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1 

UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 

LIBRARY 
Gift  of 
Hohn  Adams 


THE    LAW    OF    INSURANCE. 


Volume  II. 


THE 


LAW  OF  INSURANCE, 


AS    APPLIED    TO 


FIRE,  LIFE,  ACCIDENT.  GUARANTEE 


AND 


OTHER   NOX-MARITLME   RISKS. 


BY 

JOHN    WILDER    xMAY. 


THIRD    EDITIOX, 
revised,  analyzed,  and  greatly  enlarged. 

By   frank   parsons. 


IN   TWO    VOLUMES. 

Vol.   II. 


BOSTON: 
LITTLE,    BROWN,    AND   COMPANY. 

1891. 


] 


ml 


Entered  according  to  Act  of  Congress,  in  the  year  1881,  by 

John  Wilder  Mat, 
In  the  office  of  the  Librarian  of  Congress,  at  Washington. 


Copyright,  1S91, 
By  Little,  Bisown,  and  Company. 


I'NivFnsiTY  Press  : 
Jonx  Wilson  and  Son,  Camukikge 


CONTENTS    OF    VOL.    II. 


Pags 

CHAPTER   XVII. 
The  rreinium 703 


CHAPTER   XVIII. 
Other  Insurance  and  Overvaluation 789 

CHAPTER   XIX. 

Assignment  of  the  Polic}' 831 

CHAPTER   XX. 
Beneficiaries 885 

CHAFPER   XXI. 
Of  the  Risk,  its  Duration  and  Extent 903 

CHAPTER  XXII. 

Of  the  Loss  and  its  Adjustment 963 

CHAPTER    XXIII. 
Subrogation 1026 

CHAPTER   XXIV. 
Creditors 1053 


VI  CONTENTS. 

CHAPTER    XXV. 

Of  the  Notice.     Preliminary  Proof,  raiticular  Account    .     .  \0iV2 

CHAPTER   XXVI. 

Limitation  of  Suit  as  to  Time  and  Place HOT 

CHAFIER    XXVII. 
Arbitration H25 

CHAPTER   XXVIII. 
Of  Waiver  and  Estoppel 1 1  U 

CIIAPTKR    XXIX. 
Of  Accident  Insurance ,     .     .    .  IISO 

CHAPTER    XXX. 
Of  Guarantee  and  other  Kindred  Insurances        1236 

CHAPTER    XXXI. 
Of  Mutual  Insurance 1'^^" 

CHAPTER    XXXII. 
Remedies,  Evidence,  Pleading,  Insolvency 1291 


Index • 1^^^ 


CHAPTER    XVII. 

THE    PREMIUM. 
AXALYSIS, 

PRKMRTM. 

Payment  of,  usually  made  a  condition  of  the  completion  of  the  con- 
tract, §  340, 

What  is  Payment  ? 

check,  note,  any  mode  agreed  on,  §§  345,  345  B.,  345  E. 
if  no  mode  is  fixed  the  agent  may  use  his  discretion,  §  345. 
may  be  in  depreciated  funds  if  such  is  the  usage,  §  345. 
may  be  in  dividends,  mutual  accounts,  &c.,  §  345  <t. 

but  pix)lits  not  yet  dechired  as  dividends  will  not  be 
applied  to  ]Kiy  premiums  to  save  a  forfeiture,  §  345  a. 
may  be  by  advertising,  board,  &c.,  §  347. 

may  be  by  order  on  a  third  i)crson,  §  345  B. 
a  marginal  provision  tiiat  premium  is  payable,  part  in  cash 

and  part  by  note,  is  good.  §  345  B. 
an  otfer  of  payment  by  a  banker,  the  agent  saying  lie  will 
leave  it  iii  bank,  is  et^uivalent  to  a  deposit  o*  tlie  amount, 
§  345  B. 
a  credit  on  the  books  of  the  company  by  a  general  agent  is 

payment,  §  345  B. 
payment  to  agent  is  good  though  he  converts  it  to  his  own 

iise,  §  345  B. 
an  agreement  to  pay  in  groceries,  good  (N.  J.),  §  345  B. 

in  professional  services,  nut  good,  (N.  Y.J,  §  345  B. 
evidence  that  agent  had  no  authority  to  receive  anything  but 
cash,  §  345B. 
wliere   such   is   the   case,  setting  off   debts    between 
agent   and   insured   does   not   bind   tlie   company, 
§  345  B. 
part  paj'mcnt  will  not  save  the  jiolicy,  even  pro  (antn,  §  345  C. 
tender  is   sufficient   if   made   every   time   a   premium   comes   due, 
§§345D.,  345. 

PREMIUM  NOTES,  §§  345  A.,  345E.— H. 

are  loans,  345  A. 

may  constitute  payment,  345  E. 

authority  to  a  company  to  issue  policies  is  authority  to  take 
premium  notes,  §  345  E. 

may  be  good  thovigh  the  company  was  insolvent  at  their  exe- 
cution, §  345  E. 

VOL.  11.  —  1  703 


INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XVII. 

noii-pa}TDent  of,  fatal  if  so  agreed,  §  345  E. 

but  a  stipulation  in  the  note  alone  is  not  sufficient, 

§  345  E. 

unless  taken  for  a  premium  in  default,  §  344  D. 

if  the  company  claims  forfeiture  for  non-payment  of 

note,  it  must  surrender  the  note,  §  345  E. 

though  invalid  (married  woman's),  do  not  avoid  policy  ab 

initio,  §  345  E. 
void  if  risk  never  attaches,  §  345  E. 
may  be  written  to  mature  at  loss,  §  345  E. 
no  presentment,  demand,  or  notice  necessary,  §  345  F. 
the  company  cannot  claim  the  note  and  repudiate  the  rest 

of  the  transaction,  §  345  G. 
misrepresentation  of  agent,  a  defence  to  suit  on,  §  345  G. 
but   not  informality  in   liliug   copy   of  charter  with   State 
auditor,  §  345  G. 

Recovery  by  the  company. 

on  a  note,  though  the  policy  is  suspended  by  its  non-pay- 
ment, §  345  H. 
even  after  loss  in  the  period  of  suspension,  §  345  H. 
and  the  whole  unpaid  premium  may  become  due  and 
be   recovered   on    failure   to   pay   one    instalment, 
§345H. 
the  company  may  deduct  unpaid  premium  from  the  amount 
due  on  the  loss,  §  345  H. 
even  though  the  statute  of  limitations  has  run  on  the 
note,  §  345  H. 

By  whom  payment  may  be  made, 

any  one  may  pay  premiums,  but  there  will  be  no  lien  on  the 
insurance  money  for  them  except  by  contract,  trust,  sub- 
rogation, or  right  of  a  mortgagee  to  add  charges,  even  to 
preserve  the  property,  §  349  A. 

contract  to  pay,  good  as  to  minor  beneficiary,  349  A. 

To  whom  payment  is  to  be  made. 

must  be  to  authorized  agent,  §  349  B. 

or  actually  come  to  company's  hands, 
correspondence  admissible  to  show  authority,  §  349  B. 
handing   over  a  policy   for  delivery  gives  said  authority, 

§  349  B. 
payment  to  apparent  agent,  good,  §  349  B. 
facts  may  hold  companj'  in  spite  of  a  provision  in  by-laws, 

which  are  part  of  policy,  that  the  agent  must  be  appointed 

by  seal,  §  349  B. 
authority  to  receive  first  premium  does  not  authorize  receipt 

of  after  dues,  §  349  B. 
if  an  agent  I'eceives  payment  from  himself  after  forfeiture  of 

his  policy,  it  is  a  fraud,  §  349  B. 

Place. 

payment  at  wrong,  not  good,  §  348  A. 

parol  admissible  to  show  understanding  as  to,  §  348  A. 

704 


CH.  XVII,]  THE    PREMIUM. 

Time  of  Payment. 

the  premium  is  paid  when  it  is  delivered  to  express,  §  340. 

must  be  at  or  before  midnight  on  the  day  it  is  due,  §  349. 

if  it  falls  on  Sundaj',  the  following  business  day  is  sufficient, 
§349. 

daj's  of  grace,  §§  353-355,  357. 

payment  after  death,  §§  353-355. 

the  time  named  in  the  notice  may  be  waived  by  a  previous 
course  of  dealing,  §  356  A. 
Notice 

of  non-pajinent  of  an  order  on  a  third  person  taken  as  pay- 
ment, must  be  given  before  the  company  can  claim  a  for- 
feiture, §  345  B. 

the  company  need  not  give  notice  that  a  premium  or  note 
wQl  soon  be  due,  §§  356,  341,  unless 

(1)  it  is  necessary  to  inform  the  insured  of  the  amount 
due,  as  where  he  shares  the  profits,  §§  345  A,  356,  or 

(2)  a  course  of  dealing  leads  the  insured  to  rely  on  it, 
§§  356,  356  A.,  or 

(3)  usage  has  made  it  a  part  of  the  contract,  §§  356, 
356  A. 

and  where  there  is  such  usage,  if  no  notice  is  sent,  payment 

in  a  reasonable  time  is  sufficient,  §  356  A. 
but  it  is  held  in  some  courts  that  a  habit  or  usage  of  this 
kind  may  be  discontinued  by  the  company  at  any  time, 
and  no  evidence  of  such  usage  will  be  received  to  save 
forfeiture  unless  it  is  shown  that  in  the  particular  case  in 
question  it  was  withheld  on  purj)Ose  to  obtain  a  forfeiture, 
§§  356  A,  352  A. 
in  New  York  the  notice  must  state  that  in  default  of  pay- 
ment the  policy  will  be  forfeit,  §  356  A. 
the  law  applies  to  policies  issued  before  it  was  passed, 

§  356  A. 
and  the  burden  of  proving  notice  is  on  the  company, 
§356  A. 
mailing  the  notice  is  sufficient,  whether  it  ever  arrives  or 
not,  §  356  A. 
Excuse  for  non-jmymcnt. 

the  act  of  God,  or  of  obligee  is,  §§  350,  350  A. 
so  an  act  of  government,  §§  350,  350  A, 
as  war. 

premiums  may  be  paid  at  the  agency  m  the  enemy's 
country,  which  agency  should  be  continued  by  the 
company,  §  350. 
it  has,  however,  been  held  that  war  abrogates  a  con- 
tract of  insurance  the  moment  the  parties  become 
public  enemies,  §  350  A. 
the  insured,   however,   can  recover  the  value  of  the 
premiums  paid,  if  the  company  chooses  to  declare  the 
policy  at  an  end,  §  350  A. 
if  the  right  to  pay  the  premiums  remains,  so  also  does 
the  right  in  the  company  to  recover  them,  §  351. 

705 


INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XVII. 

insolvency  of  insurer,  §  358. 

ceasing  to  do  business,  or  selling  out  to  another  company, 

§  358. 
extension  of  time,  §  358. 
change  of  agency,  §  358. 
failure  of  the  company  to  give  the  notice  required  by  a  course 

of  business  or  u.';age,  §  358  ;  see  also  §§  35(5,  356  A. 

No  excuse. 

failure  to  receive  notice  that  a  premium  is  due,  is  no  excuse, 
§§  341,  352  A  ;  see  §§  356,  356  A. 

nor  paralysis,  insanity,  or  other  disease,  §§  352,  352  A. 

nor  a  mere  suspicion  of  insolvency,  §  352  A. 

nor  failure  to  find  the  agent,  by  calling  several  times,  §  352  A. 

nor   the  agent's  assurance  that  the  dividends  will  be  suffi- 
cient, §  352  A. 

nor  a  personal    agreement  with  the  agent  that   the   latter 
would  pay,  §  352  A. 

nor  does  the  death  of  the  agent  excuse  payment  of  premi- 
ums due  at  the  home  office,  §  352  A. 
Suspension  of  the  policy, 

during  default  is  sometimes  agreed  upon,  §  343. 

it  revives  on  payment,  even  on  a  judgment,  §  343. 
but  a  part  payment  is  not  sufficient,  §  343. 

in  the  period  of  suspension  the  company  is  not  liable,  and 
earns  no  premiums,  §§  343,  358. 

but  if  they  accept  premiums  for  that  period  they  cannot  es- 
cape liability,  §  358. 

FORFEITURE  for  non-payment,  §  341. 

only  occurs  when  the  policy  stipulates  for  it,  §§  343,  344. 
condition  construed  strictly  against  company,  §§  342,  363  A. 
non-payment  of  a  note  at  maturity  may  not  be  fatal,  §  342. 
may  be  optional  with  the  company,  §  342. 
occurs  at  once  on  non-payment  without  any  entry  on  the 

company's  books,  protest  of  bill,  or  other  act,  §  342  A. 
beneficiaries  cannot  avoid  effect  of  non-payment,  §  342  A. 
failure  to  pay  interest  mi  a  loan  {i.  e.  a  note),  is  not  failure  to 

pay  p7-cmiums,  §  342  A. 
non-payment  of  a  note  taken  for  a  premium  is  not  fatal  un- 
less expressly  so  agreed,  342  .\. 
Sometimes  the  policy  is  conditioned  to  revive  on  payment  of  over- 
due premiums,  §§  341  A,  343. 
Non-forfeitable,  endowment,  and  paid-up  policies,  §  344  a. 

Massachusetts  statutes,  §§  344  b,  344  c. 

paid-up  policy  by  agreement,  §  344  D. 

continuation  of  original  policy,  §  344  D. 

not  affected  by  repeal  of  laws  under  which  the  original  policy 

was  made,  §  344  D. 
not  liable  to  execution,  §  344  D. 
tontine  company  not  a  trustee  of  any  particular  fund  for  a 

policy-holder,  344  D. 

706 


CH.  XVII.]  THE   PREMIUM. 

after  indoi-sement  as  a  paid-up  policy,  going  to  tonid  zone 

not  fatal,  §  344  D. 
when  the  original  policy  is  to  be  void  for  non-payment  of 
premium  or  interest,  and  provides  for  issue  of  a  paid-up 
policy  after  two  premiums  have  been  paid,  some  courts 
hold  that  a  paid-up  policy  must  be  called  for  during  the 
life  of  the  policy,  and  that  non-payment  of  interest  on  pre- 
mium notes  (unless  regarded  by  the  company  as  a  loan), 
will  be  fatal,  even  after  the  indoi-sement  as  a  paid-up  pol- 
icy, §  344  E. 

contra,  §  344  E. 
if  demand  for  a  paid-up  policy  is  expressly  to  be  made  with- 
in thirty  days  after  forfeiture,  the  time  is  not  of  the  es- 
sence, §  344  F. 

coiUra,  §  344  F. 
nothing  is  due  until  death,  §  344  F. 
policy  may  be  n on- forfeitable  by  estoppel,  §  344  G. 
as  by  representations  of  agent,  §  344  G. 
contra,  §  344  G. 
the  amount  of  a  paid-up  policy,  or  damages  for  its  refusal,  is 
estimated  according  to  clear  mathematical  princi- 
ples, subject  to  the  wording  of  the  contract,  §  344  H. 
insured  not  entitled  to  the  whole  sum  he  has  paid  un- 
less so  agreed,  §  344  H. 
alteration  of  original  contract  from  non-forfeitable  to  forfeit- 
able, by  terms  of  a  new  policy  or  a  note  fciken  for  a  pre- 
mium in  default,  §  344  I. 
Parol  agreement  subsequent  to  policy  that  it  should  not  fail  by  non- 
payment, is  good,  §  346. 
but  a  mere  personal  promise  of  an  agent  that  he  wUl  see  the 
premium  paid,  §  348. 

Waiver  and  estoppel. 

of  prepayment. 

by  delivery  of  policy  without  payment,  §§  360  A,  360  B. 

sending  policy  by  mail,  §  360  A. 
by  course  of  dealing  between  the  parties,  §  360  A. 
by  usage  generally,  §  360  A. 

assurance  by  agent  that  it  makes  no  difference,  §  360. 
any  circumstances  showing  that  the  company  does  not 

intend  to  insist  on  the  condition,  §§  360,  360  A. 
giving  credit  expressly  or  impliedly,  §  360  B. 

agents'   autliority  to  waive  the  rule  in  regard 
to  cash  payment,  §§  360  B,  360  D. 
in  general. 

by  agent's  wrong  information   as   to  date   premium 

is  due,  §  360  C. 
by  circular  issued  by  company,  §  360  C. 
agent  may  waive  immediate  pajTuent,  §§  360  A,  B,  C,  D. 

contra,  §  360  F. 
the  method  to  waiver  specified  in  the  policy  must  be 
pursued,  §  360  C. 

707 


§  340]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XVII. 

waiver  of  breach  by  payment  of  a  loss  this  month,  will 
*  not  compel  the  company  to  pay  another  loss  next 

month,  §  360  C. 
a   course   of    dealing,   usage,    or    custom,    to    accept 
overdue  premiums  binds  the  comj>auy  in  spite 
of  a  clause  in  the  policy  declaring  such  acts 
to  be  mere  courtesies,  §§  361,  363. 
even  a  general  usage  is  sulhcient  without  show- 
ing that  the  company  adopted  it,  §  361  u., 
contra,  §  360  F. 
an  honest  and  prudent  belief  induced  by  the 
comiKiny  that  premiums  will  be  taken  after 
date  is  sutUcieut,  §  361  n. 
but  receiving  overdue  premiums  always  with  an  iu- 
ijuiry  as  to  health,  does  not  estop  the  comjiany  in 
future,  §  361  n. 
acceptance  of  an  overdue  premium  waives  the  forfeit- 
ure   for   Us  non-i«yment,    unless   the    jwlicy 
gives  the  company  a  right  to  it  in  spite  of  for- 
feiture, §  3(52. 
othei-wise  with  a  men>  olfer  to   receive  or  a   de- 
mand (even  by  suit)  without  actual  payment, 
§  362. 
where  it  is  providiii  that  jiost  pa3'ment  will  be  received 
oil  proof  of  continued  health,  receiving  the  premium 
without  such  proof  waives  it,   but  does  not  waive 
the  fact  of  death  unknown  to  l>oth  parties,  §  353. 
no  estoi>i)el  unless  the  plaintiff  is  injured,  §  360  E. 
no  waiver  unless  the  facta  are  known,  §  360  K. 
decisions  adverse  to  waiver,  §  360  F. 

failure  of  the  comi>jiny  to  give  accustomed  notice 
no  cstopjH'l,  §  360  F. 
waiver  of  statute  provisions,  making  policies  non-for- 
feitable,  §  360  (J. 
a  prospectus  may  cpialify  the  policy,  §§  3j5-3j6. 
cy  fires  performance,  §  357. 
evidence  of  |>aynient,  §  351). 

a  receipt  is  not  conclusive  but  may  be  contradicted  by  oral 

evitlence,  §  359. 
the  company  cannot  deny  receipt  of  a  premium  acknowledgetl 
in  the  policy  in  order  to  defeat  the  contract,  but  may  deny 
it  in  order  to  recover  the  money,  §  359. 
Wrongful  nfuml  to  recdiv  premiums. 

insured  may  sue  for  amount  necessary  to  get  another  policy 
as  good,  §  363  B. 
or  for  what  he  has  paid  in,  §  863  B. 
Recovery  of  premiums  by  insured,  see  §  567. 

§  340.    Payment  of  the  premium  ;     Option  of  Insured.  —  The 
premium  paid  is  the  considei'ation  received  by  the  insurers 
for  the  risk  which  they  undertake.     Ordinarily,  therefore,  and 
708 


CH.  XVII.]  THE    PREMIUM.  [§  341 

in  the  absence  of  special  stipulation  to  the  contrary,  the  de- 
livery of  the  policy  and  consequent  assumption  of  the  ilsk, 
and  the  payment  of  the  premium,  are  coincident.  Thev  are 
two  acts  on  the  part  of  the  respective  parties  which  perfect 
the  contract  and  give  it  validity.  The  recital  in  the  policy 
is,  that  the  insured  having  paid  the  premium,  and  complied 
with  certain  other  conditions,  the  insurers  arc  under  certaiu 
obligations  to  him.  Uut  it  is  also  almost  universally  })ro- 
vided  that  the  policy  shall  not  take  efl'ect  until  the  premium 
be  paid.  And  in  such  case,  until  the  payment  of  the  pre- 
mium, the  contract  will  not  take  effect,  although  all  the  terms 
may  have  been  agreed  upon,  and  the  policy  made  out,  if  not 
delivered;^  nor  even  if  delivered,  if  such  is  the  intent  of  the 
parties.-  So  if  a  policy  by  its  terms  is  not  to  cover  the  risk 
while  a  premium  is  overdue,  a  loss  after  the  time  when  the 
premium  is  due,  and  before  it  is  paid,  must  be  borne  by  the 
insured,  though  the  policy  is  not  absolutely  void.^  If  the 
premium  be  not  paid  during  the  life  of  the  insured,  with  his 
knowledge  and  consent,  there  is  no  contract.  The  unauthor- 
ized payment  liy  a  third  person  will  not  be  an  acceptance  of 
the  terms  of  the  policy  by  the  insured.*  And  if  the  policy  is 
not  to  be  valid  till  the  premium  be  paid,  and,  if  not  paid  in 
fifteen  days,  to  be  void,  neither  jiarty  is  bound  till  the  pre- 
mium is  paid.^  The  jiremium  is  paid  when  the  money  is  de- 
livered to  the  expressman  designated  by  the  insurers,  to  be 
forwarded  to  their  agent.*^  It  is  from  that  time  at  the  risk  of 
the  insurers.^ 

§  341.  Premium;  Non-payment;  Forfeiture. —  An  insurance 
company  whose  charter  provides  that  on  non-payment  of  the 
premium  the  directors   may  forfeit,  may  also   contract  that 

1  Sc-hw.irtz  1-.  Germania  Life  Ins.  Co.,  18  Minn.  448;  Flint  v.  Ohio  Ins.  Co., 
8  Oliio,  501. 

2  Bodine  v.  Exch.  Fire  Ins.  Co.,  51  N.  Y.  117.     See  post,  §  346. 

«  Wall  V.  Home  Ins.  Co.,  36  N.  Y,  157.  See  also  post,  §§  -341  a,  345  et  seq., 
and  §  857. 

*  Wliitinp  V.  Massachusetts,  &c.  Ins.  Co.,  129  Mass.  240. 
6  Bradley  i-.  Potomac  Fire  Iiis.  Co.,  .32  Md.  108. 

6  Whitley  V.  Piedmont,  &c.  Life  Ins.  Co.,  71  N.  C.  480. 

•  Currier  v.  Continental  Life  Ins.  Co.,  53  N.  H.  538. 

709 


§  341]  INSDEANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XVII. 

such  non-payment  shall  work  a  forfeiture,  in  which  case  no 
action  of  the  directors  will  be  essential.^     If  the  policy  by 
its  terms  is  forfeitable  for  non-payment  of  premium,  or  any 
note  given  for  a  premium,  when  due,  a  failure  to  pay  at  ma- 
turity a  note  given  for  a  part  of  the  premium,  or  any  instal- 
ment or  interest  thereon,  when  due,  works  a  like  forfeiture. 
Such  a  stipulation  is  neither  unconscionable    nor  usurious. 
And  the  fact  that  no  notice  is  given  by  the  insurers  of  the 
time  when  the  note  becomes  due  will  not  avail  the  insured, 
or  an  assignee  ignorant  of  the  existence  of  such  a  note,  since 
they  are  under  no  obligation  to  give  such  notice.^     In  Pitt  v. 
Berkshire  Life  Insurance  Company,  the  policy  purported  to  be 
in  consideration  of  $86.40  to  the  defendants  "  in  hand  paid," 
and  of  a  like  sum  to  be  annually  thereafter  paid,  and  was 
conditioned  to  be  void  in  case  the  insured  should  fail  to  pay 
wlien  due  any  notes  or  other  obligations  given  for  premium. 
In  point  of  fact,  only  a  part  of  the  first  premium  was  paid  in 
hand  in  cash,  and  for  the  balance  a  note  was  given  which  set 
forth  on  its  face  that  if  not  paid  when  due  the  policy  should 
be  void,  in  accordance  with  the  conditions  of  the  policy.     And 
the  note  being  payable  in  instalments,  and  being  expressed  to 
be  for  the  unpaid  balance  of  the  premium,  it  was  held  that  the 
giving  the  note  was  not  a  payment  of  balance  due  of  the  pre- 
mium, and  that  the  forfeiture  inured  on  non-payment  of  the 
instalment  first  due.^     An  attempt  was  made  in  Windus  v. 

1  Equitable  Ins.  Co.  v.  McLennon  (Tenn.),  6  Ins.  L.  J.  124. 

2  Robert  v.  The  New  England  Mat.  Life  Ins.  Co.,  1  Disney  (Supr.  Ct.  of  Cin- 
cinnati), 355,  Gholson,  J.  ;  Pitt  v.  Berkshire  Life  Ins.  Co.,  100  Mass.  500;  Shaw 
V.  Berksliire  Life  Ins.  Co.,  10:]  id.  254  ;  Attorney-General  v.  North  American  Ins. 
Co.,  80  N.  Y.  152;  How  ;;.  Union  Miit.  Life  Ins.  Co.,  id.  32;  Nedrow  c.  Farmers' 
Ins.  Co.,  43  Iowa,  24  ;  Lewis  v.  Plirenix,  &c.  Ins.  Co.,  44  Conn.  72  ;  Mason  v. 
Citizens',  &c.  Ins.  Co.,  10  W.  Va.  572;  Southern  Mut.  Life  Ins.  Co.  r.  Taylor 
(Va.),  10  Ins.  L.  J.  208;  Moses  v.  Phoeni.x,  &c.  Ins.  Co.,  2  St.  Louis  Ct.  of  App. 
408;  Patch  i-.  Phoenix  Life  Ins.  Co.,  44  Vt.  481  ;  Williams  v.  Wash.  Life  Ins. 
Co.,  31  Iowa,  541 ;  Security  Life  Ins.  Co.  v.  Gober,  50  Ga.  404 ;  Russum  v.  St. 
Louis,  &c.  Ins.  Co.,  1  Ct.  of  App.  (Mo.)  238 ;  s.  c.  5  Big.  Life  &  Ace.  Ins.  Cas. 
243  ;  Catoir  v.  American  Life  Ins.  &  Tr.  Co.,  33  N.  J.  487  ;  Baker  v.  Union  Life 
Ins.  Co.,  43  N.  Y.  283,  reversing  s.  c.  6  Robt.  (N.  Y.  City  Sup.  Ct.)  393.  See 
post,  §  344  a. 

3  Ubi  supra.  See  also  Bigelow  v.  State,  &c.  Ins.  Co.,  123  Mass.  11.3.  But  in 
Kentucky,  it  has  been  held  that,  where  the  premium  is  paid  partly  in  cash  and 

710 


CH.  XYII.]  THE   PREMIUM.  [§  841  a 

Lord  Tredegar  ^  to  recover  a  lapsed  policy,  after  omission  to 
pay  the  annual  premium,  and  after  the  insured  had  taken  out 
a  new  policy  in  a  new  office.  The  original  policy  was  issued 
at  a  time  which,  if  it  was  still  in  force,  would  entitle  it  to  cer- 
tain valuable  bonuses ;  and  many  years  after  the  lapse  of  the 
policy  the  executors  of  the  insured  brought  their  bill  in  equity 
to  recover  the  policy  on  the  ground  that  it  had  lapsed  by  ac- 
cident, the  insured  not  having  received  the  usual  notice,  by 
reason  of  his  change  of  residence.  But  the  Master  of  the 
Rolls,  the  Lord  Justices,  and  the  House  of  Lords  on  appeal 
to  them,  scouted  the  bill.  When  the  premiums  ai-e  payable 
thrice  yearly  in  advance,  one-third  to  be  indorsed  as  a  loan, 
this  means  that  the  second  instalments  are  to  be  paid  at  the 
expiration  of  four  and  eight  months  respectively,  and  the 
policy  is  forfeited  unless  each  payment  is  made  in  advance  ; 
and  the  reserved  right  of  the  insurers  to  deduct  unpaid  pre- 
miums from  losses  refers  to  the  indorsements,  and  does  not 
release  the  insured  from  the  obligation  to  pay  in  advance.*'^ 

§  341  a.  Non-Payment  of  Vx^xaiviva.  (continued^.  —  A  policy 
for  five  years,  subject  to  the  condition  that  if  the  annual 
premium  shall  not  be  paid  within  thirty  days  after  it  falls 
due,  the  policy  shall  be  void  during  default,  although  a  note  be 
given  for  the  payment  of  the  several  premiums  as  they  become 
due,  is  an  absolute  insurance  only  for  the  year  in  which  the 
premium  is  actually  paid.  It  becomes  void  on  non-payment 
of  each  successive  premium  within  thirty  days  after  the  ex- 
piration of  the  previous  year,  but  is  renewed  for  the  balance 

partly  in  a  note,  which  is  regarded  as  practically  a  loan  to  the  insured  secured 
by  the  profits  or  dividends  which  may  be  earned,  while  a  failure  to  pay  the  cash 
premium,  or  any  note  which  may  be  given  for  it,  promptly  works  a  forfeiture, 
a  failure  to  pay  the  interest  on  the  note  as  it  accrues  will  not,  although  the  pol- 
icy provides  that  failure  to  pay  in  advance  annually  the  interest  on  unpaid 
notes  or  loans  on  account  of  annual  premiums  shall  terminate  the  policy.  The 
court  makes  a  distinction  between  the  prompt  payment  of  premiums  and  the 
prompt  payment  of  interest,  which  is  in  no  sense  a  premium,  on  premium 
notes.  St.  Louis  Mut.  Life  Ins.  Co.  v.  Grigsby,  10  Bush  (Kr.),  olO.  See  also 
p^.st,  §,.'348. 

1  15  L.  T.  N.  8.  108,  H.  L. 

2  Howard  v.  Continental  Life  Ins.  Co.,  48  Cal.  229 ;  Hesterberg  v.  Equitable 
Life  Ins.  Co.,  1  Cincinnati  Supr.  Ct.  Reptr.  483. 

711 


§  341  a]         INSURANCE  :    fire,   life,    accident,    etc.       [CH.  XVII. 

of  the  year  on  payment  after  that  f.me.  The  payment  of  the 
premium  is  optional  with  the  insured,  and  if  he  make  default, 
the  insurer  has  no  other  remedy  than  the  avoidance  of  the 
policy.  If  the  policy  be  voidable  only  at  the  option  of  tlie  in- 
surer, it  may  be  different.^  The  case  is  distinguishable,  as 
to  the  right  of  recovery  on  the  premium  note,  from  those 
cases  where  the  policy  provides  that  on  failure  to  pay  an  in- 
stalment the  whole  note  may  be  recovered.^  In  another  case, 
the  language  of  which  is  entirely  inconsistent  with  the  doctrine 
of  Yost's  case,  under  a  policy  which  provided  that  on  pay- 
ment of  all  overdue  instalments  the  policy  should  again  attach, 
it  was  held  that  the  insurers  might  recover,  in  an  action  on 
the  note  after  the  expiration  of  the  policy,  all  the  overdue 
instalments,  and  it  was  also  said  that  this  would  revive  the 
policy .3     Wlicre  the  provision  of  the  policy  was  that  the  com- 

1  Yost  V.  American  Ins.  Co.,  39  Mich.  631 ;  American  Ins.  Co  v  Cougle,  39 
Mich.  53t).  See  also  New  York  Life  Ins.  Co.  v.  Statham,  5  Big.  Life  &  Ace. 
Ins.  Cas.  607,  Strong,  J. 

2  Williams  v.  Albany  City  Ins.  Co.,  19  Mich.  451  ;  American  Ins.  Co.  v. 
Klink,  65  Mo.  78. 

8  American  Ins.  Co.  v.  Henley,  60  Ind.  515.  But  the  Superior  Court  of 
Michigan  adheres  to  the  doctrine  of  Yost's  case,  in  American  Ins.  Co.  t'.  Stoy, 
41  Mich.  385,  in  an  elaborate  opinion,  an  abstract  of  which  is  as  follows  ;  — 

"  The  written  application  made  was  '  for  insurance  against  loss  for  the  terra 
of  five  years  from  the  12th  day  of  August,  1875.'  By  the  policy  the  company, 
in  consideration  of  66. 10  cash  premium  and  an  instalment  note,  insured  against 
such  loss  as  should  happen  during  the  term  of  five  years,  commencing  Aug.  12, 
1875,  and  terminating  Aug.  12,  1880.  In  the  application  the  rate  is  fi.\ed  at 
sixty  cents,  and  but  for  one  year.  The  amount  insured  is  $1,016,  the  first  in- 
stalment payable  in  cash  is,  tiierefore,  $6.10.  The  instalment  note  is  given  for 
$24.38,  and  makes  the  assureil  promising  therein  to  pay  Aug.  1,  1876,  $6  10, 
and  a  similar  sum  Aug.  1,  1877,  also  on  Aug.  1,  1878,  .$().09,  and  a  like  sum 
Aug.  1,  1879.  In  the  application  it  is  stated  that  '  if  any  instalment  upon  the 
premium  shall  remain  due  and  unpaid  thirty  daj-s,  then  the  policy  issued  upon 
the  application  in  consideration  of  such  instalment  shall  be  null  and  void  until  the 
same  is  paid.'  The  policy  substantially  repeats  this,  and  further  recites  that 
the  company  '  shall  not  be  liable  to  pay  any  loss  happening  during  the  continu- 
ance of  such  default  in  the  payment  of  such  instalment,  but  on  payment  by  the 
assured  or  his  assigns  of  all  instalments  of  premium  due  under  this  policy,  or 
upon  the  instalment  note  given  therefor,  the  company's  liability  shall  revive, 
and  this  policy  shall  be  in  force  as  to  all  losses  happening  after  such  pajynent. 
.  .  .  When  a  promissory  note  is  given  by  the  assured  for  the  cash  premium,  it 
shall  be  considered  a  payment  of  such  premium,  provided  such  note  is  paid  at 
or  before  maturity,  .  .  .  and  no  attempt  to  collect  such  note  or  any  instalment 

712 


CH.  XVII.]  THE   PREMIUM.  [§  341  a 

pany  should  not  be  liable  while  a  note  given  for  a  premium 
should  be  past  due  or  unpaid,  it  was  held  that  the  policy  was 
suspended,  and  did  not  cover  a  loss  during  that  time.^ 

of  premium  due  .  .  .  shall  be  deemed  a  waiver  of  any  of  the  conditions  of  this 
policy,  or  have  the  effect  to  revive  it' 

"  Held,  1.  That  these  provisions  are  inconsistent  with  the  clause  declaring 
the  policy  to  be  for  a  term  of  five  years,  and  taken  together  they  mean  that  a 
yearly  policy  has  been  issued  upon  the  instalment  plan,  to  run  for  a  period  not 
exceeding  five  years.  This  is  especially  clear  from  the  provision  of  the  policy 
whereby  the  company  '  reserved  the  right  of  cancelling  this  policy  at  its  elec- 
tion, by  paying  to  the  assured  ti\e  unearned  premium,  if  any  there  be.'  The 
company  could  not  retain  and  collect  the  note  or  deduct  tiie  amount  before  due 
from  the  amount  of  the  loss.  As  to  all  subsequent  instalments  after  tlie  loss 
there  would  be  no  risk  on  the  company's  part,  which  is  absolutely  essential  to 
the  right  to  recover  premium  in  such  a  case. 

"  2.  Tiie  provision  of  tlie  company's  charter  that  in  case  of  refusal  or  neglect 
to  pay  any  instalment  for  thirty  days  the  whole  note  shall  become  due  and  pay- 
able, is  not  binding  on  defendant.  The  relations  existing  between  the  parties 
are  not  like  those  of  persons  insuring  in  a  mutual  company,  where  the  assured 
becomes  a  member  of  the  company  and  bound  by  all  its  rules.  The  company 
may  have  authority  under  its  charter  to  carry  on  business  on  the  mutual  plan  ; 
but  such  is  not  the  contract  here  The  clause  in  the  policy  referring  to  the 
charter  only  makes  it  a  part  of  the  policy  to  explain  such  rigiits  and  obligations 
as  are  not  otherwise  provided  for  by  the  terms  of  the  agreement.  Here,  how- 
ever, the  policy  fully  provides  fi)r  all  the  rights  and  obligations  of  both  parties  so 
far  as  they  are  in  issue,  and  tiie  charter  provisions  cannot  be  admitted  to  change 
in  important  matters  tlie  deliberate  agreement  entered  into.  The  case  in  its 
facts  is  therefore  not  like  Williams  r.  Albany  City  Ins.  Co.,  19  Mich.  451 

"3.  The  words  '  null  and  void  '  as  used  in  the  policy  do  not  mean  voidable. 
A  payment  by  the  assured  revives  the  policy  from  that  date,  but  gives  no  life 
to  it  covering  the  period  it  was  suspended.  Parties  may  agree  that  on  the  hap- 
pening of  a  certain  contingency  their  agreement  shall  become  absolutely  void, 
but  may  again  take  effect  from  the  happening  of  another  event  at  either  party's 
option. 

"  4.  The  argument  is  unsound  that  as  the  policy  was  suspended  by  the 
mere  wrongful  act  of  the  assured  in  not  paying  the  instalment  wiien  due,  and 
as  he  could  revive  the  policy  by  paying,  lie  should  not  be  heard  to  complain 
of  any  hardship  resulting  from  his  own  wrong  in  not  paying  as  he  promised. 
Parties  often  take  advantage  of  some  positive  provision  of  law  to  aid  them  in 
maintaining  a  defence  to  an  action,  where  in  so  doing  they  take  advantage  of 
something  done  by  themselves  which  they  ought  not  to  have  done.  And  here, 
under  our  construction  of  the  contract,  the  assured  is  at  liberty  to  decline  at 
the  end  of  the  year  to  renew  at  all ;  he  is  therefore  guilty  of  no  wrong 
whatever." 

In  Klink's  case  the  words  of  the  policy  were,  "in  part  or  whole  consideration 
of  such  note  or  notes." 

1  Garlick  v.  Mississippi,  &c.  Ins.  Co.,  44  Iowa,  553.  See  also  Schmidt  v. 
Insurance  Co..  41  III.  295. 

713 


§  342]  INSUEANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XVII. 

§  342.  Non-payment  of  Premium  (^continued').  —  But  when 
the  policy  is  forfeitable  for  non-payment  of  the  premium,  but 
does  not  distinctly  provide  that  the  non-payment  of  a  note 
given  therefor  at  maturity  shall  work  a  forfeiture,  as  this 
clause  is  inserted  for  the  benefit  of  the  insurers  it  must  be 
taken  most  strongly  against  them,  and  the  non-payment  of 
the  note  at  maturity  will  not  work  a  forfeiture.^  The  courts 
will  not  extend  the  operation  of  a  condition,  the  breach  of 
which  involves  a  forfeiture,  to  a  case  not  clearly  within  it. 
Thus,  where  two  notes  were  taken,  one  subject  to  the  condi- 
tion and  the  other  not,  the  failure  to  pay  tlie  latter  was  held 
not  to  work  a  forfeiture.^  And  thougli  the  note  itself  be  made 
payable  in  six  months,  and  by  the  terms  of  the  note  the  policy 
is  to  be  void  if  the  note  be  not  promptly  paid  at  maturity,  it 
has  been  held  that  the  non-])ayment  of  the  note  only  renders 
the  policy  voidable  and  not  void,  so  that  the  policy  continues 
in  force  unless  the  insurers  do  some  act  to  show  that  they 
insist  upon  the  forfeiture.^     The  case  referred  to  was  this :  — 

A  mutual  life  insurance  company  insured  the  life  of  a 
member  for  a  certain  annual  premium,  to  be  paid  at  the 
beginning  of  each  year,  and,  if  not  so  paid,  the  policy  was  to 
cease  and  determine,  the  insured  to  forfeit  all  moneys  {)aid 
and  all  rights  under  such  jiolicy.  The  insured  paid  three 
annual  premiums,  but  gave  his  promissory  note  for  the  next 
year's  premium,  the  taking  of  which  the  comj)any  assented  to, 
payable  six  months  after  date,  bearing  interest  at  a  higher 
rate  than  the  rules,  <fec.,  of  the  company  provided  for.  The 
note  on  its  face  was  "  for  premium  on  policy  No.  25,187,  and 
if  not  paid  at  maturity,  said  policy  is  to  be  void."  The  note 
was  not  paid  at  maturity,  nor  did  the  company  demand  pay- 
ment of  the  maker,  on  the  day  it  became  due,  but  uigcd  pay- 
ment at  other  times.  The  maker  was  solvent.  When  the 
next  year's  premium  would  have  fallen  due,  by  the  terms  of 

1  McAllister  v.  New  England  Mut  Life  Ins.  Co.,  101  Mass.  558. 

2  New  England  Mut.  Life  Ins.  Co.  v.  Ilasbrook,  32  Ind.  4-17. 

3  Mut.  Ben.  Life  Ins.  Co  v.  French,  2  Cincinnati  Superior  Court  Reporter, 
321;  affirmed,  .30  Ohio  St.  240;  La  Compagnie  D.  Ass.,  &c.  v.  Gramnion  (Q.  B. 
Montreal),  3  Legal  News,  19.  But  see  Thompson  v.  Knickerbocker,  &c.  Ins.  Co., 
C.  Ct.  (Ala.)  5  Big.  Life  &  Ace.  Ins.  Cas.  8. 

714 


CH.  XVII.]  THE   PREMIUM.  [§  342 

the  policy  upon  a  tender  made  of  it  to  the  agent  of  the  com- 
pany, tlie  latter  refused  to  receive  it,  claiming  that  the  risk 
had  determined  by  reason  of  non-payment  of  the  note,  and 
demanded  back  the  receipt  given  for  the  previous  year's  pre- 
mium, but  continued  to  hold  the  note.  In  an  action  brought 
after  the  death  of  the  insured,  to  recover  upon  the  policy,  the 
action  was  sustained  by  the  court.  In  giving  its  opinion  the 
court  said  :  — 

"  Now,  what  is  the  legal  effect  of  the  policy  itself  ?  It  is 
an  agreement  to  insure  the  life  of  French  from  year  to  year 
during  his  life,  on  the  payment  to  it  each  year  of  a  certain 
amount  of  money  as  a  premium  for  the  risk  taken.  His  fail- 
ure to  pay  such  premium  at  the  beginning  of  each  year,  unless 
waived  by  the  company  ipso  facto^  would  cause  the  policy  to 
'  cease '  and  determine.  It  was  a  contract  that  could  only 
continue  from  year  to  year,  at  the  option  of  the  insured,  who 
could  let  it  drop  at  any  time.  If,  on  July  6, 1867,  the  insured 
had  said  to  the  company,  '  I  will  not  pay  ;  I  do  not  wish  to 
insure  longer  in  the  company,'  it  could  not  have  compelled 
him  to  do  so  ;  it  could  not  have  sued  and  recovered  from  him 
that  or  any  subsequent  year's  premium.  Its  remedy  was  pro- 
vided against  the  insured  by  the  forfeiture  of  all  his  moneys 
previously  paid  and  rights  under  the  policy.  Hence  the  pay- 
ment of  each  year's  premium  was  a  condition  precedent  to  the 
further  existence  of  the  contract.^ 

"  Had  this  note  been  taken  in  pursuance  of  any  stipulation 
of  the  policy,  or  rules  or  laws  of  the  company  authorizing  it 
as  a  method  of  paying  the  annual  premium,  it  would  then 
have  been  a  condition  precedent  to  the  continuance  of  the 
policy,  which  would  have  ceased  and  determined,  as  of  July 
6,  1867  ;  but  if  not  so  provided  for,  this  would  not  necessarily 
be  S0.2 

"  Let  us,  then,  inquire  whether  the  note  given  in  this  case 
could  have  been  sued  upon  and  recovered  by  the  company 

1  See  Mut.  Ben.  Life  Ins.  Co.  v.  Jarvia,  22  Conn.  133. 

2  McAllister  v.  New  England  Mut.  Life  Ins.  Co.,  101  Mass.  558 ;  Robert  v. 
New  England  Mut.  Life  Ins.  Co.,  1  Disney,  355  ;  s.  c.  2  id.  106, 107;  New  Eng- 
land Mut.  Life  Ins.  Co.  v.  Hasbrook,  32  lud.  447,  449. 

715 


§  342]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XYII, 

after  it  became  due,  or  whether  the  maker  could  have  suc- 
cessfulW  defended  against  it,  on  the  ground  that  he  had 
elected  to  insure  no  longer  with  the  company.  We  think  he 
could  not.  The  risk  for  the  whole  year  would  have  com- 
menced ;  the  policy  for  -that  year  would  have  attached,  and 
the  company  would  have  carried  it  six  months  and  three 
days,  liable  in  case  of  the  insurer's  death  during  the  whole 
time.  The  payment  of  the  note  became  a  condition  subse- 
quent, which  only  the  company  could  avail  itself  of.  There 
would  have  been  an  election  on  the  part  of  the  insured  to 
insure  for  another  year,  and  not  a  refusal  to  do  so,  as  if  he 
had  not  attem])tcd  to  pay  the  premium  for  the  year,  in  which 
case  there  would  have  been  no  liability  on  his  part.  Such 
terms  in  the  note  made  the  policy  merely  voidable  at  the 
option  of  the  company.  Forfeitures  are  not  favored,  espe- 
cially wlicre  delay  can  be  compensated  for  in  money.^ 

"  Still  the  company  might  have  forfeited  the  policy  on  non- 
payment of  the  note  when  it  became  due,  but  it  should  have 
exercised  the  right  promptly.  It  should  have  demanded  pay- 
ment on  the  last  day  of  grace,  during  the  business  hours  of 
the  day  ;  and  if  such  payment  was  not  tlien  made,  it  should 
have  declared  the  policy  forfeited  or  void.  This  is  in  ac- 
cordance with  well-settled  rules  for  enforcing  forfeitures  for 
breaches  of  condition  subsequent.  No  such  demand  is  re- 
quired in  the  case  of  the  non-performance  of  conditions  pre- 
cedent, as  the  stipulation  in  a  policy  for  the  payment  of 
annual  premiums,  though  it  is  usual  for  companies  to  notify 
parties  a  few  days  in  advance  of  the  time  such  annual  pay- 
ments are  to  be  made ;  but  this  is  mere  accommodation. 
The  company,  tlien,  did  not  determine  or  make  void  this 
policy  when  the  note  fell  due,  and  it  became  a  mere  debt, 
like  the  check  given  for  the  other  half  of  that  year's  cash 
premium."  ^  And  even  a  parol  agreement  to  pay  may  be  so 
far  a  payment  as  to  prevent  a  torfeiture  of  the  policy  by  the 


i  Boyd  V.  Talbert,  12  Ohio,  212,  214  ,  Smith  v.  Whitbeck,  13  Ohio  St.  471. 
2  Mut.  Ben.  Life  Ins.  Co  v.  Frencli,  2  Cincinnati  Superior  Court  Reporter, 
321 ;  s.  c  4  Big.  Life  &  Ace  Ins  Cas.  369,  affirmed,  30  Ohio  St.  240. 
716 


CH.  XVII.]  THE   PREMIUM.     •  [§343 

mere  fact  of  non-payment.^  In  such  case,  however,  the  in- 
sured is  not  entitled  to  his  paid-up  policy  till  the  notes  given 
in  part  payment  of  the  premiums  are  themselves  paid.^ 

[§  342  A.  On  failure  of  the  assured  to  pay  the  premium 
the  policy,  if  so  conditioned,  at  once  becomes  void,  without 
notice  or  other  act.^  If  the  premium  is  paid  by  a  foreign  bill 
drawn  by  the  insured,  and  the  policy  is  to  be  void  if  the  bill 
is  not  paid  at  maturity,  forfeiture  follows  the  non-payment  of 
the  bill  on  proper  presentment  at  maturity  without  protest^ 
although  protest  might  be  necessary  to  fix  the  liability  of  the 
drawer  on  the  bill.*  Those  beneficially  interested  in  the  policy 
cannot  avoid  the  effects  of  the  non-payment  of  a  premium  note. 
It  was  their  duty  to  have  protected  themselves  by  seeing  that 
it  was  paid.^  Failure  to  pay  interest  on  a  loan  indorsed  on 
the  policy  will  not  be  fatal  under  a  provision  for  forfeiture  by 
non-payment  of  premiums.^  When  a  note  is  taken  for  the 
premium,  and  the  policy  delivered,  non-payment  of  the  note 
at  maturity  will  not  invalidate  the  insurance.'] 

§  343.  When  no  Provision  for  Forfeiture ,  Suspension  of 
Policy.  —  If,  however,  the  policy  contains  no  such  proviso, 
though  the  charter  and  by-laws  require  the  payment  of 
annual  premiums,  the  non-payment  of  the  annual  premium 
when  due  does  not  work  a  forfeiture.  Such  a  policy  insures 
for  the  number  of  years  stipulated  absolutely,  leaving  the 
annual  payment  of  the  premium  to  be  enforced,  not  as  a  con- 
dition, but  as  a  part  of  the  consideration  agreed  to  be  paid.^ 
So  if  the  policy  is  merely  suspended  while  a  premium  or 
instalment  remains  unpaid,  a  payment,  even  though  upon  a 

1  See  pout,  §  346. 

2  Moses  V.  Brooklyn  Life  Ins.  Co.,  50  Ga.  196.  But  see  Home  Ins.  Co.  v. 
Pierce,  post,  §  345  a. 

3  [Roeliuer  v.  Knickerbocker  Life  Ins.  Co.,  63  N.  Y.  100  at  163;  Ashbrook 
V  Phoenix  Mut.  Life  Ins.  Co.,  94  Mo.  72,  even  an  entry  on  the  company's  books 
is  not  necessary.] 

*  [Knickerbocker  Life  Ins.  Co.  v.  Pendleton,  112  U.  S.  696] 

5  [Continental  Ins.  Co.  v  Daly,  33  Kans.  601.] 

6  [Gardner  v  Union  Cent  Life  Ins.  Co.,  5  Fed.  Rep.  430,  6th  Cir.  (Ohio), 
1880.] 

1  [La  Compagnie  d'Ass.  des  Cultivateurs  v  Grammon,  24  L.  C.  Jur.  82.] 
8  Woodfin  V.  The  Asheville  Mut.  Ins.  Co.,  6  Jones  (N.  C  ),  558. 

717 


§  344]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XVII. 

« 

judgment  recovered  in  a  suit  therefor,  will  revive  the  policy.^ 
[But  a  part  payment  will  not  remove  the  suspension .2  Where 
a  policy  is  to  be  void  by  non-payment  of  a  premium,  yet 
capable  of  revival  by  subsequent  payment,  the  company  is 
not  liable  for  loss  occurring  after  default  and  before  revivor, 
nor  does  it  earn  premiums  during  the  period  of  suspension.^] 

§  344.  Under  the  following  special  and  peculiar  facts  a 
policy  was,  after  much  fluctuation  of  judicial  opinion,  held 
void.  The  policy  was  headed  as  follows  :  "  Annual  premium, 
£33  ;  whole  term,  payable  by  quarterly  instalments  of  £8  5s. 
each."  The  policy  was  dated  Aug.  2,  1856,  and  recited  that 
"  the  assured  liad  paid  £8  5s.  as  the  premium  till  2d  of  No- 
vember." It  also  stipulated  tliat  if  the  insured  should  die 
within  twelve  calendar  months  from  the  date  thereof,  or 
should  live  beyond  such  period,  and  should  on  or  before  that 
period,  or  before  the  expiration  of  every  succeeding  twelve 
calendar  months,  pay  the  annual  amount  of  i)rcmium,  the 
insurers  should  be  liable;  with  a  proviso,  however,  that  if 
the  insured  should  die  before  the  whole  of  the  quarterly 
payments  shall  become  payable  for  the  year,  the  directors 
might  deduct  from  the  sum  insured  the  whole  of  the  premium 
for  that  year,  reckoning  it  to  commence  from  the  2d  of 
August.  The  insured  died  after  the  third  quarterly  instal- 
ment had  become  payable,  but  before  it  was  paid,  and  it  was 
held  in  the  Queen's  Bench  that  the  non-payment  of  the 
third  instalment  rendered  the  policy  void,  on  the  ground 
that  this  was  a  policy  from  quarter  to  quarter,  leaving  to 
the  assured  liberty  to  drop  it  at  the  end  of  any  quarter,  and 
not  imposing  any  continuing  liability  on  the  insurer,  unless 
the  quarterly  payment  is  made  at  the  end  of  the  quarter ;  and 
further,  that  the  condition  as  to  the  payment  of  all  the  quar- 
terly premiums  was  a  condition  precedent.*  This  judgment, 
however,  was  reversed  in  the  Exchequer  Chamber,^  on  the 
ground  that  the  insurance  was  an  annual  insurance  for  a 

1  American  Ins.  Co.  v.  Klink,  65  Mo.  78. 

2  [Curtin  v.  Phoenix  Ins.  Co.,  78  Cal.  619.] 

8  [Mattliews  v.  Insurance  Co.,  40  Ohio  St.  135,  1.38.] 
4  Sheridan  v.  Phoenix  Life  Ass.  Co.,  E.,  B.  &  E.  156.      5  ibid.  160. 
718 


CH.  XVII.]  THE   PREMIUM.  [§  344  a 

year,  and  from  year  to  year,  time  being  given  to  pay  the 
annual  premium  by  quarterly  instalments ;  and  that  the  ab- 
sence of  any  express  promise  to  pay,  and  of  any  provision  as 
to  the  consequence  of  non-payment  of  the  quarterly  premium, 
prevented  their  payment  from  being  a  condition  precedent. 
But  this  judgment  was  again  reversed  in  the  House  of  Lords, 
on  the  ground  that  the  "  annual  amount "  of  the  premium 
had  not  been  paid,  and  the  proviso  was  not  meant  to  apply 
to  the  case  of  a  default  of  payment,  but  to  the  case  where 
the  payments  had  been  regularly  made  as  they  became  due, 
but  when  all  the  instalments  had  not  become  due.^ 

The  testimony  of  an  experienced  actuary  is  admissible  on 
such  a  question.^ 

§  344  a.  Non-forfeitable  Policy  ,•  Proportionate  Payments.  — 
Where,  however,  a  policy  indorsed  "non-forfeiting  life  policy" 
contains  the  provision  that  if,  after  the  receipt  of  two  or  more 
annual  premiums,  the  policy  should  "  cease "  by  reason  of 
non-payment  of  premiums,  then,  upon  a  surrender  within 
twelve  months  from  the  time  of  "such  ceasing,"  a  new  policy 
will  be  issued  for  "such  sum  as  is  proportionate  with  the 
annual  payments  which  have  been  made,"  and  also  a  pro- 
vision that,  if  the  premiums  shall  not  be  paid  the  insurers 
shall  only  be  liable  for  so  much  of  the  loss  "as  is  propor- 
tionate with  the  annual  payments  made,  as  above  specified," 
the  insured  has  an  absolute  claim  for  such  proportionate 
insurance,  whether  surrendering  the  policy  Avithin  twelve 
months  or  not.  Such,  reading  the  two  provisions  together 
in  the  light  of  the  rule  that  language  working  forfeiture 
will  be  strictly  construed  against  a  forfeiture,  is  their  fair 
import.  They  serve  to  enable  the  company,  in  certain  con- 
tingencies, to  get  rid  of  a  bad  risk,  but  not  to  convert  a 
policy  declared  to  be  non-forfeitable  into  a  forfeitable  one, 
or  to  relieve  them  from  a  liability  which  they  admit.  Can- 
cellation of  the  policy  by  the  insurers  is  of  no  avail.^     And  it 

1  Pliocnix  Life  Ins.  Co.  v.  Sheridan,  8  H.  L.  Cas.  745. 
-  Greenfield  v.  Massachusetts  Life  Ass.  Co.,  47  N.  Y.  480. 
3  Chase  v.  Phoenix,  &c.  Ins.  Co.,  67  Me.  85.     See  also  Fitch's  Case,  ante, 
p.  223,  n  2. 

VOL.  II. —  2  719 


§  344  a]      INSURANCE  :  fire,  life,  accident,  etc.     [ch.  xvn. 

was  held  in  a  later  case  in  the  same  court  that  an  adminis- 
trator of  the  deceased  insured  might  under  a  similar  policy 
not  declared  to  be  non-forfeitable,  recover  such  proportion- 
ate sum  within  twelve  months  after  "the  ceasing"  of  the 
policy.  Nor  is  it  necessary  in  such  cases  to  surrender  the 
old  policy .1  And  where  two  annual  premiums  were  paid, 
part  in  cash  and  part  in  notes  on  interest,  and,  though  the 
policy  was  not  declared  non-forfeitable,  the  notes  provided 
that  it  was  to  be  forfeital)le  if  the  interest  on  such  notes  was 
not  paid  when  due,  it  was  held  that  a  failure  to  pay  such 
interest  did  not  work  a  forfeiture  as  to  the  "proportionate 
part"  of  the  amount  insured,  two  annual  premiums  having 
been  paid  in  cash  and  notes.^ 

1  Dorr  V.  Phoenix,  &c.  Ins.  Co.,  67  Me.  438.  See  also  Coffey  i^.  Universal, 
&c.  Ins.  Co ,  10  Ins.  L.  J.  525.  In  Bussing  i;.  Union,  &c.  Ins.  Co.  (Ohio),  8  Ins. 
L.  J.  218,  it  was  held,  no  time  being  fixed  by  tlie  policy,  that  the  new  paid-up 
policy  must  be  demanded  wliile  tlie  first  policy  was  in  force.  In  Dutcher  v. 
Brooklyn  Life  Ins.  Co.,  it  was  held  that,  under  the  peculiar  conditions  of  the 
policy  and  tiie  practical  construction  of  them  by  the  company,  tiie  insured  was 
entitled  to  a  paid-up  policy,  without  payment  of  his  premium  notes,  which  tiie 
court  held  were  only  to  be  paid  wlien  the  policy  became  payable,  although  tiie 
policy  was  to  be  issued  for  as  many  tentiis  "  as  there  have  been  annual  prem- 
iums in  cash."     s.  c.  affirmed,  5  Reptr.  61.     See  post,  §  363  a. 

2  Ohde  V.  Northwestern,  &c.  Ins.  Co.,  40  Iowa,  357.  "  One  of  the  conditions 
of  the  policy  is  that  if  the  premiums,  or  the  interest  upon  any  note  given  for 
premiums,  should  not  be  paid  on  or  before  the  days  mentioned  in  tlie  policy  for 
the  payment  thereof,  then  in  every  such  case  the  company  sliould  not  be  liable 
for  the  payment  of  the  whole  sura  assured,  and  for  such  part  only  as  is  ex- 
pressly stipulated  in  tiie  policy. 

"  Tliis  express  stipulation  is  as  follows  :  '  And  the  said  company  further  prom- 
ise and  agree  tiiat  if  default  shall  be  made  in  tlie  payment  of  any  premium,  they 
will  pay,  as  above  agreed,  as  many  tenth  fxtrts  of  the  original  sum  insured  as  there 
shall  have  been  complete  annual  premiums  paid  at  the  time  of  such  drfault.'  What 
then  is  to  be  considered  as  the  payment  of  complete  annual  premiums  ?  It  is, 
we  think,  quite  clear  from  the  whole  contract  that  the  entire  premium  for  each 
year  was  to  be  ninety-two  dollars  and  ninety-three  cents,  pajable  in  two  semi- 
annual cash  payments  of  twenty-four  dollars  and  eighty-four  cents  each,  on  the 
12th  days  of -July  and  January,  and  the  execution  of  a  note  to  the  company  for 
the  sum  of  forty-three  dollars  and  twenty-five  cents,  with  interest  at  seven  per 
centum  ;  that  these  cash  payments  were  to  be  made,  and  such  a  note  executed 
each  year  for  the  first  ten  years  of  the  policy  ;  that  it  is  not  contemplated  that 
these  annual  premium  notes  are  to  be  paid  each  year  as  a  condition  to  the  con- 
tinuance of  the  policy.  On  the  contrary,  the  second  condition  in  the  policy 
expressly  provides  for  and  requires  only  the  interest  upon  these  notes  to  be  paid 
together  with  the  cash  premiums. 

720 


CH.  XVII.]  THE   PREMIUM.  [§  344  b 

§  344  b.  Endowment  Policy  non-forfeitable  under  Massachu- 
setts Statute. —  In  Carter  v.  John  Hancock  Life  Insurance 

"  This  condition  exonerates  the  company  from  liabihty  to  pay  the  whole  sum 
in  case  the  premiums  or  the  interest  upon  any  notes  given  for  premiums  shall 
not  be  paid,  &c.  Tliis  language  is  utterly  inconsistent  with  the  idea  that  a  fail- 
ure to  pay  the  principal  of  these  notes  annually  should  work  a  forfeiture  of  the 
policy  to  any  extent.  The  agreement  is  to  pay  money  and  give  notes  bearing 
interest  each  year,  and  to  pay  the  interest  accruing  upon  these  notes.  It  is 
beyond  question  that  the  assured  would  have  no  right  to  insist  tiiat  the  company 
sliould  receive  the  entire  premium  in  cash,  for  that  they  have  not  agreed  to  do  ; 
they  have  stipulated  for  interest-bearing  notes  instead.  More  than  this,  the 
assured  was  under  certain  circumstances  entitled  to  have  liis  share  of  dividends 
applied  on  the  notes,  which  also  proves  that  these  notes  were  to  be  made 
annually,  the  interest  to  be  paid  annually  by  the  assured,  and  the  principal  to 
remain  unpaid  except  as  dividends  were  applied  to  that  end,  and  to  be  liens  on 
tiie  policy  until  they  should  become  due  by  limitation,  or  death  of  the  assured, 
when  they  should  be  deducted  from  the  policy. 

"  The  doctrine  is  well  settled  in  this  State  that  the  giving  of  a  note  does  not 
operate  as  payment  of  a  precedent  debt,  unless  it  be  so  agreed  by  the  parties ; 
but  that  doctrine  does  not  apply  to  this  case.  Here  the  agreement  on  the  part 
of  the  assured  was  to  make  certain  semi-annual  cash  payments,  and  execute 
annual  notes,  and  to  pay  tiie  interest  falling  due  upon  such  notes,  —  the  payment 
of  tiie  principal  of  the  notes  being  otherwise  provided  for,  first  by  dividends  due 
the  assured,  and  second,  by  deduction  from  the  amount  of  the  policy  when  that 
became  payable.  It  follows,  therefore,  that  when  the  assured  had  made  the 
semi-annual  cash  payments  in  July  and  January,  executed  and  delivered  his 
note  for  the  balance  of  tiie  premiums  as  stipulated  in  the  policy,  and  paid  the 
interest  due,  if  any,  on  the  previously  executed  note  or  notes,  then  a  complete 
annual  premium  was  paid.  This  the  assured  performed  for  two  years,  which 
entitled  his  widow,  upon  his  death,  to  two  tenths  part  of  the  whole  sum  named 
in  the  policy,  deducting  therefrom  the  amount  of  the  two  premium  notes  and 
their  accrued  interest."  Little  v.  Northwestern,  &c.  Ins.  Co.,  Superior  Ct. 
(Indianapolis),  o  Ins.  L.  J.  149  ;  s.  c.  affirmed,  56  Ind.  504  ;  Hull  r.  Northwestern 
&c.  Ins.  Co.,  39  Wis.  .397.  In  this  case,  however,  the  policy  was  indorsed,  "  This 
policy  is  non-forfeitable.  Each  complete  yearly  payment  secures  its  proportion 
of  the  policy."  Northwestern,  &c.  Ins.  Co.  v.  Bonner  (Ohio),  9  Ins.  L.  J.  G84 ; 
Kirkpatrick  v.  Knickerbocker  Life  Ins.  Co.  (Tenn.),  6  Ins.  L.  J.  368;  Symonds 
V.  Northwestern,  &c.  Ins.  Co.,  23  Minn.  491  ;  Mound  City,  &c.  Ins.  Co.  i'.  Twi- 
ning, 12  Kans.  475;  Nettleton  v.  St.  Louis,  &c.  Ins.  Co.,  C.  Ct.  (Ind.),  6  Ins.  L.J. 
420;  Watts  v.  Atlantic,  &c.  Ins.  Co.  (Out.  Q.  B.),  16  Can.  L.  J.  215;  Montgom- 
ery V.  Phcpnix,  &c.  Ins.  Co.  (Ky.),  8  Ins.  L.  J.  300.  Where  the  annual  premi- 
ums are  paid  by  notes  of  a  third  person,  and  renewal  receipts  are  given,  a 
paid-up  policy  cannot  be  refused  because  the  notes  are  unpaid.  Michigan,  &c. 
Ins.  Co.  V.  Bowes,  42  Mich.  19.  But  the  note  of  the  insured  and  a  renewal  re- 
ceipt will  not  renew  beyond  the  maturity  of  the  notes.  Wilmot  v.  Charter  Oak 
Ins.  Co.,  40  Conn.  483.  On  the  other  hand  it  was  held  in  Smith  v.  Continental 
Ins.  Co.  (Dist.  Ct.  of  Phila.),  3  Ins.  L.  J.  63,  that  even  where  a  policy  was  de- 
clared non-forfeitable,  it  was  nevertheless  forfeited  if  the  policy  was  not  actually 

721 


§  344  h]         INSUEANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XVII. 

Company,^  the  case,  which  cannot  well  be  abridged,  was  this, 
Soule,  J.,  giving  the  opinion  :  — 

"  The  plaintiff  holds  a  policy  on  his  own  life,  issued  by  the 
defendant,  dated  in  August,  1866,  and  payable  to  a  person 
named  in  it  in  case  of  the  plaintiff's  death  within  ten  years, 
but  to  the  plaintiff  if  he  should  survive  that  period.  It  is 
termed  an  endowment  policy.  It  contains  an  express  condi- 
tion '  that  if  any  premium  due  upon  this  policy  shall  not  be 
paid  at  the  day  when  the  same  is  payable,  this  policy  shall 
thereupon  become  forfeited  and  void ;  this  condition,  how- 
ever, being  subject  to  the  provisions  of  the  186th  chapter  of 
the  acts  of  the  legislature  of  Massachusetts  in  the  year  1861, 
entitled  "  An  act  to  regulate  the  forfeiture  of  policies  of 
life  insurance."  '  The  plaintiff  paid  in  cash  or  by  his  own 
notes  all  the  several  annual  premiums  except  the  last  one  due 
in  August,  1875.  This  he  did  not  pay.  The  company  had 
due  notice  that  the  plaintiff  had  survived  the  period  of  ten 
years  named  in  the  policy.  The  question  to  be  decided  is, 
whether,  notwithstanding  his  failure  to  pay  the  last  premium, 


surrendered  within  the  limited  time.  In  Schumacher  v.  Manliattan  Life  Ins. 
Co.,  C.  Ct.  (Mo.),  3  Ins.  L.  J.  455,  to  tlie  same  effect,  the  policy  was  not  declared 
nonforfeitable.  See  also  Winchell  v.  John  Hancock  Life  Ins.  Co.,  C.  Ct.  (Mass.), 
8  Ins.  L.  J.  652,  wliere  it  was  held  that  equity  could  not  relieve  against  neglect 
to  comply  with  conditions  upon  which  tiie  statute  maile  a  policy  nonforfeitable, 
but  where,  however,  it  was  licld  tliat  under  a  policy  wliich,"  at  any  time"  after 
the  payment  of  one  annual  premium,  pave  tiie  insured  the  option  to  surrender 
and  secure  a  paid-up  policy  for  a  proportionate  amount,  tliat  the  insured  or  Ins 
administrator  might,  at  any  time  before  the  next  annual  premium  becomes  due, 
choose  between  a  policy  as  provided  by  the  statute,  or  a  paid-up  policj'  as  pro- 
vided by  the  contract,  and  if  he  did  not  choose  the  former  he  forfeited  only  tliat, 
but  still  retained  his  right  to  a  paid-up  policy.  In  Knapp  v.  Homoeopathic  Life 
Ins.  Co.,  C.  Ct.  (Mass.),  10  Ins.  L.  J.  84,  the  policy  was  held  forfeited  because 
the  insured  did  not  exercise  a  similar  option,  given  by  the  contract  within  the 
ninety  days  limited  by  the  terms  of  the  contract.  The  non-forfeiture  law  of 
Massachusetts  St.  1861,  c.  186)  is  applicable  to  policies  issued  by  foreign  insur- 
ance companies  at  their  home  offices  to  residents  of  Massachusetts,  if  the  com- 
panies consent  to  do  business  in  the  State,  subject  to  its  laws.  Morris  i'.  Penn., 
&c.  Ins.  Co.,  120  Mass.  503;  Holmes  i^.  Charter  Oak,  &c.  Ins.  Co.  (Mass.),  10 
Ins.  L.  J.  348.  But  by  Stat.  1880,  c.  202,  such  law  is  not  to  apply  to  policies 
issued  after  Dec.  81,  1880.  So  it  was  held  in  Smith  v.  Mut.  Life  Ins.  Co.,  U.  S. 
Dist.  Ct.  (Mass.)  January,  1881.  See  a.lao  post,  §  863  a. 
1  127  Mass.  153. 

722 


CH.  XVII.]  THE   PREMIUM.  [§  344  h 

he  is  now  entitled  to  recover  the  amount  of  the  insurance. 
This  depends  on  the  effect  to  be  given  to  the  reference  in  the 
policy  to  the  statute  of  18G1.  It  is  not  necessary,  in  deciding 
this  case,  to  consider  the  question  whether  the  statute  of 
1861  applies,  by  its  own  force,  to  endowment  insurance  poli- 
cies, so  called,  because  the  forfeiture  clause  in  the  plaintiff's 
policy  is  in  terms  made  subject  to  the  conditions  of  that  stat- 
ute. The  only  question,  therefore,  is  as  to  the  construction 
to  be  given  to  the  forfeiture  clause  thus  qualified. 

"  The  defendant  contends  that  the  effect  of  the  statute  when 
incorporated  into  the  policy  is  merely  to  keep  it  alive  for  a 
certain  period  of  temporary  insurance  after  the  failure  of  the 
insured  to  pay  the  stipulated  premium  when  due,  and  to  make 
the  sum  insured  payable  only  in  case  of  the  death  of  the 
insured  before  the  expiration  of  that  period.  The  plaintiff, 
on  the  other  hand,  contends  that  the  effect  is  to  make  the 
sum  insured  payable  if  either  the  death  of  the  insured  or  the 
expiration  of  the  ten  years  occurs  during  the  period  of  tcm- 
porarv  insurance.  The  defendant  relies  on  the  language  of 
the  second  section  of  the  statute,  which  provides  that  if  the 
death  of  the  insured  occurs  within  the  term  of  temporary 
insurance,  the  company  shall  be  bound  to  pay  the  amount  of 
the  policy  ;  and  argues  that  as  the  statute  specifies  the  death 
as  the  contingency  on  which  the  liability  to  pay  depends, 
there  can  be  no  liability  after  the  failure  to  pay  the  premium, 
except  in  case  of  death. 

"It  is  to  be  observed,  however,  that  the  purpose  of  the 
statute  is  merely  to  establish  a  rule  which  shall  enable  the 
insured  to  reap  the  full  benefit  of  premiums  paid  before 
default  on  his  part,  and  at  the  same  time  to  secure  to  the 
insurance  company,  in  case  it  is  obliged  to  pay,  the  full 
amount  of  the  premiums  which  the  terms  of  the  policy  call 
for.  It  is  not  the  purpose  of  the  statute  to  make  a  new  con- 
tract between  the  parties,  nor  to  make  any  change  in  the  time 
when  the  amount  of  the  policy  becomes  payable.  No  diffi- 
culty of  construction  arises  when  the  statute  is  to  be  applied 
to  a  policy  for  life  without  the  endowment  feature.  Such 
policy  is  payable  on  the  death  of  the  assured,  and  the  lan- 

723 


§  344  J]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XVII. 

guage  of  the  statute  is  equivalent  to  saying, '  If  the  event, 
on  the  happening  of  which  the  policy  becomes  payable,  oc- 
curs during  the  term  of  temporary  insurance,  the  company 
shall  be  bound  to  pay.'  As  applied  to  a  pure  life  policy,  the 
words  of  the  statute  cannot  have  any  other  meaning  than 
this ;  and  when  the  statute  provisions  are  adopted  in  an 
endowment  policy,  for  the  purpose  of  qualifying  the  forfeiture 
clause,  the  clause  thus  qualified  is  to  be  so  construed  as  to 
give  the  insured  its  full  benefit,  without  altering  any  other 
provision  of  the  policy,  if  this  can  be  done  without  violating 
any  rule  of  law.  In  the  endowment  policy,  the  expiration  of 
ten  years  from  its  date  is  the  occurrence  of  an  event  on  the 
happening  of  which  the  policy  becomes  payable.  As  regards 
the  right  to  receive,  and  the  obligation  to  pay  the  amount  of 
the  policy,  it  is  equivalent  to  the  death  of  the  insured  iu  a 
pure  life  policy.  In  construing  tlie  forfeiture  clause,  as  quali- 
fied Ijy  the  imi)ortation  of  the  statute  into  it,  we  must,  there- 
fore, regard  the  expiration  of  ten  years  as  equivalent  to  the 
death  of  the  insured,  so  far  as  regards  the  (luestion  when  the 
policy  becomes  payable.  There  is  no  hardship  to  the  defend- 
ant in  this  construction,  because  it  is  permitted  to  deduct 
from  the  amount  of  the  policy  all  unpaid  premium,  with  inter- 
est from  the  day  it  became  due  to  the  day  when  the  amount 
of  tlie  policy  becomes  due,  so  that  it  is  put  in  precisely  the 
same  position  in  which  it  would  have  been  if  the  premium 
had  been  duly  ))aid.  The  construction  contended  for  by  tiie 
defendant  might  impose  serious  hardship  on  the  insured. 
The  premium  provided  for  by  policies  is  fixed  with  reference 
to  the  endowment  feature,  and  is,  of  course,  much  larger  than 
is  paid  for  a  pure  life  policy  when  the  age  of  the  insured  is 
such  that  his  expectation  of  life  is  largely  in  excess  of  the 
period  at  the  end  of  which  the  amount  of  tlic  policy  is  made 
payable.  It  would  be  altogether  to  the  advantage  of  the 
insurance  company  to  hold  that  the  policy  should  be  payable 
only  in  case  of  death  within  the  term  of  temporary  insurance, 
though  sucli  term  might  run  for  years  after  the  end  of  the 
period  named  in  the  policy,  and  that  the  company  in  case  the 
life  dropped  might  deduct  from  the  amount  of  the  policy 
724 


CH.  XVII.]  THE    PREMIUM.  [§  344  C 

the  large  unpaid  endowment  premium  with  the  accumulated 
interest  during  those  years.  The  more  valuable  the  policy  at 
tlie  time  of  the  default,  the  greater  might  be  the  advantage 
to  the  company  in  such  case. 

"  The  result  is  tliat,  as  the  plaintiff  survived  the  period  of 
ten  years,  and  duly  notified  the  defendant  of  the  fact,  and  the 
value  of  the  policy  when  he  failed  to  pay  the  premium  was 
sufficient  to  furnish  a  premium  for  a  temporary  insurance  for 
a  term  extending  beyond  the  expiration  of  said  ten  years,  he 
is  entitled  to  recover,  and  the  defendant  is  bound  to  pay  the 
amount  of  the  policy  less  the  amount  due  from  him  to  the 
defendant." 

§  344  c.  Massachusetts  Statute  ;  Indebtedness ;  Amount 
recoverable.  — Under  the  Massachusetts  statute  a  question  of 
considerable  importance  arose  as  to  what  constituted  indebt- 
edness to  the  company  whicli  might  be  deducted  in  determin- 
ing the  amount  of  premium  for  temporary  insurance. 

Miller,  J.  :  "  The  policy  upon  which  this  action  is  founded 
contained  a  provision, '  that  in  case  any  premium  due  upon  tliis 
policy,  or  any  note  given  for  part  of  the  premium,  shall  not  be 
paid  at  the  day  when  payable,  the  policy  shall  thereupon  cease 
and  determine.  The  net  value  of  the  policy  on  that  day  shall 
be  ascertained  according  to  the  "  Combined  Experience  "  or 
"  Actuaries  "  rate  of  mortality,  with  interest  at  the  rate  of  four 
per  cent  per  annum,  from  which  value  shall  be  deducted  what- 
ever is  due  to  the  company,  including  any  unpaid  premium 
notes,  with  interest  at  six  per  cent  per  annum  thereon  ;  four- 
fifths  of  the  remaining  value  shall  be  considered  a  premium 
for  temporary  insurance,  and  the  term  for  which  it  will  insure 
shall  bo  determined  according  to  the  age  of  the  insured  when 
said  unpaid  premium  became  payable  upon  the  aforesaid 
assumption  of  mortality  and  rate  of  interest,  and  during  said 
term,  and  no  longer,  this  policy  shall  continue  in  force,  pro- 
vided no  other  cause  of  forfeiture  exists,'  &c.  The  policy 
was  issued  in  Massachusetts,  and  the  construction  to  be  given 
to  the  clause  above  cited  is  governed  by  a  special  statute  of 
that  state.  This  law  provides  for  the  continuance  and  valid- 
ity of  the  policy  for  a  limited  period  after  the  failure  to  pay 

725 


§   344  6']  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XVII. 

the  premium,  and  for  ascertaining  what  that  period  is  to  be, 
and  then  declares  that  '  after  deducting  from  such  net  value 
any  indebtedness  to  the  company,  or  notes  hold  bv  the  com- 
pany against  the  insured,  which  notes  if  given  for  premium 
shall  then  be  cancelled,  four-fifths  of  what  remains  shall  be 
considered  as  a  net  single  premium  of  temporary  insui-ance, 
and  the  term  for  which  it  will  insure  shall  be  determined  ac- 
cording to  the  age  of  the  party  at  the  time  of  the  lapse  of  pre- 
mium, and  the  assumptions  of  mortality  and  interest  aforesaid.' 

"  The  question  is,  what  amount  is  to  be  deducted ;  and  this 
must  be  determined  by  the  construction  to  be  given  to  the 
provisions  of  the  policy  of  the  non-forfeiture  act,  to  which 
reference  has  been  had.  One  half  year's  premium  had  been 
paid  upon  the  policy  when  it  was  issued,  and  when  Selye,  the 
insured,  died,  tliat  period  of  time  had  elapsed,  and  the  re- 
maining half  year  was  to  be  paid. 

"The  defendant  claims  that  under  the  law  cited  the  unpaid 
half  of  the  premium  for  tlie  first  year  is  to  be  considered  as 
an  indebtedness,  and  is  to  be  deducted  from  the  net  value  of 
the  policy,  and  that  upon  this  prlncijjle  the  policy  lapsed  after 
the  expiration  of  the  first  six  months. 

"  Evidence  was  taken  upon  the  trial  of  witnesses  versed  in 
calculations  of  this  kind,  and  tiie  defendant's  actuary,  and 
another  person,  who  Avas  an  expert  in  such  matters,  upon  the 
assumption  that  the  unpaid  premium  for  the  last  half-year 
was  a  debt,  and  as  such  should  be  deducted  from  the  net 
value  of  the  policy  at  the  close  of  the  first  six  months,  testify 
that  the  policy  would  remain  in  force  after  this  time  expired, 
which  was  on  the  thirtieth  day  of  June,  and  until  the  seven- 
teenth day  of  September,  and  as  Selye  died  on  the  first  day  of 
October,  it  had  lapsed  and  was  of  no  avail. 

"  On  behalf  of  the  plaintiff,  it  is  proved  by  an  expert  of 
large  experience  that,  upon  tlie  theory  that  the  unpaid  pre- 
mium is  not  a  debt,  the  policy  would  be  carried  far  beyond 
the  time  of  Mr.  Selye's  death.  The  question  then  recurs, 
was  the  unpaid  premium  an  indebtedness  which  was  to  be 
deducted  from  the  value  of  the  policy  under  the  non-forfeit- 
ure act  ?  The  statute  in  question  provides  that  there  shall  be 
726 


CH.  XVII.]  THE    PREMIUM.  [§   344 


deducted  '  any  indebtedness  or  notes '  held  by  the  company. 
No  notes  were  heki  by  the  defendant  against  the  insured,  and 
there  was  no  direct  promise  by  him  to  pay  any  amount,  or  any 
obligation  to  do  so.  There  was  therefore  no  indebtedness 
within  the  meaning  of  the  act.  A  debt  means  an  obligation 
to  pay  a  sum  of  money  which  is  due  or  to  become  due  by  con- 
tract, as,  for  instance,  a  note,  bond,  or  other  legal  obligation, 
which  the  party  to  whom  it  is  due  may  enforce  by  an  action 
brought  for  that  purpose.  No  action  could  be  maintained  to 
recover  the  amount  of  this  premium,  as  it  rested  entirely  with 
the  insured  to  pay  or  not,  as  he  might  determine. 

"  The  policy  expresses  a  consideration  of  the  whole  year's 
premium,  '  per  margin,'  and  an  entry  upon  the  margin  shows 
that  one  half  year's  premium  was  paid,  and  the  other  half 
payable  semi-annually.  This  does  not  constitute  a  promise  to 
pay,  either  express  or  implied ;  and  in  case  of  non-payment  the 
policy  became  void,  except  so  far  as  it  was  saved  by  the  stat- 
ute. It  merely  indicates  that  if  the  other  half  is  paid  at  the 
close  of  the  six  months,  the  risk  will  be  extended  for  another 
six  months.  It  is  not  a  loan.  But  if  it  was,  as  the  plaintiff 
never  received  the  money,  it  should  be  applied  in  payment  of 
the  premium ;  and  this,  with  the  money  paid,  would  keep  the 
policy  in  force  for  a  year,  and  of  course  at  the  time  of  the 
death  of  Sclye. 

"  In  Worthington  v.  Charter  Oak  Insurance  Company ,i  the 
distinction  between  the  premium  on  a  policy  of  insurance  and 
a  debt  is  pointed  out,  and  it  is  said  that  '  the  theory  that  the 
premium  as  it  becomes  due  is  a  debt,  is  a  fallacious  one,  and 
leads  to  an  erroneous  conclusion.'  In  the  one  case  the  pay- 
ment is  entirely  optional,  while  in  the  other  it  may  be  enforced 
at  law.  The  position  that  it  was  a  debt  because  it  was  agreed 
to  be  paid,  is  not,  we  think,  well  founded.  The  policy  shows 
one  half  year's  premium  was  paid  ;  and  if  the  other  half  was 
to  be  paid  at  the  expiration  of  six  months,  the  insurance  would 
be  continued  for  a  year.  There  clearly  was  no  agreement 
which  obligated  the  insured  unqualifiedly  and  absolutely  to 
pay  any  sum,  at  any  time  which  was  named.     If  the  argument 

1  41  Conn.  416. 

727 


§  344  D]        INSUEANCE  :    fire,    life,    accident,    etc.       [CH.  XVII. 

urged  by  the  defendant's  counsel  is  sound,  then  the  same  rule 
would  apply  to  yearly  payments  which  are  to  be  made  on  or 
before  December  30  in  each  and  every  year  •  and  these  are 
debts  which  can  be  enforced  at  law  without  regard  to  the 
wislies  of  the  insured.  According  to  the  terms  of  the  policy 
there  is  no  promise  to  pay,  and  it  rests  with  the  insured  to 
sav  how  long  he  will  continue  it.  lie  can  stop  it  at  the  end 
of  the  year  and  determine  when  the  policy  shall  cease.  When 
he  refuses  to  pay,  the  policy  lapses,  and  the  insured  has  no 
further  claim,  except  what  is  conferred  by  the  uou-forfeiture 
clause. 

"  We  have  been  referred  to  some  decisions  in  the  State  of 
Massachusetts,  which,  it  is  claimed,  sustain  the  theory  of  the 
defendant's  counsel  ;  but  we  think  they  are  distinguishable 
from  the  one  at  bar.  In  one  of  them,  notes  were  given  for 
the  premium,  and  in  the  other  a  memorandum  witli  a  promise 
to  pay  one  half  of  the  premium.  It  thus  appears  that  there 
was  an  obligation  in  each  case  acknowledging  an  indebtedness 
and  binding  the  insured  to  pay,  which  was  a  debt  that  could 
be  enforced  ;  while  in  the  case  at  bar  no  such  promise  exists, 
and  none  is  shown  by  the  policy.  The  difference  referred 
to  is  quite  sufficient  to  take  this  case  out  of  the  rule  laid 
down  in  the  decision  cited.  The  result  is  that  the  unpaid 
premium  was  not  an  indebtedness  within  the  statute,  and 
that  the  policy  remained  in  force  at  the  time  of  Selye's 
death."  i 

[§  344  D.  Paid-up  Policies.  —  Sometimes  the  policy  contains 
a  condition  that  default  of  premiums  shall  not  work  a  for- 
feiture, but  shall  convert  the  policy  into  a  paid-up  policy  for 
the  amount  of  the  premiums  paid.  In  such  case  the  conver- 
sion may  take  place  at  any  time,  by  notice  to  the  insurer.^ 
Sometimes  a  policy  is  so  worded  as  to  be  void  upon  default  of 
a  premium  with  a  right  to  call  for  a  paid-up  policy  of  some 
kind,  but  to  be  totally  void  by  default  of  the  interest  due  on 
notes  given  for  prior  premiums.^     A  paid-up  policy  is  a  coii- 

1  Goodwin  v.  Mass.  Mat.,  &c.  Ins.  Co.,  73  N.  Y.  480. 

2  [Lovell  V.  St  Louis  Mut.  Life  Ins.  Co.,  Ill  U.  S.  264.] 

3  [Insurance  Co.  v.  Robinson,  40  Ohio  St.  270.] 

728 


CH.  XVII.]  THE   PREMIUM.  [§  344  E 

tinuation  of  the  original  policy,  and  is  not  affected  by  the  re- 
peal of  laws  in  force  at  the  time  the  original  was  issued,  but 
which  were  repealed  before  the  paid-up  policy  was  issued. ^ 
An  endowment  policy  is  a  life  insurance  policy  so  far  as  not 
to  be  liable  on  execution.^  A  life  company  issuing  policies  on 
the  tontine  or  "  ten  years  dividend  "  system  is  not  a  trustee  of 
any  particular  fund  for  a  holder  of  such  policy,  but  is  simply 
a  debtor.  The  apportionment,  however,  is  to  be  equitably 
made,  and  a  policy-holder  may  come  into  court  to  secure  such 
division. 3  If  in  j)ursuance  of  its  provisions  a  policy  is  in- 
dorsed as  a  paid-up  policy  valid  for  two-tenths  of  the  sum 
insured,  it  seems  that  it  becomes  executed,  and  a  violation  of 
a  condition  as  by  going  into  the  torrid  zone  does  not  invali- 
date it.^] 

[§  344  E.  Forfeiture  of  Paid-up  Policy.  — A  policy,  to  be  void 
on  non-payment  of  premium,  and  allowing  the  insured  after 
the  payment  of  two  premiums  to  call  for  a  paid-up  policy, 
only  permits  such  call  during  the  life  of  the  policy.  If  it  is 
forfeited  by  non-payment  or  otherwise  the  right  ceases,  and 
the  representations  of  the  agent  or  the  opinion  of  an  cxj)ert  as 
to  the  interpretation  usually  put  by  insurance  companies  on 
such  clauses,  is  inadmissible.^  The  insured  cannot  demand  a 
paid-up  policy  when  he  has  allowed  the  original  to  lapse  for 
non-payment  of  a  premium,  if  such  is  the  agreement  ^  A  policy 
on  which  a  paid-up  policy  is  to  be  issued  on  demand  after  two 
premiums  have  been  paid,  but  which  is  generally  conditioned 
to  be  void  by  non-payment  of  premiums  or  interest,  will  be 
forfeited  even  after  indorsement  as  a  paid-up  policy,  "  subject 
to  the  conditions  of  the  policy,"  if  interest  is  not  paid  on  the 
notes  given   for  portions  of   the  first   two   premiums."     An 

1  [McDonnell  v.  Ala.  Gold  Life  Ins.  Co.,  85  Ala.  401,  410.] 

2  [Briggs  v.  McCullougli,  36  Cal.  542] 

8  [Uhlman  v.  N.  Y.  Life  Ins.  Co.,  100  X.  Y.  421 ;  Bogardus  v.  N.  Y.  Life  Ins. 
Co.,  101  N.  Y.  328 ;  Marvin  v.  Brooks,  94  N.  Y.  71  ;  Pierce  v.  E.  L.  A.  Soc,  12 
N.  E.  Rep.  858,  distinguished  and  the  first  limited.] 

*  [Cotton  States  Life  Ins.  Co.  v.  Edwards.  74  Ga.  220.] 

5  [Smith  V.  Nat.  Life  Ins.  Co.,  103  Pa.  St.  177,  distinpuishins  N.  Y.,  Ohio, 
and  Maine  cases.] 

6  [Sheerer  v.  Manhattan  Life  Ins.  Co.,  20  Fed.  Rep.  (Ky.)  1884.] 

7  [McQuitty  r.  Continental  Life  Ins.  Co.,  15  R.  I.  573.] 

729 


§  344  F]        INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XVII. 

indorsement  on  a  policy  after  default  of  premium  by  the  com- 
pany that  it  was  to  pay  "8200  subject  to  the  terms  and 
condition  expressed  in  the  policy,"  does  not  prevent  total  for- 
feiture by  subsequent  failure  to  keep  up  the  interest  on  prior 
premium  notes,  as  required  by  the  policy.^  But  in  Kentucky 
after  paying  premiums  enough  to  entitle  the  holder  to  a  paid- 
up  policy,  a  provision  for  forfeiture  in  case  of  non-]»aymcnt 
of  interest  on  premium  notes,  in  cash  at  a  precise  time,  the 
company  being  secure  of  its  ultimate  payment,  is  oppressive, 
against  public  policy,  and  void.^  And  in  Missouri  after  the 
number  of  premiums  necessary  to  entitle  the  insured  to  a  paid- 
up  policy  have  been  received  by  the  company,  failure  to  pay  a 
note  given  for  a  subsequent  premium  will  not  forfeit  the  policy, 
although  it  provides  in  general  terms  that  failure  to  pay  any 
premium  note  shall  have  that  effect.^  But  a  ])aiJ-up  jjolicy  is 
not  forfeited  by  failui'e  to  pay  interest  on  premium  notes  which 
it  appears  were  regarded  by  the  company  as  a  loan  to  the 
assured.^] 

[§  344  F.  Time;  Within  thirty  days,  etc.  —  Where  a  paid-up 
policy  is  to  be  demanded  within  thirty  days  after  forfeiture 
the  time  is  not  of  the  essence  of  the  contract.  If  demand  is 
made  witliin  a  reasonable  time  under  all  the  circumstances  it  is 
suificient.^  And  a  surrender  of  the  old  i)olicy  five  years  after 
forfeiture  has  been  held  good.*^  But  in  New  York  where  a  pol- 
icy provides  that  within  thirty  days  after  failure  to  ])ay  a  ])re- 
mium  due,  the  holder  may  surrender  the  policy  and  have  a 
new  one  issued  "  for  the  proportion  of  the  amount  of  insurance 
paid  for,"  a  failure  to  take  advantage  of  this  clause  within  the 
thirty  days  is  fatal,  although  the  company's  agent  told  the 
applicant  at  the  time  of  issuing  the  policy  that  it  was  non- 
forfeitable and  the  insured  had  not  read  his  policy.^     In  a  life 

1  [Holman  v.  Continental  Life  Ins.  Co.,  54  Conn.  05] 

2  [Nortliwestern  Mutual  Life  Insurance  Co.  v.  Fort's  Adm.,  82  Ky.  269, 
278.] 

3  [Tutt  V.  Covenant  Mut.  Life  Ins.  Co.,  19  Mo.  App.  677.] 

4  [Bruce  v.  Life  Ins.  Co.,  58  Vt.  253.] 

6  [.Johnson  v.  Southern  Mut.  Life  Ins.  Co.,  79  Ky.  403.] 

e  [Southern  Mut.  Life  Ins.  Co.  v.  Montague,  84  Ky.  653.] 

7  [Attnrnoy-General  v.  Continental  Life  Ins.  Co.,  93  N.  Y.  70.] 

730 


CH.  XVII.]  THE    PREMIUTVr.  [§  344  H 

policy  which  declares  that  it  will  "  be  good  at  any  time  after 
three  payments,  for  its  equitable  value,"  nothing  is  due  upon 
this  clause  until  death  occurs. ^] 

[§  344  G.  Non-forfeitable  by  Estoppel.  —  A  company  may  be 
estopped  by  the  conduct  of  its  agent  from  denying  that  the 
insured  possesses  a  "  participation "  policy  or  asserting  that 
the  one  actually  held  by  the  insured  was  void  for  non-payment 
of  premium.^  On  the  other  hand,  in  Tennessee  it  is  held  that 
the  representation  of  the  agent  that  the  policy  is  non-forfeit- 
able  and  that  the  insured  could  at  any  time  have  a  paid-up 
policy  for  the  full  amount  paid  by  him  in  premiums,  is  not 
admissible.  Parol  cannot  be  allowed  to  contradict  a  written 
contract.^] 

[§  344  H.  Amount  of  Paid-up  Policy  or  of  Damages  for  its 
Refusal.  —  If  a  policy  gives  the  insured  the  option  of  receiving 
a  "  paid-up  policy  for  the  full  amount  of  the  premium  paid," 
the  insured  is  not  limited  to  the  amount  of  the  original  insur- 
ance, as  where  ten  premiums  of  $389.16  each  had  been  paid 
on  a  $3,000  life  policy  the  company  was  required  to  give  a 
paid-up  policy  for  $3891.60.*  Unless  so  agreed,  however,  the 
plaintiff  suing  for  a  paid-up  policy  promised  to  be  given 
on  an  equitable  basis,  is  not  entitled  to  the  amount  of  the 
premiums  he  has  paid.  A  portion  of  that  sum  has  been 
earned  by  the  company  in  carrying  the  risk.  The  plaintiff 
should  recover  only  the  present  value  of  the  policy.^  On  suit 
to  recover  damages  for  breach  of  a  contract  to  give  a  paid-up 
policy,  tlie  value  of  the  policy  can  be  calculated  with  great 
precision.  A  part  of  every  premium  is  absorbed  in  the  ex- 
penses of  the  business,  a  part  is  earned  by  the  company  in 
carrying  the  risk,  and  a  part  accumulates  on  interest  to  re- 
spond to  the  particular  policy  and  constitutes  its  particular 
value.^     The  contract  of  life  insurance  is  based  on  statistics, 


1  [Andrews  i'.  ^tna  Life  Ins.  To  ,  92  N.  Y.  59G.] 

2  [Piedmont,  &c.  Ins.  Co.  v.  Young,  58  Ala.  476.] 

3  [Nashville  Ins.  Co.  v.  Matthews,  8  Lea  (Tenn.),  499  ] 

*  [Christy  v   Ilomoenpithic  Mut.  Ins.  Co.,  93  N.  Y.  345.] 

5  [Farley  ;•.  Union  Mut.  Life  Ins.  Co.,  41  Hun,  .^>03.] 

«  [Nashville  Life  Ins.  Co.  v.  Mathews,  8  Lea  (Tenn.),  499,  504-505.] 

731 


§  345]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XYII. 

and  subject  to  rules  that  admit  of  mathematical  accuracy  in 
the  estimation  of  the  damage  resulting  from  breach  of  the 
contract  by  the  insurer.^] 

[§  344  I.  Alteration  of  Original  Contract  from  Non-forfeitable 
to  Forfeitable.  —  If  an  insurer  has  a  right  to  impose  on  the 
assured  an  obligation  to  pay  interest  annually  on  premium 
notes  outstanding  at  the  issue  of  a  new  policy  in  place  of  a 
"  non  forfeitable  "  policy  upon  which  the  premiums  had  not 
been  kept  up,  it  may  enforce  such  obligation  by  inserting  a 
provision  of  forfeiture.^  Where  within  thirty  days  after  de- 
fault in  paying  a  premium  the  insured  could  demand  a  paid- 
up  policy  for  the  amount  of  premiums  paid,  if  on  sucli  default 
the  company  accepts  a  note  for  the  premium,  in  which  note 
there  is  a  clause  of  absolute  forfeiture  of  all  benefits,  under  the 
policy  if  the  note  is  not  paid  at  maturity,  this  is  an  alteration 
of  the  original  contract,  and  on  failure  to  pay  the  note  at 
maturity  there  is  a  total  forfeiture,  and  no  right  to  demand  a 
paid-up  policy  within  thirty  days.^] 

§  345.  Premium  ;  What  constitutes  Payment.  —  When  no  spe- 
cial mode  of  payment  is  stipulated  for,  any  mode  of  payment 
which  is  accepted  without  objection,  on  the  part  of  the  in- 
surers or  their  agent,  will  suflice.  Thus,  the  actual  delivery 
to  the  agent  of  a  check  payable  to  the  order  of  the  agent,  or 
mailing  or  sending  by  express  such  a  check  to  his  address, 
at  his  request,  made  at  the  time  of  the  completion  of  the  con- 
tract, is  an  actual  payment  of  the  premium,  if  the  check  be 
at  the  time,  and  afterwards,  till  received,  continue  to  be  good. 
Since  no  mode  of  payment  is  provided,  the  agent  may  exer- 
cise his  discretion  and  accept  any  usual  mode  which  suits 
the  convenience  of  the  parties.^  Even  a  payment  of  the  pre- 
mium in  depreciated  funds  to  the  local  agent  of  a  foreign 
insurance  company,  if  received  by  him  according  to  the  usual 

1  [Nashville  Life  Ins.  Co.  tv  Mathews,  8  Lea  (Tenn.),  499;  Knickerbocker 
Life  Insurance  Co.  v.  Heidel,  Id.  488  ,  Mutual  Life  Insurance  Co.  i-.  Bratt,  55 
Md.  200.] 

2  [People  V.  Knickerbocker  Life  Ins.  Co.,  103  N.  Y.  480.] 

3  [Holly  V.  Met.  Life  Ins.  Co.,  105  N.  Y.  437,  444.] 

*  Tayloe  v.  Merchants'  Fire  Ins.  Co.,  9  How.  (U.  S.)  390;  ante,  §  134  ;  Cur- 
rier V.  Continental,  &c.  Ins.  Co.,  53  N.  H.  538. 

732 


CH.  XVII.]  THE    PREMIUM.  [§  345  a 

course  of  his  business  known  to  his  principals,  is  a  valid  pay- 
ment.^  And,  of  course,  a  tender  of  payment  in  a  like  cur- 
rency would  be  equivalent  to  the  actual  payment  in  its  effect 
upon  the  obligations  of  the  policy .^  So  the  payment  may  be 
by  note ;  and  if  the  note  is  given  and  accepted  as  payment, 
it  will  be  sufficient,^  even  though  the  policy  forbids  it,  if  the 
form  of  the  note  provided  by  the  insurers  leads  to  the  infer- 
ence that  the  agent  is  authorized  to  take  it.^ 

§  345  a.  What  amounts  to  Payment;  Dividends;  Mutual 
Accounts. —  An  advance  to  a  general  agent  by  a  sub-agent, 
on  account  of  premiums  thereafter  to  be  collected,  will  inure 
as  pavmeut  of  the  premium  on  a  policy,  negotiations  for  which 
are  pending  at  the  time  of  the  advance,  on  the  life  of  the 
sub-agent,  for  the  benefit  of  his  wife.''  Funds  in  the  hands 
of  the  insurer  belonging  to  the  insured  will  inure  as  payment 
of  a  receipt  for  a  renewal  premium  delivered  to  the  insured, 
no  demand  of  payment  being  made  at  the  time,  or  called  for 
before  loss.°  And  if  a  dispute  arises  as  to  what  premiums 
are  paid,  and  the  insured  directs  the  a])propriation  of  money 
forwarded  on  account  of  premiums,  the  insui'crs  have  no  right 
to  make  any  different  appropriation."     So  dividends  ^  stand- 

1  Robinson  r.  Int.  Ass.  Soc.  of  London,  42  N.  Y.  54  ;  Martine  v.  Int.  Ass. 
Soc.  of  London,  62  Barb.  (N.  Y.)  181 ;  Sands  i-.  New  York  Life  Ins.  Co.,  50 
N.  Y.  G2G ;  Polglass  v.  Oliver,  2  Cr.  &  Jer.  14. 

2  New  York  Life  Ins.  Co.  v.  Clopton,  7  Bush  (Ky.),  179.  See  also  New  York 
Central  Ins.  Co.  v.  Nat.  Prot.  Ins.  Co  ,  20  Barb   (N.  Y.)  4G9. 

3  Mut.  Ben.  Life  Ins.  Co.  v.  French,  2  Cincinnati  Superior  Ct.  Reptr.  321 ; 
affirmed,  30  Ohio  St.  240;  Pitt  v.  Berkshire  Life  Ins.  Co.,  100  Mass.  500; 
Mowry  v.  Home  Ins.  Co.,  9  R.  I.  346 ;  Carey  v.  Nagle,  2  Abb.  (U.  S.)  156.  In 
point  of  fact,  it  is  customary  for  mutual  insurance  companies  to  accept  part  pay- 
ment of  the  first  as  well  as  of  subsequently  accruing  premiums  in  the  form  of  a 
note.  Of  course  such  a  note  is,  by  tlie  understanding  of  both  parties,  a  pay- 
ment j)ro  tanto. 

*  Inman  v.  Globe  Ins.  Co ,  C.  Ct.  (Ky.),  4  Ins.  L.  J.  719. 

5  Thompson  v.  American,  &c  Ins.  Co.,  46  N.  Y.  674.  So  if  the  agent  credits, 
and  is  charged.  Train  v.  Holland,  &c.  Ins.  Co.,  62  N.  Y.  598  ;  Union  Ins.  Co.  v. 
Grant,  68  Me.  229  ;  Home  Ins.  Co.  v.  Curtis,  32  Mich.  402. 

6  Staunton  u.  West.  Ass.  Co.,  21  Upper  Canada  (Ch.),  578  ;  s.  c.  affirmed, 
23  id.  81. 

^  Butler  V.  American  Pop.  Ins.  Co.,  10  J.  &  Sp.  (N.  Y.)  343. 
8  [But  profits  in  the  hands  of  a  mutual  company,  which  have  not  yet  been 
declared  in  dividends,  will  not  be  applied  to  the  payment  of  premiums  to  pre- 

733 


§  345  a]  INSUEANCE  :    fire,   life,    accident,   etc.       fCH.  XYII. 

ing  to  the  credit  of  a  member  of  a  mutual  insurance  company 
will  inure  j)^o  tanto  as  payment  of  premiums  falling  due,i 
especially  if  such  had  been  the  custom  of  the  company ,2  and 
the  course  of  business  between  the  parties  did  not  show  that 
such  was  not  their  contract.^  And  where  the  insured  shares 
in  the  profits,  and  at  the  time  when  the  annual  ])remium  be- 
comes due  cannot  know  what  amount  he  will  be  required  to  pay 
the  company,  the  insurers  cannot  insist  on  a  forfeiture  until 
they  give  the  insured  notice  of  the  amount  he  is  required  to 
payJ  Indeed,  it  has  been  broadly  held  that  such  notes  are 
loans,  and  the  failure  to  pay  interest  on  them  does  not  work  a 
forfeiture,  but  the  insurers  must  apply  the  dividends  or  sue 
on  the  note.-5  In  some  cases  the  policy  specially  provides  how 
the  dividend  shall  be  appropriated,  not  leaving  the  matter 
open  to  doubt.^ 

In  Ancient  Order  of  United  Workmen  v.  Moore,'  it  was 

vent  a  forfeiture.  Mutual  Life  Ins.  Co.  v.  Girard  Life  Ins.  Co.,  100  Pa.  St.  172. 
Unless  expressly  made  applicable  to  such  purpose,  the  company  cannot  apply 
dividends  to  the  payment  of  the  interest  on  premium  notes  without  the  assent 
of  the  assured,  at  least  where  not  necessary  to  save  a  forfeiture.  Mutual  Fire 
Ins.  Co.,  58  Md.  463  ] 

1  Girard,  &c.  Ins.  Co.  v.  Mutual,  &c.  Ins.  Co.  (Pa.),  10  Ins.  L.  J.  257. 

2  Manhattan  Life  Ins.  Co.  v.  Hoelzle  (U.  S.),  8  Ins.  L.  J.  226. 

3  Anderson  v.  St.  Louis,  &c.  Ins.  Co.,  C.  Ct.  (Tenn),  5  Big.  Life  &  Ace.  Ins. 
Cas.  527;  Glide  v.  Northwestern,  &c.  Ins.  Co.,  iO  Iowa,  357;  Russum  v.  St. 
Louis,  &c.  Ins.  Co.,  and  note  to  same,  1  Ct.  of  App.  (Mo.),  228^  5  Big.  Life  & 
Ace.  Ins.  Cas.  24-3;  Patch  v.  Phoeni.x  Ins.  Co.,  44  Vt.  481. 

*  Home  Life  Ins.  Co.  t\  Pierce,  75  111.  426. 

5  St.  Louis,  &c.  Ins.  Co.  v.  Grigsby,  10  Bush  (Ky.),  310;  Dietz  v.  Knicker- 
bocker Life  Ins.  Co.,  C.  Ct.  (Baltimore),  8  Ins.  L.  J.  80;  Brooks  v.  Phoenix  Ins. 
Co.,  C.  Ct.  ( Vt),  8  Ins.  L.  J.  741.  Tiiis  doctrine,  however,  the  court  refused  to 
follow  in  both  Anderson's  and  Russum's  cases,  supra.  [Notes  given  in  part 
payment  of  premiums  are  really  loans  by  the  company  to  the  policy-holder,  and 
are  to  be  treated  accordingly.     Insurance  Co.  v.  Bonner,  36  Ohio  St.  51.] 

6  Hull  V.  Northwestern  Ins.  Co.,  39  "Wis.  397.  In  Wheeler  v.  Connecticut 
Mut.  Life  Ins.  Co.  (N.  Y.),  10  Ins.  L.  J.  116,  the  dividends  were  insufficient  to 
pay  the  premiums,  and  it  was  not  necessary  to  decide  whether,  if  they  had  been 
sufficient,  the  insurers  would  have  been  bound  to  apply  them.  "Wliether  equity 
will  relieve  in  such  a  case,  the  authorities  differ.  Pro:  See  Grigsby 's  case  and 
note  to  Russum's  case,  supra.  See  also  Bird  v.  Penn  Mutual  Insurance  Co., 
C.  Ct.  (Pa.),  5  Big.  Life  &  Ace.  Ins.  Cas.  487;  Nettleton  r.  St.  Louis,  &c. 
Insurance  Co.,  0  Ins.  L  J.  426.  Contra :  Anderson's  case,  supra,  and  cases  therein 
cited. 

"  Ky.,  9  Ins.  L.  J.  539. 

734 


CH.  XVII.]  THE   PREMIUM.  [§  345  B 

held  that  where  a  member  of  a  subordinate  lodge  had  money- 
due  him  for  "sick  benefits,"  it  was  not  the  right  of  his  lodge 
to  appropriate  it  in  payment  of  an  assessment  ordered  by  the 
grand  lodge,  without  the  member's  direction,  Pryor,  C.  J., 
dissenting.  The  majority  of  the  court  based  their  opinion 
on  the  distinction  between  the  funds  created  by  assessments 
ordered  by  the  grand  lodge,  which  were  for  the  benefit  of  the 
families  of  members  after  their  death,  and  the  dues  collected 
by  the  subordinate  lodges,  which  were  for  the  payment  of 
"  sick  benefits  "  to  sick  members. 

"Where  a  paid-up  policy  was  substituted  for  a  life  policy, 
and  the  outstanding  notes  were  consolidated  into  one,  upon 
the  prompt  payment  of  the  interest  upon  which  the  contin- 
uance of  the  policy  was  conditioned,  the  policy  was  held  for- 
feited by  failure  to  pay  the  interest  as  stipulated.^ 

[§  345  B.  "What  constitutes  Payment  (^continued^.  —  When 
the  company  receives  an  order  on  a  third  person  in  lieu  of  cash 
for  a  premium,  it  cannot  avoid  tbe  policy  without  giving  notice 
of  the  non-payment  of  the  order.^  Wbere  an  insured  brake- 
man  gave  the  company  an  order  on  the  railroad,  which  made 
payments  thereon  but  after  a  time  neglected  to  pay  an  instal- 
ment, and  during  the  neglect  the  brakeman  was  killed,  it  was 
held  that  without  notice  to  the  insured  that  payment  had  not 
been  made,  the  company  could  not  take  advantage  of  the  con- 
dition of  the  policy  to  be  void  by  non-payment.  The  company 
accepted  and  retained  the  order,  and  did  not  give  any  notice  to 
the  insured,  and  this  made  the  matter  one  between  itself  and 
the  railway .3  An  order  on  a  railroad  company  is  not  a  pay- 
ment of  the  premium  until  cashed,  where  tbe  policy  provides 
that  the  premium  must  be  actually  paid  before  the  risk  at- 
taches for  each  period.*  Words  and  figures  in  the  margin  of  the 
policy  to  the  effect  that  one  half  the  annual  premium  is  payable 
in  cash  and  the  other  half  by  note  form  part  of  the  policy,  and 
if  this  method  is  followed  "  complete  annual  premiums  "  are 

1  Knickerbocker,  &c.  Ins.  Co.  v.  Harlan,  56  Miss.  512 ;  Knickerbocker,  &c. 
Ins.  Co.  V.  Dietz,  52  Md  16. 

2  [Xational  Ben.  Ass.  v.  Jackson,  114  111.  533.] 
<*  [Lyon  t'.  Travelers'  Ins.  Co.,  55  Mich.  141.] 

*  [McMahon  v.  Travelers'  Ins.  Co.,  77  Iowa,  229  ] 

VOL.  II.  —  3  735 


§  345  C]        LNSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XVII. 

paid.^  When  the  premium  is  tendered  to  the  agent  when  the 
apjilication  is  made,  but  he  refuses  it,  and  says  he  will  con- 
sider it  as  paid  and  will  leave  it  with  the  plaintiff,  who  was 
his  banker,  till  the  policy  arrived,  when  he  would  call  and  get 
it,  the  company  is  bound.  In  legal  effect  the  money  was  paid 
to  the  agent  and  by  him  deposited.^  A  credit  of  the  premium 
on  the  books  of  the  company  by  a  general  agent,  and  a  charge 
of  the  amount  as  received  by  himself  in  pursuance  of  a  usage, 
are,  as  between  the  company  and  the  insured,  a  payment.^ 
Receipt  of  the  premium  by  the  agent  completes  the  contract 
and  binds  the  company,  although  the  agent  converts  the  pre- 
mium to  his  own  use  and  a  policy  is  never  issued.*  The  com- 
pany cannot  cancel  a  policy  for  non-payment  of  the  balance 
of  a  premium  which  the  insured  has  agreed  with  the  agent  to 
pay  in  groceries,  and  which  he  is  ready  to  pay  at  all  times.* 
Where  the  general  agents  of  an  insurance  company  gave  a 
policy  to  a  physician,  with  the  agreement  that  the  premium 
should  be  paid  in  his  professional  services  as  examiner  for 
the  company,  and  where  this  was  contrary  to  usage  and  not 
ratified  by  the  company,  it  was  held  that  the  policy  and  the 
premium  note  given  thereon  were  both  void.^  Evidence  may 
be  given  that  the  agent  had  no  authority  to  receive  anything 
but  money  as  payment  of  a  premium.'  In  general  an  agent 
has  no  more  authority  than  that,  ami  where  an  agent  wrong- 
fully delivers  a  renewal  receipt  merely  in  (Consideration  of  a 
setting  off  of  debts  between  himself  and  the  policy-holder,  the 
receipt  does  not  bind  the  company,  and  the  policy  lapses.^] 

[§  345  C.  Part-payment.  - —  Part  prepayment  of  the  premi- 
um when  the  contract  calls  for  full  payment,  will  not  make 
the  contract  obligatory.^     Nor  will  payment  of  a  'part  of  the 

1  [Pierce  v.  Cliarter  Oak  Ins.  Co,  1.38  Mass.  151.] 

2  fHallock  V.  Insurance  Co.,  26  N.  J.  L.  268  at  277.] 

3  [Matter  of  Booth,  11  Abb.  N.  C.  145.] 

4  [Lie  V.  Plioenix  Ins.  Co.,  2  Biss.  333  ] 

6  [Carlwitz  v.  Germania  Fire  Ins.  Co.,  12  Ins   L.  J.  127  (N.  J.),  1883.] 
6  [Anchor  Life  Ins.  Co.  v.  Pease,  44  How.  (N,  Y.)  885.] 
■  [Life  Ins.Co.  v.  Davidge,  51  Tex.  244.] 

8  [Frazer  v.  Gore  Dist.  Mut.  Fire  Ins.  Co.,  2  Ont.  R.  416.] 

9  [Barnes  v.  Piedmont,  &c.  Ins.  Co.,  74  N.  C.  22  at  23.] 

736 


CH.  XVII.]  THE   PREMIUM.  [§  345  E 

premium  entitle  the  insured  to  a  proportionate  amount  of  the 
insurance-money.^] 

[§  345  D.  Tender  is,  of  course,  sufficient  to  avoid  forfeiture 
if  in  proper  time  and  form.  But  tender  must  be  made  every 
time  a  premium  is  due.  If  the  premium  is  tendered  when  it 
comes  due  and  is  refused,  and  again  tendered  when  next  due, 
but  at  the  following  due-times  is  not  tendered,  the  policy  is 
forfeited.-] 

[§  345  E.  Premium  Notes.  —  A  negotiable  note  may  consti- 
tute payment  of  a  premium.^  A  negotiable  promissory  note 
given  to  a  mutual  company  in  payment  of  a  premium  may  be 
negotiated  by  it,  and  an  authority  to  issue  policies  gives  author- 
ity to  take  such  notes.*  A  policy  may  be  voidable  by  non- 
payment of  premium  notes  at  the  time  of  loss.^  If  there  is 
not  stipulation  to  that  effect,  failure  to  pay  a  premium  note 
at  maturity  will  not  defeat  the  policy.^  And  a  stipulation  in 
the  premium  note  itself  that  its  non-payment  shall  avoid  the 
policy  (no  such  provision  being  contained  in  the  policy)  is 
nugatory  J  Where  a  company  claims  a  forfeiture  for  non-pay- 
ment of  a  premium  note,  it  must  offer  to  surrender  the  note. 
It  cannot  forfeit  the  policy  and  keep  the  note.^  A  policy  is 
not  void  ah  initio  because  the  premiums  are  paid  by  notes 
which  do  not  bind  the  maker,  a  married  woman,^  But  a 
premium  note  executed  on  a  policy  of  insurance  which  never 
becomes  operative  is  void.^^  A  premium  note  may  be  so 
written  as  to  become  due  at  the  date  of  a  loss  under  the 
policy,  if  such  should  occur  before  its  regular  maturity." 
Where  an  insolvent  insurance  company  issued  a  policy  and 

1  [Willcuts  V.  Northwestern  Mat.  Life  Ins.  Co.,  81  Ind.  300.] 

2  [Life  Ins.  Co.  t-.  Le  Pert,  52  Tex.  504.] 

»  [East  Tex.  Fire  Ins.  Co.  t-.  Miras,  1  Tex.  Cir.  Cas.  §  1324;  see  100  Mass. 
500.] 

*  [Fnrmeis'  Bank  v.  Maxwell,  32  N.  Y.  579  at  582.] 
6  [American  Ins.  Co.  v.  Leonard,  80  Ind.  272.] 

6  [Trade  Ins.  Co.  v.  BarraclifE,  45  X.  J.  543.] 

7  [Insurance  Co.  v.  Hardie,  37  Kans.  673] 

8  [Johnson  V.  Southern  Mut.  Life  Ins.  Co.,  79  Ky.  403.] 

9  [McQuitty  V.  Continental  Life  Ins.  Co.,  15  R.  I.  573.] 

10  [Lynn  v.  Burgoyne,  13  B.  Mon.  (Ky.)  400  at  402] 

11  [Schimp  V.  Cedar  Rapids  Ins.  Co.,  124  111.  354.] 

737 


§  345  H]     INSURANCE  :  fire,  life,  accident,  etc.     [ch.  xtii 

took  a  promissory  note  for  the  premium,  the  insolvency  not 
bein^  known  to  the  officers  or  agents  at  the  time.  It  was 
held  a  valid  contract  on  good  consideration. i] 

[§  345  F.  It  is  not  incumbent  on  the  company  to  present  a 
premium  note  at  the  residence  of  the  maker  before  relying 
on  its  non-payment  as  a  forfeiture  ;  that  provision  of  law  re- 
lates to  indorsers  and  does  not  apply  between  maker  and  payee.^ 
Demand  on  a  promissory  note  given  in  payment  of  the  premi- 
um on  a  policy  of  insurance  is  unnecessary,  and  on  failure  to 
pay  the  same  on  the  stipulated  day,  if  the  policy  expressly  de- 
clares that  in  such  a  case  it  shall  be  void,  the  forfeiture  occurs 
at  once  and  without  notice.^] 

[§  345  G.  When  the  assured  gave  a  promissory  note  to 
a  mutual  company  to  secure  the  premium  on  an  open  policy, 
he  was  held  liable  only  to  the  extent  of  the  subsequent  insur- 
ances indorsed  upon  it.*  If  an  agent  agrees  to  take  a  note 
for  the  premium  and  to  send  the  policy,  on  the  understanding 
that  it  may  be  returned  and  the  note  demanded  if  the  policy 
proves  unsatisfactory,  the  transaction  is  all  one  contract,  and 
the  company  cannot  maintain  that  the  agent  had  no  authority 
to  make  such  an  agreement  and  still  claim  the  right  to  sue  on 
the  note.^  A  misrepresentation  by  the  agent  as  to  the  condi- 
tion of  the  company  is  a  defence  to  a  suit  for  the  premium,^ 
but  an  informality  in  filing  with  the  State  auditor  the  required 
copy  of  its  charter  by  a  foreign  insurance  company,  will  not 
affect  its  suit  upon  a  note  given  to  it.^] 

[§  345  H.  Recovery  by  Company.  —  A  premium  note  is  not 
without  consideration  after  its  maturity,  though  the  policy  is 
suspended  until  its  payment.^  The  company  may  recover  on 
a  note  though  the  policy  is  to  lapse  during  default  of  its  pay- 

1  [Lester  v.  Webb,  5  Allen,  569  at  573.] 

3  [Mclntyre  v.  Michigan  State  Ins.  Co.,  52  Mich.  188,  193.] 

2  [Roeliner  v.  Knickerbocker,  &e.  Co.,  4  Daly,  512.] 

4  [Maine  Mut.  Fire  Ins.  Co.  v.  Stockwell,  67  Me.  382  at  384.] 

5  [Jacoway  v.  Insurance  Co.,  49  Ark  320.  323.] 

6  [Sunbury  Fire  Insurance  Co.  v.  Humble,  100  Pa.  St.  495,  and  following 
case.] 

7  [American  Ins.  Co.  v.  Pressell,  78  Ind.  442] 

8  [Robinson  v.  Insurance  Co.,  51  Ark.  441.] 

738 


CH.  XVII.]  THE    PREMIUM.  [§  346 

ment.i  Where  a  premium  note  is  given  at  long  rates  and  it 
is  agreed  that  by  faihire  to  pay  any  instalment  the  risk  shall 
cease  during  the  default,  and  that  the  whole  note  shall  imme- 
diately become  due  upon  such  failure  as  to  any  instalment,  the 
fact  that  the  risk  ceases  during  non-payment  does  not  prevent 
the  insured  being  bound  to  pay  his  note.  Such  is  the  clear 
agreement  of  the  parties.^  By  express  agreement  the  premi- 
um instalment  notes  may  remain  binding  after  forfeiture  for 
non-payment  of  one  instalment.^  When  the  premium  note 
stipulates  that  on  default  of  any  instalment  the  whole  amount 
unpaid  shall  become  due,  the  company  may,  even  after  a  loss 
for  which  it  is  not  liable,  the  loss  occurring  during  default, 
recover  the  whole  unpaid  premium.^  When  credit  is  given 
for  a  premium,  an  after-occurring  breach  of  condition  will  not 
affect  the  company's  right  to  recover  the  premium,  although 
it  cancels  or  avoids  the  policy  for  the  breach.^  The  company 
may  deduct  the  amount  of  an  unpaid  premium  note  from  the 
amount  of  the  policy.^  If  by  the  terms  of  the  policy  the  com- 
pany may  in  case  of  loss  deduct  any  premium  unpaid,  this 
right  continues  even  though  the  statute  of  limitations  has  run 
on  the  premium  note.^] 

§  346.  Parol  Agreement  to  pay;  Days  of  Grace.  A  parol 
agreement,  made  at  the  time  of  the  annual  payment  of  the 
premium,  subsequent  to  the  issue  of  the  policy,  that  if  any- 
thing should  happen  to  the  insured  to  prevent  his  punctual 
payment  of  the  premium,  the  policy  should  not  become  void, 
but  should  continue  in  force  for  a  reasonable  time  thereafter, 
so  that  the  premium  could  be  paid,  is  valid,  though  Hunt,  C.,^ 
thought  such  an  agreement  could  keep  the  policy  alive  upon 
a  living  subject  only,  and  that  if  the  insured  were  dead  before 

1  [Limerick  v.  Gorham,  37  Kans.  739,  741.] 

2  [Continental  Ins.  Co.  v.  Boykin,  25  S.  C.  323 ;  Id.  v.  Hoffman,  Id.  327.] 

3  [Blaciierby  v.  Continental  Ins.  Co.,  83  Ky.  574.] 

*  [Palmer  v.  Continental  Ins.  Co.,  31  Mo.  App.  467.] 

5  [Schimp  V.  Cedar  Rapids  Ins.  Co.,  124  111.  354.] 

6  [Currier  v.  Continental  Lite  Ins.  Co.,  57  Vt  496.] 

7  [Alexander  v.  Continental  Ins.  Co.,  67  Wis.  422.] 

"  Howell  V.  Knickerbocker  Life  Insurance  Co.,  44  N.  Y,  277.  And  see  post, 
§  353. 

739 


§  346]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XVII. 

the  tender  of  the  premium,  although  the  tender  were  within 
a  reasonable  time,  it  would  l>e  ineffectual  to  continue  the 
policy.  And  to  the  same  effect  were  the  observations  of  the 
court  in  Baptist  Church  v.  Brooklyn  Fire  Insurance  Company,^ 
a  case  of  fire  insurance.  "  A  provision  in  a  policy  already 
executed  and  delivered  so  as  to  bind  the  company,  declara- 
tory of  a  condition  that  premiums  must  be  paid  in  advance, 
manifestly  has  no  effect,  except  to  impart  convenient  informa- 
tion to  persons  who  may  wisli  to  be  insured.  As  such  a  pro- 
vision in  the  policy  in  question  could  have  no  effect  upon  the 
delivered  and  perfect  contract  in  which  it  was  contained,  so 
it  could  have  none  to  prevent  the  same  parties  from  making 
such  future  contract  as  they  please.  In  any  subsequent 
agreement  for  a  renewal  or  continuation  of  the  risk,  it  was 
competent  for  the  parties  to  contract  by  parol,  and  to  waive 
the  payment  in  cash  of  the  premium,  substituting  therefor  a 
promise  to  pay  on  demand,  or  at  a  future  day.  Proof  of  such 
an  agreement  would  have  no  tendency  to  contradict  or  to 
change  the  written  policy  already  in  force  between  the  parties, 
and  which  would  be  wholly  spent  before  the  new  agreement 
could  take  its  place."  ^  But  perhaps  such  an  agreement  made 
at  the  time  of  issuing  the  policy  would  not  be  provable,  as 
tending  to  contradict  the  terms  of  the  policy,  nor  a  usage  of 
the  company  known  to  the  insured  of  allowing  such  days  of 
grace,  for  the  reason  that  it  would  be  in  plain  conflict  with 
its  provisions ;  ^  though  the  contrary  has  been  expressly  held 
as  to  the  proof  of  a  usage.^  Nor  would  a  notice  printed  on 
the  policy,  but  not  made  part  of  it,  and  not  proved  to  have 
been  seen  by  the  insured,  that  acceptance  of  an  overdue  pre- 
mium is  but  an  act  of  grace,  and  cannot  control  the  future 

1  19  N.  Y.  305. 

-  See  also  Bodine  v.  Exch.  Fire  Ins.  Co.,  51  N.  Y.  117. 

3  Ibid.  ;  Howell  v.  Knickerbocker  Life  Ins.  Co.,  44  N.  Y.  279 ;  Franklin  Life 
Ins.  Co.  V.  Sefton,  53  Ind.  380;  Lewis  v.  Plioenix,  &c.  Ins.  Co.,  44  Conn.  72; 
Candee  v.  Citizens'  Ins.  Co.,  C.  Ct.  (Conn.),  4  Fed.  Rep.  143;  Busby  v.  North 
America,  &c.  Ins.  Co.,  40  Md.  572. 

*  Helme  v.  Phila.  Life  Ins.  Co.,  61  Pa.  St.  107  ;  Garber  e.  Mut.  Life  Ins.  Co., 
C.  Ct.  (Mo.),  5  Big.  Life  &  Ace.  Ins.  Cas.  221  ;  New  York  Life  Ins.  Co.  v.  Eg- 
gleston,  96  U.  S.  572  ;  post,  §  356.     See  also  Morey  i'.  New  York  Life  Ins.  Co., 
C.  Ct.  (Miss.),  3  Ins.  L.  J.  493.     See  also  ante,  §  179 ;  post,  §  361. 
740 


CH.  XVIT.]  THE    PREMIUM.  [§  348 

action  of  the  company,  avoid  the  effect  of  such  proof.  And 
the  same  is  true  where  there  is  notice  that  the  agent  has  no 
authority  to  recover  overdue  premiums  or  waive  forfeiture, 
if  the  conduct  aud  course  of  dealing  of  the  company  and  its 
agent  has  been  such  as  to  justify  in  the  insured  an  opposite 
conckision.' 

§  347.  Payment ;  Advertising ;  Board.  —  Where  a  policy 
of  life  insurance  was  issued  stipulating  that  the  first  year's 
premium  was  to  be  paid  in  advertising  in  the  newspaper 
published  by  the  insured,  and  the  advertising  matter  was 
furnished  by  the  company  and  duly  advertised,  it  was  held 
that  it  w^as  incumbent  upon  the  company  to  furnish  suffi- 
cient amount  to  meet  the  premium,  and  the  insured  was  not 
responsible  for,  and  the  insurance  not  vitiated  by,  a  deficiency 
in  advertising  matter.  It  was  also  held  that  in  the  absence 
of  any  notice  from  the  company  to  the  insured  that  the 
policy  would  not  take  effect  until  the  termination  of  the 
time  of  advertising,  it  took  effect  from  its  date.^  And  it 
seems  that  payment  may  be  in  board,  or  commercial  paper, 
or  whatever  other  consideration,  if  agreed  upon  by  properly 
authorized  parties.^ 

§  c48.  Premium ;  Payment.  —  But  it  has  been  held  that  a 
promise  by  the  treasurer  of  the  insurers,  where  the  policy  has 
been  executed  but  not  delivered,  aud  the  by-laws  make  pre- 
payment essential  to  the  validity  of  the  policy,  that  he  would 
see  that  the  premium  was  paid,  or  that  he  would  take  it  upon 
himself  to  keep  the  policies  good,  is  no  payment.  The  act  of 
a  treasurer,  under  such  circumstances,  is  not  that  of  the  agent 
of  the  company,  but  his  own  act  in  his  private  capacity.*  But 
the  courts  of  Massachusetts  give  the  greatest  effect  to  the 
by-laws  of   a  mutual  insurance  company   in  restricting  the 


1  Mound  City  Ins.  Co.  v.  Huth,  49  Ala.  529;  Iiiman  v.  Globe,  &c.  Ins.  Co., 
C.  Ct.  (Ky.),  4  Ins.  L.  J.  719 ;  Girard,  &c.  Ins.  Co.  i-.  Mutual  Life  Ins.  Co.  (Pa.), 
10  Ins.  L.  J.  257. 

2  The  Kentuckj'  Mut.  Ins.  Co.  v.  Jenks,  5  Ind.  96. 

3  Schwartz  v.  Germania  Life  Ins.  Co.,  18  Minn.  448 ;  Pendleton  v.  Knicker- 
bocker, &c.  Ins.  Co.,  5  Fed.  Rep.  238. 

4  Buffuni  V.  Fayette  Mut.  Ins.  Co.,  3  Allen  (Mass.),  360. 

741 


§  349]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XVII. 

powers  of  the  officers  and  agents  of  the  company.^  And  it  is 
doubtful  if  the  decision  above  cited  would  meet  with  approba- 
tion in  most  of  the  States.^ 

[§  3-18  A.  Place  of  Payment.  —  If  a  premium  note  is  payable 
at  a  place  named  to  a  general  agent,  a  payment  to  a  local 
agent  at  another  place  is  not  a  payment  to  the  company .^  If 
not  fixed  by  the  terms  of  the  contract,  parol  is  admissible  to 
show  an  understanding  between  the  assured  and  the  agent  as 
to  the  place  of  payment.^] 

§  349.  Premium  ;  Time  of  Payment ;  Sunday.  —  A  premium 
due  on  a  certain  day  must  be  paid  on  or  before  midnight  of 
that  day,  and  if  paid  before  that  hour,  even  after  a  loss,  it 
will  be  sufficient.^  Where  the  premium  falls  due  on  Sunday 
it  may  be  paid  on  the  following  day,  —  even  after  a  loss  also, 
—  the  rule  appertaining  to  negotiable  notes  entitled  to  grace, 
that  the  payment  must  be  made  on  the  day  preceding  the 
last  day  of  grace  when  that  day  happens  on  Sunday,  not 
obtaining  in  other  contracts,  for  reasons  thus  stated  by  the 
court  in  a  case  where  the  premium  fell  due  on  Sunday  at 
noon :  — 

"  h\  reference  to  notes  payable  on  a  certain  day  but  enti- 
tled to  three  days'  grace,  it  is  said  that  in  such  case  the  note 
by  its  terms  would  be  due  and  payable  two  days  earlier  than 
Saturday,  and  that  what  was  originally  a  mere  indulgence  to 
casualty  or  oversight  should  not  be  extended,  and  therefore 
if  the  last  of  three  days  of  grace  falls  on  Sunday,  the  payment 
must  be  made  on  Saturday,  and  that  it  was  more  reasonable 
to  take  from  than  to  add  to  a  period  of  time  thus  originally 
allowed  as  mere  grace  and  favor.  But  as  to  other  contracts, 
which  by  the  face  of  the  instrument  required  a  payment  on 
a  day  which  proves  to  be  Sunday  to  discharge  literally  the 
promise  or  duty,  the  law  seems  to  sanction  the  postponement 

1  See  ante,  §§  127-145. 

2  See  ante,  §  134.  See  also  Wheeler  v.  Watertown  Fire  Ins.  Co.  (Mass.),  10 
Ins.  L.  J.  354,  355,  where  crediting  the  payment  to  the  insured  by  tlie  agent  is 
held  to  be  evidence  of  the  completion  of  the  contract. 

3  [Curtin  v.  Phoenix  Ins.  Co.,  78  Cal.  619  ] 

♦  [Blackerby  v.  Continental  Ins.  Co.,  83  Ky.  574.] 
5  Och  V.  Homestead,  &c.  Ins.  Co.,  21  Pitts.  Leg.  Jour.  98. 
742 


CH.  XVII.]  THE   PREMIUM.  [§  349  A 

of  the  time  for  doing  the  same  till  the  Monday  following.  In 
other  words,  Sunday  is  not  a  legal  day  for  the  performance 
of  contracts  and  doing  secular  business.  The  statute  law 
forbids  all  such  acts.  The  party  paying  and  the  party  receiv- 
ing money  on  that  day  in  discharge  of  a  contract  would  sub- 
ject themselves  to  a  penalty  for  so  doing.  Sunday  was  not  a 
day  contemplated  by  the  parties  as  embraced  in  the  stipula- 
tion to  pay  a  quarterly  premium  on  the  first  day  of  October 
on  each  and  every  year  during  the  life  of  the  party  assured. 
The  defendants  had  no  office  open  on  that  day,  and  were 
under  no  obligation  to  receive  the  payment  of  the  premium 
on  that  day,  if  the  same  had  been  tendered  by  the  assured. 
Such  being  the  case,  the  assured  was  under  no  obligation  to 
do  what  would  have  been  not  only  an  illegal  act,  but  also  one 
which  the  other  party  was  not  bound  to  recognize.  In  this 
view  of  the  case  there  was  no  such  default  on  the  part  of  the 
assured  in  not  paying  the  premium  fully  due  on  the  first  of 
October,  as  should  be  held  to  terminate  the  policy."  ^  Pay- 
ment within  thirty  days,  on  notice  published  five  days  con- 
secutively in  a  newspaper,  means  payment  within  thirty  days 
after  the  expiration  of  the  five  days.^ 

[§  349  A.  Payment  by  Whom  ;  Lien  for  the  Money.  —  In 
general  premiums  voluntarily  paid  on  the  life  of  another  can- 
not be  recovered  from  the  beneficiary,  unless  so  agreed.^ 
When  one  who  is  not  the  sole  beneficial  owner  pays  premiums 
he  is  entitled  to  lien  on  the  policy  or  its  proceeds  in  the  follow- 
ing cases  :  (1)  By  contract  with  the  beneficiary.  (2)  By  the 
right  of  trustees  to  indemnity  out  of  trust  property  for  money 
spent  in  its  preservation.     (3)  By  subrogation  to  this  right  of 

1  Hammond  v.  The  American  Mut.  Life  Ins.  Co.,  10  Gray  (Mass.),  306; 
Taylor  v.  Germania  Ins.  Co.,  2  Dill.  C.  Ct.  (U.  S.)  282;  Campbell  v.  The  Inter- 
national Life  Ass.  Soc,  4  Bosw.  (N.  Y.  Sup.  Ct.)  298;  Howland  v.  Continental, 
&c.  Ins.  Co.,  121  Mass.  499.  This  case  contains  an  elaborate  resume  of  the  his- 
tory of  the  Sunday  law,  so  called,  well  worthy  of  perusal.  A  note  not  entitled 
to  grace  falling  due  on  Sunday  is  not  payable  till  Monday.  Salter  v.  Bush,  20 
Wend.  (N.  Y.)  205.  A  premium  note  is  entitled  to  grace.  Jarman  v.  St.  Louis, 
&c.  Ins.  Co.  (Tenn.),  5  Ins.  L.  J.  572. 

2  Wctmore  r.  Mutual,  &c.  Ins.  Ass.,  23  La.  Ann.  770. 

3  [Meier  v.  Meier,  88  Mo.  566.] 

T43 


§  349  B]        INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XVII. 

some  person  who  by  request  of  the  trustees  had  advanced 
money  to  preserve  the  property.  (4)  By  the  right  of  a  mort- 
gagee to  add  to  his  charge  any  money  paid  by  him  to  preserve 
the  property.  In  no  other  case  can  a  lien  be  acquired  either 
by  a  stranger  or  a  part-owner.^  And  a  trustee  has  as  such 
no  lien  for  premiums  unless  he  is  trustee  of  the  very  policy 
on  which  he  pays  them.^  A  contract  to  pay  premiums 
and  receive  the  amount  out  of  the  insurance  money  is  good 
even  as  to  a  minor  beneficiary,  for  though  not  binding  on 
him  as  a  contract,  equity  will  compel  him  to  do  justice.^ 
Sometimes  it  is  agreed  that  the  mortgagee  may  insure  and 
that  the  premiums  shall  be  a  lien  under  the  mortgage,  and 
such  agreement  is  good.*  If  a  mortgagor  of  a  policy  neg- 
lects to  pay  the  premiums  the  mortgagee  may  do  so,  and 
recover  the  amount  with  interest.^] 

[349  B.  Payment  to  Whom.  —  The  correspondence  between 
certain  brokers  and  the  company  is  admissible  to  show  that 
they  were  authorized  to  receive  premiums  for  the  company, 
and  that  payment  to  them  was  payment  to  the  company.^ 
If  a  company  delivers  to  one  not  already  its  agent  a  policy 
containing  an  acknowledgment  of  the  payment  of  the  pre- 
mium, it  makes  such  person  its  agent  to  receive  the  premium 
and  deliver  the  policy.''  Where  the  insured  paid  the  premium 
to  B.,  a  broker  whom  he  had  requested  to  get  insurance  for 
him,  and  B.  obtained  a  policy  through  C,  a  correspondent  of 
B.'s,  but  retained  the  premium  until  the  monthly  settlement 
between  himself  and  C,  it  was  held  that  the  company  was 
bound,  although  the  policy  was  not  to  take  effect  until  the 
actual  cash  payment  of  the  premium.  B.  was  regarded  as  the 
agent  of  the  company  in  respect  to  holding  the  premium.^ 

1  [Leslie  v.  French,  23  Ch.  D  552.] 

2  [In  re  Earl  of  Winchelsea's  Policy  Trusts,  39  Ch.  D.  169.] 

3  [Hodge  c.  Elhs,  70  Ga  272.] 

4  [Neale  v.  Albertson,  39  N.  J.  Eq   382.] 

5  Hoflgson  I'.  Hodgson,  2  Keen,  704  at  713 ;  Overby  v.  Fayetteville  B.  &  L. 
Life  Ass.,  81  N.  C.  56.] 

6  [Sun  Mut.  Ins.  Co.  v.  Saginaw  Barrel  Co.,  114  111.  99.] 
'  [Lebanon  Mut.  Ins.  Co.  v.  Erb,  112  Pa.  St.  149.] 

8  [liilev  'V  Commonwealth  Mut.  Fire  Ins.  Co.,  110  Pa.  St.  144.] 
744 


CH.  XVII.]  THE    PREMIUM.  [§  350 

Payment  of  a  premium  to  a  broker  through  whom  the  policy 
is  delivered,  and  who  is  apparently  the  agent  of  the  company, 
is  good  although  the  policy  declares  that  payment  to  any  but 
the  duly  authorized  agent  of  the  company  should  be  at  the 
risk  of  the  assured.^  Where  the  policy  provided  that  the 
premium  must  be  paid  to  a  duly  appointed  agent,  that  the  by- 
laws should  be  part  of  the  contract,  and  that  no  condition 
could  be  waived  except  in  writing,  a  by-law  requiring  all 
agents  to  be  appointed  under  seal  is  not  one  of  those  condi- 
tions, and  may  be  waived  by  the  act  of  the  company  in  au- 
thorizing a  person  to  act  as  its  agent  by  a  course  of  dealing 
recognizing  him  as  such.^  A  clause  in  a  policy  making  it  ne- 
cessary for  it  to  be  countersigned  and  delivered  by  the  agent 
and  the  advance  premium  paid,  does  not  give  the  agent 
authority  to  receive  subsequent  annual  premiums  after  the 
day  on  which  it  was  provided  by  the  policy  that  they  should 
be  so  paid  in  advance.^  Where  the  insured  was  postmaster 
(unknown  to  the  company)  and  the  company  sent  the  premium 
note  to  the  postmaster  for  collection,  and  he,  ten  days  after 
it  was  due,  tore  up  the  note  in  the  presence  of  witnesses  and 
put  the  money  in  its  place  in  the  safe,  and  eight  days  after 
loss,  which  occurred  the  day  following  his  witnessed  payment, 
he  enclosed  the  money  to  the  company  which  did  not  know  of 
the  loss,  it  was  held  that  his  act  in  taking  payment  from 
himself  after  forfeiture  was  a  fraud,  and  he  could  not  re- 
cover.*] 

§  350.  Non-payment  of  Premium  ;  Excuse  ;  Intervening  War. 
—  But  as  the  intervention  of  war  cuts  off  all  intercourse  be- 
tween the  contracting  parties,  if  they  reside  respectively  with 
the  belligerents,  and  neither  by  themselves  or  by  their  agents 
can  lawfully  have  such  intercourse,  it  has  been  generally 
held  by  the  State  courts,  and  in  the  inferior  courts  of  the 
United  States,  that  a  failure  to  pay  under  such  circumstances 
does  not  avoid  the  policy.     One  may  undertake  as  against  his 

1  [Greenwich  Ins.  Co.  i'.  Union  Dredging  Co.,  14  Daly,  237.] 

2  [Susquehanna  Mut.  Fire  Ins.  Co.  v.  Elkins,  124  Pa.  St.  484.J 

3  [Bouton  V.  American  Mut.  Life  Ins.  Co.,  25  Conn.  542  at  555.J 
*  [Harle  v.  Council  Bluffs  Ins.  Co.,  71  Iowa,  401.] 

745 


§  350]  INSURANCE  :   FIRE,  LIFE,   ACCIDENT,   ETC.       [CH.  XVII. 

own  acts  and  the  acts  of  strangers,  but  not  a.5  against  the  acts 
of  God,^  his  own  government,  or  of  the  obligee.^     And  by  the 

1  [See  however,  School  District  v.  Dauchy,  25  Conn.  530  at  535,  where  it 
was  held  tliat  the  act  of  God  will  not  excuse  one  from  performing  a  contract  he 
has  entered  into  absolutely.] 

2  See  the  authorities  cited,  ante,  §§  o6-42.  And  see  also  Sands  v.  New  York 
Life  Ins.  Co.,  59  Barb.  (N.  Y.)  556,  557  ;  s.  c.  affirmed  in  the  Court  of  Appeals, 
50  N.  Y.  6"26,  and  Cohen  v.  New  York  Life  Ins.  Co.,  id.  610,  reversing  s.  c.  in  the 
Superior  Court  of  the  city  of  New  York.     The  opinion  was  as  follows  ;  — 

"  A  decision  of  this  appeal  has  been  delayed  at  the  request  of  parties  to 
other  actions  pending  in  this  court,  like  in  character  in  some  respects  to  this, 
that  before  the  questions  involved  should  be  decided  their  appeals  might  be 
heard. 

"  The  importance  of  the  questions  at  issue  induced  the  court  to  listen  to  the 
request,  and  this  case  was  substantially  re-argued  with  Sands  v.  Tlie  New  York 
Life  Insurance  Company  in  December  last.  The  legal  status  of  citizens  of 
States  of  war,  and  the  relation  they  mutually  occupy,  as  well  as  the  effect  of  a 
state  of  war  upon  contracts  and  obligations  of  the  subjects  of  litigant  States, 
and  their  right  to  contract  or  hold  intercourse  with  each  other,  have  recently 
been  so  frequently  the  subject  of  judicial  discussion  and  decision  in  the  State 
and  Federal  courts,  that  tlie  leading  principles  by  which  the  intercourse  and 
dealing  between  enemies  —  that  is,  between  the  inhabitants  of  States  and 
nations  at  war  —  are  prohibited,  or  restricted  and  regulated,  and  the  effect  of 
war  upon  their  mutual  contracts  and  obligations,  are  quite  familiar.  They  have 
been  so  often  repeated  in  different  forms,  althougii  in  substance  and  effect  the 
same,  that  a  review  of  them,  or  a  reference  at  much  length  to  them,  would  be 
out  of  place. 

"  The  general  principles  and  doctrines  as  found  in  the  treaties  of  nations 
upon  public  law,  and  deducible  from  the  judgments  of  courts,  are  firmly  estab- 
lished, and  cannot  be  ignored  or  essentially  modified  by  courts  at  this  day.  All 
that  courts  have  to  do  is  to  apply  the  principles  thus  recognized  and  settled  to 
cases  as  they  are.  It  is  said,  in  general  terms,  that  in  a  state  of  war  '  the  in- 
dividuals who  compose  the  belligerent  States  exist,  as  to  each  other,  in  a  state 
of  utter  occlusion,'  and  all  intercourse  between  them  is  forbidden.  Per  Johnson, 
J.,  The  Rapid,  8  Cranch  (Supr.  Ct),  155.  This  proposition  has  been  repeated 
with  approval  in  several  later  cases.  Judge  Nelson,  in  the  Prize  Cases,  2  Black 
(U.  S.),  635,  681,  adopting  the  language  of  approved  writers  on  international 
law,  says  that  one  of  the  legal  consequences  resulting  from  a  state  of  war  is 
that  '  the  people  of  the  two  countries  immediately  became  the  enemies  of  each 
other;  all  intercourse,  commercial  or  otherwise,  between  them,  unlawful;  and 
all  contracts  existing  at  the  commencement  of  the  war,  suspended,  and  all  made 
during  its  existence,  utterly  void.  The  insurance  of  eneniies'  property,  the 
drawing  of  bills  of  exchange  or  purchase  on  the  enemies'  country,  the  remis- 
sion of  bills  or  money  to  it,  are  illegal  and  void;  all  existing  partner?hips  be- 
tween citizens  or  subjects  of  the  two  countries  are  dissolved  ;  and,  in  fine, 
interdiction  of  trade  and  intercourse,  direct  or  indirect,  is  absolute  and  com- 
plete by  the  mere  force  and  effect  of  the  war  itself.'  See  also  Jecker  v.  Mont- 
gomery, 18  How.  110;  Hanger  v.  Abbott,  6  Wall,  532  ;  The  Ouachita  Cotton, 
746 


OH.  XVII.]  THE   PREMIUM.  [§  350 

same  courts  it  has  been  held  that  the  contract  is  not  dis- 
solved, nor  an  established  agency  discontinued,  by  the  war ; 

id.  521 ;  Griswold  v.  Waddington,  16  Johns.  438.  These  propositions,  general 
and  far-reacliing  as  they  are,  were,  however,  made  in  cases  relating  to  commer- 
cial intercourse,  and  involved  the  question  as  to  the  legality  and  effect  of  com- 
mercial dealings  and  transactions  ;  and  the  general  language  used  in  legal  etiects 
extends  only  to  intercourse  and  dealings  of  that  character,  although  all  other 
intercourse  clearly  within  the  mischief  intended  to  be  avoided  would  be  within 
the  principle,  and  therefore  within  the  rule  itself. 

"  I  do  not  understand  that  it  has  been  autlioritatively  adjudged  that  all  pri- 
vate contracts,  without  exception,  made  between  citizens  or  subjects  of  States 
at  war,  are  necessarily  void,  although  the  language  of  the  court  has  been  suffi- 
ciently comprehensive  to  include  the  proposition  in  its  largest  extent.  Tlie  sub- 
ject is  elaborately  and  ably  considered  in  Kershaw  i'.  Kelsey,  100  Mass.  561 
[ante,  §  42],  and  the  authorities,  with  the  reason  and  extent  of  the  rule  under 
consideration,  reviewed  and  discussed.  The  result  of  the  examination  was  tiiat 
the  law  of  nations,  as  judicially  declared,  prohibits  all  intercourse  between  citi- 
zens of  the  two  belligerents  which  is  inconsistent  with  the  state  of  war  between 
these  countries.  This  was  regarded  as  including  every  act  of  voluntary  submis- 
sion to  the  enemy,  or  receiving  his  protection  in  any  act  or  contract  which  tends 
to  increase  his  resources,  and  every  kind  of  trading  or  commercial  dealing,  or 
intercourse,  direct  or  indirect.  The  action  of  Congress  of  July  13, 1861,  12  U.  S. 
Statutes  at  Large,  257,  and  the  proclamation  of  the  President  pursuant  to  that 
statute,  only  prohibited  commercial  intercourse  between  the  citizens  of  the 
States  declared  to  be  in  insurrection  and  the  citizens  of  the  rest  of  the  States. 
For  all  the  purposes  of  this  action  it  may  be  assumed  that  the  rule,  thus  re- 
stricted, would  prohibit  tlie  making  of  a  contract  during  a  state  of  war,  for  the 
insurance  of  the  life  of  an  enemy. 

"This  was  rather  assumed  by  tlie  counsel  for  both  parties  upon  the  argument. 
It  would  certainly  forbid  the  transmission  of  money  for  a  premium  from  one  of 
the  States  at  war  to  the  other,  and  it  is  said  that  the  life  of  an  alien  enemy  can- 
not be  insured  by  his  creditor,  although  the  latter  be  a  subject  of  the  same 
country  with  the  insurer.  Bnnyon's  Life  Assurance,  19.  The  auth.orities  cited 
to  sustain  this  proposition  were  all,  however,  cases  of  insurance  upon  merchan- 
dise. Harman  r.  Kingston,  3  Camp.  150;  Potts  y.  Bell,  8  T.  11.  548;  Flindt  v. 
Waters,  15  East,  260,  266.  The  insurance  upon  the  life  of  the  husband  of  the 
plaintiff  was  a  valid  and  lawful  contract  at  the  time  it  was  made  in  1849,  and  was 
for  the  term  of  his  natural  life,  in  consideration  of  a  sum  paid  at  the  date  of  the 
policy,  and  further  consideration  of  the  annual  payment  of  a  like  sum  on  or  before 
the  second  day  of  April  in  every  year.  This  was  not  a  policy  from  year  to 
year,  but  an  insurance  for  life,  subject  to  be  defeated  by  the  non-performance 
of  the  condition  prescribed,  to  wit,  the  payment  of  the  annual  premium. 

"  It  is  expressly  declared  in  the  contract  of  insurance  that  if  the  annual  pay- 
ments should  not  be  made,  'that  said  policy  should  cease  and  determine,'  and 
'  that  all  previous  payments  made  thereon  should  be  forfeited  to  the  company.' 
It  was  a  life  policy.  Hodsdon  ?'  Guardian  Life  Ins.  Co.,  97  Mass.  144;  Ruse  v. 
Mutual  P>en  Life  Ins.  Co.,  26  Barb.  556 ;  New  York  Life  Ins.  Co.  v.  Clopton, 
7  Busli  (Ky.),  179.     The  contract  was  not  as  to  all  its  stipulations,  and  as  to 

747 


§  350J  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH,  XVII. 

that  the  insurers  were  bound  to  receive  premiums,  if  properly 
tendered,  and  to  maintain  agencies  at  the  places  stipulated  ; 

both  parties,  executory.  It  was  executed  by  the  plaintiff  by  the  payment  of  the 
annual  premiums  from  1849  to  and  including  1861,  while  it  was  wholly  executory 
on  the  part  of  the  defendant,  its  undertaking  being  to  pay  the  amount  specified 
upon  the  death  of  the  insured.  It  is  no  answer  to  say  that  the  plaintiff  had  only 
paid  for  the  risk  incurred  from  year  to  year.  The  annual  premium  paid  during 
tiie  first  years  of  a  life  policy  is  in  excess  of  the  actual  risk,  and  this  excess  is 
so  much  paid  in  advance  for  the  greater  risk  during  the  later  years  in  case  of  a 
prolonged  life.  Tiie  insurers  would  be  greatly  the  gainers  by  avoiding  all  life 
policies  on  young  lives  after  tlie  paj'ment  of  the  annual  premiums  for  ten  or  fif- 
teen years,  terminating  the  risk  before  the  greater  hazard  of  loss —  the  result 
of  advanced  age  —  has  been  incurred.  The  contract  was  a  continuing  one  in  the 
sense  that  it  was  to  be  performed  in  the  future,  but  it  was  not  a  contract  of  con- 
tinuance in  its  performance.  The  act  to  be  performed  by  the  defendant  was  a 
single  act,  the  payment  of  a  specified  sum  upon  the  happening  of  a  certain  event, 
and  in  this  respect  was  like  a  covenant  or  promise  to  pay  a  sum  of  money  at  a 
day  certain,  or  upon  any  condition  lawful  in  itself  There  is  no  pretence  that  a 
contract  of  the  latter  kind  would  be  dissolved  by  war.  The  contract  would  re- 
main, the  remedy  would  be  suspended.  The  act  to  be  performed  by  the  plain- 
tiff was  a  single  act  to  be  performed  at  stated  periods,  and  was  not  like  tlie 
contract  of  partnership,  and  some  otiier  contracts  which  are  continuous  in  their 
performance. 

"In  the  case  of  a  marine  insurance,  or  a  contract  of  affreightment,  a  war 
might  act  as  a  dissolution,  and  put  an  end  to  them.  The  first  is  upon  enemies' 
property,  and  an  insurance  is  in  support  of  their  commerce,  and  entirely  incon- 
sistent with  the  allegiance  due  to  the  government  of  the  underwriter.  As  to 
sucii  a  contract,  the  authorities  say  the  insurance  terminates  absolutely  and  at 
once  by  the  verj'  act  of  war,  and  the  parties  are  in  the  same  condition  as  if  no 
contract  was  made;  the  one  loses  the  premium,  and  the  other  his  security 
against  loss.  But  the  rule  will  hardly  apply  to  a  life  policy  when  large  sums 
have  been  paid  for  premiums. 

"  There  is  nothing  in  the  policy  of  the  law,  or  the  interest  of  the  public,  calling 
for  an  enforcement  of  the  law  of  confiscation  incident  to  a  state  of  war,  after 
tlie  war  has  ceased,  and  the  people  of  tiie  two  belligerent  nations  have  again  be- 
come one,  solely  for  the  benefit  of  one  of  two  contracting  parties,  by  the  forfeit- 
ure of  the  rights  of  the  other.  This  would  be  simply  a  confiscation  of  property 
after  war  had  ceased,  at  the  instance  and  for  the  benefit  of  individuals. 

"  By  the  payment  of  the  annual  premiimi  in  April,  1861,  the  life  was  insured 
until  April,  1862  ;  the  engagement  of  the  defendant  was  then  lawful,  and  was  to 
the  effect  that  the  company  would  pay  the  plaintiff  five  thousand  dollars  upon 
the  death  of  her  husband  within  the  year.  A  promissory  note  in  that  form, 
made  upon  a  good  consideration,  would  be  obligatory,  and  if  the  death  occurs 
within  the  year,  although  after  war  had  intervened,  the  right  of  action  would  be 
suspended  during  the  war,  but  revived  with  the  return  of  peace. 

"  There  is  no  reason  apparent  why  the  promise  to  pay  money  upon  the  ter- 
mination of  a  specified  life  should  necessarily  be  terminated  by  the  happening 
of  war  between  the  States  of  which  the  parties  are  respectively  subjects,  as  unlaw- 

748 


CH.  XVII.]  THE   PREMIUM.  [§  350 

that  a  tender  by  a  citizen  of  one  belligerent  party  to  an  agent 
located  within  the  territory  of  that  belligerent,  whose  appoint- 

f  111  and  inconsistent  witli  the  state  of  war,  merely  because  it  is  called  an  insurance 
upon  lite.  Tlie  policy  in  this  instance  protects  the  insurers  and  umkes  void  tlie 
policy  if  the  insured  enter  any  military  or  naval  service,  or  dies  in  the  known 
violation  of  tlie  laws  of  the  United  States,  so  that  the  risk  was  not  increased  by 
the  state  of  war,  nor  the  ability  of  the  enemy  to  fill  up  the  ranks  of  the  army 
and  navy  affected  by  the  insurance  upon  the  life  of  its  citizens. 

"  Those  insured  would  rather  be  deterred  from  taking  up  arras  against  the 
United  States,  lest  their  policies  should  be  avoided. 

"  Had  the  insured  died  at  any  time  before  April,  1862,  I  think  there  can  be 
no  doubt  that  the  contract  would  have  been  regarded  as  one  of  those  which,  law- 
ful when  made  and  executed  by  the  one  party,  are  not  dissolved,  but  merely 
suspended  by  the  existence  of  war,  and  that  a  recovery  could  have  been  had  at 
the  close  of  the  war. 

"  The  contracts  betveeen  individuals  of  belligerent  States  are  necessarily  sus- 
pended during  the  war  of  the  States,  but  are  not  annulled.  Phill.  Int.  Law,  666  ; 
per  Nelson,  J.,  Prize  Cases,  supra.  Mr.  Wheaton  says  commercial  partnerships 
are  dissolved  by  the  mere  force  and  act  of  war,  though  as  to  other  contracts  it 
only  suspends  tlie  remedy.  Wheat.  Int.  Law  (8th  ed.),403,  §  317.  This  is 
upon  the  principle  that  the  States,  and  not  the  individual,  wage  war.  The  ques- 
tion then  remains  whether  the  non-payment  of  the  annual  premiums  during  the 
years  1862,  1868,  and  1864,  involved  a  forfeiture  of  the  policy  and  of  all  pay- 
ments before  then  made.  That  such  would  be  the  effect  of  the  non-performance 
of  the  condition,  unless  waived  or  legally  excused,  is  not  disputed,  and  unless  the 
performance  was  waived  by  the  defendant,  or  is  legally  excused  by  the  exist- 
ence of  the  war,  the  plaintiff  must  fail  in  her  action  and  submit  to  the  loss  re- 
sulting from  the  forfeiture.  It  must  be  borne  in  mind  that  the  war  was  the  act 
of  the  States,  and  that  individual  citizens  are  not  identified  with  their  govern-, 
ment  so  as  to  expose  them  to  the  rule  of  law,  that  he  who  by  his  own  conduct 
prevents  the  fulfilment  of  a  contract,  or  renders  its  performance  impossible, 
shall  not  take  advantage  of  a  non-performance  on  the  other  side,  or  excuse  the 
non-performance  on  his  part.  Odlin  v.  Insurance  Co.  of  Pennsylvania,  2  Wash. 
C.  C.  R.  312 ;  Francis  v.  The  Ocean  Ins.  Co.,  6  Cow.  404 ;  s.  c.  in  error,  2  W.  R. 
64.  The  condition  of  affairs  which  made  the  payment  of  the  premiums  by  the 
plaintiff  during  the  years  named  unlawful,  and  therefore  impossible,  was  not 
created  by  the  act  or  default  of  the  plaintiff,  but  resulted  from  the  acts  of  the 
governments  of  which  the  respective  parties  were  subjects.  There  is  a  manifest 
distinction  between  mere  impediments  and  difficulties  in  the  way  of  the  perform- 
ance of  a  condition,  and  an  impossibility  created  by  law  or  the  act  of  the  govern- 
ment. This  is  clearly  recognized  in  Wood  v.  Edwards,  10  J.  R.  205,  and  People 
V.  Bartlett,  3  Hill,  570.  An  individual  by  his  covenant  may  undertake,  as 
against  his  own  acts  and  the  acts  of  strangers,  but  not  against  the  acts  of  God  or 
of  his  government,  or  of  the  obligee.  See  per  Nelson,  C.  J.,  People  v.  Bartlett, 
supra.  In  Wolfe  v.  Howes,  20  N.  Y.  197,  the  performance  of  the  undertaking 
became  impossible  by  the  act  of  God  in  the  death  of  the  party,  and  performance 
was  held  excused  upon  the  ground  that  the  parties  must  be  deemed  to  have  made 
this  an  exception  by  implication.     So,  too,  a  party  is  excused  from  the  perform- 

749 


§  350]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.        [CH.  XVII. 

ment  had  not  been  revoked,  was  lawful  ;  that  the  agent  was 
bound  to  receive  it  without  conditions,  and  to  hold  it  for  his 

ance  of  his  covenant  when  the  performance  is  made  unlawful  by  act  of  Parlia- 
ment. If  made  absolutely  unlawful,  it  operates  to  repeal  the  covenant ;  if  only 
temporarily  unlawful,  it  suspends  the  operation.  Brewster  v.  Kitchin,  1  Ld. 
Kaym.  317.  Lord  Alvanley,  C.  J.,  in  Touteng  v.  Hubbard, 3  B.  &  P.  '291,  says: 
'  But  when  the  policy  of  the  State  intervenes  and  prevents  tlie  performance  of 
the  contract,  the  party  will  be  excused.'  That  which  will  avoid  a  covenant  will 
nullify  a  condition,  and  vice  versa.  Piatt  on  Gov.  569  ;  Doughty  i-.  Neal,  1  Saund. 
211,  214,  n.  (2).  The  policy  of  the  law  is  to  mitigate  the  severity  of  wars,  and 
relieve  citizens,  so  far  as  consistent  with  the  interest  of  the  government,  from 
the  hardships  incident  to  it,  and,  a  fortiori,  the  stringent  and  severe  rule  invoked 
by  the  defendant  should  not  be  applied  in  a  doubtful  case  so  as  to  produce  ex- 
treme hardship,  when,  by  adopting  a  milder  and  more  equitable  rule,  each  of 
the  contracting  parties  will  secure  equal  and  exact  justice,  and  all  their  legal  and 
equitable  rights.  The  operation  of  the  Statute  of  Limitations  is  held  to  be  sus- 
pended during  the  war  by  reason  of  the  inabihty  to  enforce  the  claim,  and  this 
is  in  harmony  with  the  benign  tendency  of  the  age,  the  result  of  advanced  civ- 
ilization. Hanger  i-.  Abbott,  6  Wall.  532.  Judge  Clifford  says  :  '  Neither  laches 
nor  fraud  can  be  imputed  in  such  a  case.'  At  the  time  of  making  the  contract 
in  this  case,  the  plaintiff  had  the  legal  right  and  ability  to  make  the  annual  pay- 
ments, but  the  effect  of  the  war  was  to  make  the  attempt  unlawful,  without  any 
fault  on  her  part.  The  operation  of  a  condition  as  express  and  absolute  as  in 
this  case,  was  held  suspended  during  the  war,  in  Semmes  v.  Hartford  Ins.  Com- 
pany, 13  Wall.  158.  The  condition  there,  as  here,  was  by  the  act  and  agree- 
ment of  the  party,  and  yet,  its  performance  being  impossible,  it  was  held  to  be 
inoperative,  and  the  time  for  bringing  the  action  extended,  notwithstanding  tlie 
agreement  of  the  parties,  by  the  mere  act  and  effect  of  the  war.  It  was  held 
that  the  disability  to  sue  imposed  on  the  plaintiff  by  the  war  relieved  him  from 
the  consequences  of  failing  to  make  the  annual  payments  by  the  day.  She  was 
guilty  of  no  laches,  and  why  subject  her  to  a  forfeiture  1  No  injustice  is  done 
the  defendant  in  this  case  by  permitting  the  plaintiff  to  make  now  the  payments 
which  she  could  not  lawfully  make  between  1861  and  18G5. 

"The  interest  will  compensate  for  the  non-payment  at  the  time,  and  the  de- 
fendant in  legal  contemplation  will  be  precisely  in  the  situation  it  would  have 
been  had  the  money  been  paid  on  the  law-day.  Manhattan  Life  Ins.  Co.  v.  War- 
wick, 20  Grat.  614;  New  York  Life  Ins.  Co.  v.  Clopton,  7  Bush  (Ky.),  179; 
Hamilton  v.  The  Mut.  Life  Ins.  Co.,  9  Blatch.  234;  ante,  §  39. 

"  The  reasonings  of  the  prevailing  opinions  in  the.se  cases  abundantly  sus- 
tain the  judgments.  The  case  comes  before  us  on  demurrer  to  the  complaint, 
and  if  there  are  any  equities,  or  any  facts  or  circumstances  whieli  would  deprive 
the  plaintiff  of  the  rights  to  which  the  case  made  by  the  complaint  entitled  her, 
the  defendant  may  set  them  up  by  answer. 

"  It  was  also  claimed  that  tlie  defendant,  being  a  mutual  compiny,  of  which 
all  holders  of  policies  were  members,  it  was  a  partnership  which  was  dissolved 
by  the  war.  Trading  and  commercial  partnerships,  and  perhaps  all  pnrtnerships. 
are  dissolved  by  war  between  the  States  of  the  several  partners.  But  wliatever 
analogies  there  may  be  between  mutual  companies  and  ordinary  partnerships, 
750 


CH.  XVII.]  THE   PREMIUM.  [1  350  a 

principals,  who  were  domiciled  within  the  territory  of  the 
other  belligerent.  And  where  the  agency  was  not  during  the 
war  continued  by  the  insurers,  the  insured  might,  after  the 
war,  without  tender  of  overdue  premiums,  recover  damages  as 
for  a  breach  of  the  contract,  if  the  insurers  denied  the  validity 
of  the  policy.^ 

§  350  a.  Intervening  War.  —  On  the  other  hand,  it  has  been 
held,  in  opposition  to  the  general  doctrine  of  the  cases  cited  in 
the  preceding  section,  and  in  a  very  able,  learned,  and  elabo- 
rate opinion,  in  which  many  of  these  cases  were  considered 
and  criticised,  that  tlie  war  abrogated  all  such  contracts  of 
insurance  from  the  moment  when  the  parties  thereto  became 


and  the  relation  of  the  members  of  the  two  organizations,  an  incorporated  com- 
pany, although  organized  upon  the  mutual  principle,  is  in  no  proper  or  legal  sense 
a  partnership.  The  defendant  is  a  body  politic  and  corporate,  capable  of  con- 
tracting, and  of  suing  and  being  sued,  and  the  relation  between  the  plaintiff  and 
tlie  corporation  is  that  of  insured  and  insurer,  and  the  rights  and  duties  aif  the 
contracting  parties  are  to  be  governed  and  determined  by  the  terms  of  the  pol- 
icy by  which  the  insurance  is  effected  as  in  other  cases.  Other  and  incidental 
rights  are  secured  to  the  plaintiff,  as  a  member  of  the  company  and  one  of  the 
corporators;  but  this  does  not  make  the  members  partners  as  between  tliem- 
selves,  or  affect  the  express  contract  of  the  corporation.  If  it  was  a  partnership, 
as  claimed,  and  dissolved  by  the  war,  the  plaintiff  has  not  forfeited  her  share  in 
the  assets  of  the  copartnership,  but  is  entitled  to  an  accounting  as  of  the  day  of 
the  dissolution,  and  to  her  due  proportion  of  the  property  and  assets.  This 
would  lead  to  a  result  not  desired  by  the  defendant." 

1  Hancock  v.  New  York  Life  Ins.  Co.,  C.  Ct.  (Va.),  4  Big.  Life  &  Ace.  Ins. 
Cas.  488.  The  amount  received  in  this  case  seems  to  have  been  the  amount  of 
premiums  which  had  been  paid  with  interest.  See  also  New  York  Life  Ins.  Co. 
?•.  White  (Va.),  2  Ins.  L.  J.  917  ;  New  York  Life  Ins.  Co.  v.  Hendren,  24  Grat. 
536;  Smith  v.  Charter  Oak,  &c.  Ins.  Co.,  C.  Ct.  St.  Louis  County  (Mo.),  5  Big. 
Life  &  Ace.  Ins.  Cas.  212 ;  s.  c.  1  Cent.  L.  J.  76,  and  note ;  Martine  v.  Inter- 
national Life  Ins.  Co.,  53  N.  Y.  339.  In  this  case  the  premiums  were  payable  by 
a  citizen  of  North  Carolina  through  an  agency  at  Fayettesville  in  that  State,  to 
the  New  York  general  agency,  controlled  by  a  directory  of  a  British  insurance 
company.  The  insured  having  died  during  the  war,  several  premiunis  being 
actually  unpaid,  and  no  agency  of  the  insurers  being  kept  up  in  North  Carolina 
during  the  war,  recovery  was  had  for  the  amount  of  insurance  less  the  amount 
of  unpaid  premiums.  [The  civil  war  preventing  the  payment  of  premiums 
excuses  the  failure,  and  the  insured  will  be  reinstated  by  equity  on  offer  to  pay 
up  the  premiums  after  the  war.  Bird  v.  Insurance  Co.,  11  Phila.  485  and  C.  Ct. 
U.  S.j,  5  Big.  Life  &  Ace.  Ins.  Cas.  487  ;  Connecticut,  &c.  Ins.  Co.  v.  Duerson 
(Va.),  6  Ins.  L.  J.  670;  Crawford  v.  JEtna  Life  Ins.  Co.  (Tenn.),  6  Ins.  L.  J. 
685. 

VOL.  II.  —  4  751 


§  350  a]        INSURANCE  :    fire,   life,    accident,    etc.       [cH.  XVII. 

public  enemies,  so  that  neither  could  maintain  any  action 
against  the  other.^  Following  this  case  came  also  the  very- 
elaborate  case  of  Worthington  v.  Charter  Oak  Insurance  Com- 
pany ,2  where  the  court  came  to  the  same  conclusion.  And, 
finally,  the  Supreme  Court  of  the  United  States,  after  affirm- 
ing by  an  equally  divided  court  the  opposite  decisions  in 
Hamilton  and  Tait's  cases,  and  upon  grounds  not  altogether 
consistent  with  those  upon  which  the  court  based  its  decision 
in  Worthington's  case,  has  now  so  far  adopted  the  doctrine  of 
the  latter  case  as  to  hold  that  a  policy  of  life  insurance  for- 
feitable on  non-payment  of  any  annual  premium  is  not  an  in- 
surance from  year  to  year,  lilvc  a  common  fire  policy,  but  that 
the  premiums  constitute  an  annuity,  the  whole  of  which  is  the 
consideration  for  the  entire  insurance  for  life,  and  the  condi- 
tion is  a  condition  subsequent  making  void  the  i)olicy  by  its 
non-performance  ;  that  the  time  of  payment  in  such  policies  is 
material,  and  of  the  essence  of  the  contract,  failure  wherein 
involves  a  forfeiture  which  equity  cannot  relieve  against ;  and 
that  if  war  intervenes,  and  makes  intercourse  between  the 
parties  unlawful,  the  policy  is  nevertheless  forfeited  if  the 
insurers  insist  upon  it,  in  which  case,  however,  the  insured  is 
entitled  to  recover  the  difference  between  the  cost  of  a  new 
policy  and  the  present  value  of  the  premiums  yet  to  be  paid 
on  the  old  policy  at  the  time  the  forfeiture  occurred,  —  being 
the  equitable  value  of  ih(i  policy  arising  out  of  the  premiums 
actually  paid.  It  was  also  held  that  it  would  be  inequitable  to 
compel  a  revival  of  the  policies  subverted  by  the  war,  as  none 
but  the  sick  or  wounded  would  probably  elect  to  have  them 
revived.^ 

1  Emmons,  J.,  Tait  v.  N.  York  Life  Ins.  Co.,  C.  Ct.  (Tcnn.),  2  Ins.  L.  J.  863 ; 
s.  c.  4  Big.  Life  &  Ace.  Ins.  Cas.  479. 

2  41  Conn.  372.  See  also  Dillard  v.  Manhattan,  &c.  Insurance  Company, 
44  Ga.  119. 

3  New  York  Life  Ins.  Co.  v.  Statham,  93  U.  S.  24.  Tliis  case  holds  that  a 
policy  for  life  is  a  contract  from  year  to  year,  terminable  at  tlie  expiration  of  any 
year  at  the  option  of  the  insured,  contrary  to  the  view  taken  hy  the  New  York 
Court  of  Appeals,  which  regard.s  it  as  a  continuous  contract  for  life.  Homer  v. 
Guardian,  &c  Ins.  Co.,  67  N.  Y.  478.  See  also  upon  this  last  point,  as  well  as 
upon  the  whole  subject,  11  Am.  Law  Rev.  221,  article  by  Ex-Judge  Foster,  of 
the  Massachusetts  Supreme  Judicial  Court. 

752 


CH.  XVII.]  THE    PREMIUM.  [§  852  A 

§  351.  And  as  the  right,  under  such  circumstances,  to  keep 
alive  the  policy  by  the  payment  of  overdue  premiums  remains 
in  the  insured,  so  the  insurers  may  demand  and  compel  pa}-- 
ment  of  the  same.^ 

§  352.  Payment  of  Premium;  Excuse;  Intervening  Death. — 
The  payment  of  the  premium  on  or  before  the  day  specified  in 
a  policy  from  year  to  year  is  a  condition  precedent,  and  its 
non-payment  from  year  to  year  as  it  becomes  due  works  a  for- 
feiture of  the  policy  ;  and  the  fact  that  the  insured  is  stricken 
with  paralysis  or  insanity  before  payment,  even  though  he  may 
be  on  his  way  to  the  office  to  pay  his  annual  premium,  does 
not  excuse  the  non-payment  or  save  the  policy.  This  was 
not  the  intervention  of  an  act  of  God  in  such  sense  as  to  be 
the  foundation  of  an  excuse.'^  The  payment  of  the  premium 
is  an  act  which  can  be  performed  by  others  than  the  insured, 
and  does  not  depend  upon  the  continued  capacity  of  the  in- 
sured. In  point  of  fact,  a  man  may  be  mentally  and  morally, 
and  even  pjiysically,  incapable  for  years  of  existence,  yet  the 
premiums  may  be  paid  by  his  friends  or  relatives,  or  those 
interested  in  his  case.  And  so  they  often  are.  The  act  re- 
quired is  not  necessarily  a  personal  act,^  but  may  be  performed 
as  well  by  others ;  and  the  failure  therefore  of  the  insured  to 
perform  it  personally  does  not  show  that  the  act  could  not 
have  been  performed.*  The  insurers  are  not  liable  unless  the 
death  occur  within  the  time  covered  by  the  policy.^ 

[§  352  A.  Invalid  Excuses.  —  Where  a  policy  provides  that 
it  shall  be  forfeit  if  the  premium  is  not  paid  ad  diem,  or  the 

1  Lynchburg  Hose  Fire  Ins.  Co.  v.  Knox,  Sup.  Ct.  City  of  Baltimore,  ante, 
§41. 

2  [Delirious  sickness  rendering  it  impossible  for  the  assured  to  attend  to  the 
payment  of  premiums  is  not  such  an  act  of  God  as  will  excuse  the  default. 
Carpenter  v.  Centennial  Mut.  Life  Ass.,  68  Iowa,  453.] 

^  As  to  the  point  that  the  act  is  a  personal  one,  see  Worden  i'.  Guardian,  &c. 
Ins.  Co.,  39  N.  Y.  Sup.  Ct.  317. 

*  Howell  V.  Knickerbocker  Life  Ins.  Co.,  44  N.  Y.  (Ct.  of  App.)  277  ;  Wheeler 
V.  Conn.  Life  Ins.  Co.  (N.  Y.),  11  Rcptr.  613;  Evans  v.  United  States  Life  Ins. 
Co.,  64  N.  Y.  304 ;  ante,  §  33-3.  See  also  dissenting  opinion  of  Runyon,  Ch.,  in 
Hillyard  v.  Mutual  Ben.  Life  Ins.  Co.,  35  N.  J.  415,  and  post,  §  465;  Broom's 
Legal  Maxims  (6th  Am.  ed.),  176. 

s  Lockyer  v.  OflSey,  1  T.  R.  252,  260. 

753 


§  353]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XVII. 

note  given  therefor  is  not  paid  at  maturity,  neither  sickness 
and  incapacity  of  the  insured,  nor  a  faihire  on  the  part  of  the 
company  to  conform  to  its  usage  of  giving  notice  of  the  day  of 
payment,  will  constitute  a  good  excuse.  The  company  usually 
gives  notice  to  designate  the  agent  to  whom  payment  shall  be 
made  and  to  stimulate  the  memory  of  the  insured,  but  it  is 
under  no  obligation  to  give  such  notice.  Prompt  payment  is 
the  life  and  soul  of  the  insurance  business,  and  time  is  material 
to  the  contract.  A  custom  not  to  demand  punctual  payment  of 
premium  notes  is  a  mere  matter  of  indulgence  and  begets  no 
legal  right  to  its  continuance.^  While  the  company  continues 
to  do  business  in  the  ordinary  way,  a  belief  that  it  is  insolvent 
is  no  excuse  for  not  paying  premiums.^  Although  the  agent 
of  assured  calls  several  times  at  the  insurance  office  on  the 
day  the  premium  is  due,  and  fails  to  find  the  agent,  the  policy 
is  still  void  for  non-payment.^  An  assurance  by  the  agent 
that  the  dividends  will  pay  the  premiums,  is  not  a  ground  of 
relief  against  the  obligation  to  pay  premiums.*  It  is  no  an- 
swer to  a  defence  of  non-payment  that  the  assured  agreed  with 
the  agent  that  the  latter  should  credit  the  premium  on  a  debt 
lie  owed  the  assured,  or  that  the  agent  agreed  to  give  notice 
to  a  voluntary  assignee  of  tlie  insured  when  the  premium  was 
due.  Such  assignee  is  a  stranger  to  the  contract  of  the  com- 
pany.^ The  death  of  the  local  agent  is  no  excuse  for  not  pay- 
ing premiums  that  by  the  terms  of  the  policy  are  payable  at 
the  home  office.^] 

§  353.  Days  of  Grace  ;  Payment  of  Premium  after  Death  of 
the  Insured. — And  upon  tlie  point  suggested  by  Hunt,  J.,'' 
that  such  a  payment  can  only  inure  to  keep  the  policy  alive 

1  [Thompson  v.  Insurance  Co.,  104  U.  S.  252,  258-259  (1881)  ;  New  York 
Life  Ins.  Co.  v.  Statham,  93  U.  S.  24;  Insurance  Co.  v.  Eggleston,  96  U.  S. 
572.] 

2  [Taylor  v.  Charter  Oak  Life  Ins.  Co.,  9  Daly,  489;  8  Abb.  U.  C.  331.] 

3  [Cronkhite  v.  Accident  Ins.  Co.,  35  Fed.  Rep.  26  (Col),  1888.] 

4  [Hale  V.  Continental  Life  Ins.  Co.,  12  Fed.  Rep.  359;  20  Blatch.  515.] 
s  [Lycoming  Fire  Ins.  Co.  v.  Siorrs,  97  Pa.  St.  354.] 

6  [Bulger  r.  Washington  Life  Ins.  Co.,  63  Ga.  328.] 

"  Ante,  §  346.  [An  overdue  premium  paid  after  death  of  the  insured,  both 
parties  being  ignorant  of  the  fact,  has  no  effect.  Miller  v.  Union  Central  Life 
Ins.  Co.,  110  III.  102.] 

754 


CH.  XVII.]  THE   PREMIUM.  [§  353 

when  the  subject  of  insurance  is  alive  at  the  time  of  payment, 
the  case  of  Pritchard  v.  Merchants'  and  Tradesmen's  Mutual 
Life  Assurance  Society  ^  has  an  important  bearing.  In  that 
case  there  was  a  condition  that  the  policy  should  be  void  "  if 
the  premiums  were  not  paid  within  thirty  days  after  they 
should  become  due,  but  that  the  policy  might  be  revived 
within  three  calendar  months,  on  satisfactory  proof  of  the 
health  of  the  party  on  whose  life  the  insurance  was  made." 
The  insured  died  before  tlie  expiration  of  the  thirty  days,  and 
the  premium  was  forwarded  and  received  the  day  after  the 
expiration  of  the  thirty  days,  both  parties  being  ignorant  of 
the  fact  of  the  death.  Said  Gray,  for  the  insured,  arguendo  : 
"  The  receipt  of  the  premium  after  the  expiration  of  the  thirty 
days  does  not  operate  the  creation  of  a  new  policy,  but  is  a 
mere  waiver  of  a  forfeiture,  and  an  adoption  of  the  payment  as 
if  made  in  due  time.  The  distinction,  therefore,  of  '  lost  or 
not  lost,'  has  no  bearing  on  this  case."  Willes,  J. :  "  You  say 
that  the  payment  on  November  15  had  retrospective  effect.  Is 
not  that  contradictory  to  the  terms  of  the  receipt,  which  is  stated 
to  be  for  a  '  renewal '  of  the  policy,  pointing  to  the  future  ? " 
Gray  :  "  It  is  the  ordinary  form  of  receipt  in  use ;  the  same 
that  would  have  been  given  if  the  payment  had  taken  place 
within  the  thirty  days,  and  in  the  lifetime  of  the  party." 
Crowder,  J. :  "  Would  an  original  policy  have  been  good,  the 
party  being  dead  at  the  time  the  assurance  was  effected  ? 
Would  not  that  be  within  the  case  of  Coutourier  v.  Hastie  ?  ^ 
Was  not  this  a  receipt  of  money  in  ignorance  of  facts,  which,  if 
known,  would  have  prevented  the  parties  from  accepting  the 
payment  ?  "  ^  Gray  :  "  This  is  not  like  the  case  of  an  action 
to  recover  back  money  which  has  been  paid  under  a  mistake 
of  fact.  If  a  man  enters  into  a  contract  under  a  mistake,  that 
mistake  will  not  absolve  him  from  the  performance  of  his  con- 

1  3  C.  B.  N.  8.  622. 

2  5  House  of  Lords  Cases,  673. 

3  This  was  the  case  in  Lefavour  v.  Insurance  Co.,  1  Phila.  558,  where  a  pol- 
icy was  held  void  wliich  was  issued  after,  nlthough  dated  prior  to,  the  deatli,  tiie 
insurers  being  ignorant  of  the  fact,  and  the  insured  knowing  it.  But  if  both 
parties  were  ignorant,  it  has  been  said  the  policy  issued  is  valid.  Forbes  v.  Ed. 
Life  Ass.  Co.,  10  Ct.  of  Sess.  Cas.,  1st  ser.,  451. 

755 


§  353]  INSURANCE  :    FIRE,    LIFE,   ACCIDENT,   ETC.      [CH.  XYII. 

tract.  Here  the  payment  was  to  cover  the  risk  from  October 
13,  1855,  to  October  13,  1856."  Crowder,  J.  :  "  But  the  man 
was  dead  when  the  transaction  took  place."  The  counsel  for 
the  plaintiff  was  stopped  by  the  court.  Williams,  J.,  in  giving 
his  opinion,  said  :  — 

"  Taking  the  policy  without  the  conditions,  it  is  clear  that 
the  plaintiff  would  have  no  claim  whatever  against  the  com- 
pany thereon  after  the  13th  of  October,  1854,  unless  he  duly 
paid  the  premium  for  each  ensuing  year,  on  or  before  that  day. 
Then  comes  a  condition  (the  second)  which  provides  that  the 
policy  shall  become  void  if  the  (yearly)  premiums  be  not  paid 
within  thirty  days  after  they  become  due  respectively.  Stop- 
ping there,  it  might  be  a  question,  and  it  is  one  which  persons 
insured  would  be  wise  not  to  raise,  whether  this  does  not  con- 
template a  payment  by  the  assured  himself,  or  whether,  as  has 
been  contended  on  the  part  of  the  plaintiff,  the  effect  of  this 
condition  is  to  absolutely  extend  the  period  for  the  payment 
of  the  premium,  so  that,  if  the  assured  should  die  within  the 
thirty  days,  the  company  arc  still  bound  to  accept  the  money ; 
such  payment  to  all  intents  and  purposes  inuring  as  a  pay- 
ment within  the  time  limited  by  the  policy,  so  as  to  entitle  the 
representatives  of  the  assured  to  recover  upon  the  policy,  even 
though  the  assured  should  be  dead  at  the  time  the  premium 
was  paid.  The  inclination  of  my  opinion,  if  it  be  necessary  to 
express  one,  and  perhaps  it  is,  for  it  has  an  important  bearing 
on  the  case,  is,  that  the  thirty  days  are  given  only  with  refer- 
ence to  insurance  for  future  years,  and  that,  notwithstanding 
the  life  has  become  less  valuable,  the  company  are  bound  to  go 
on  insuring  future  years,  provided  the  future  premiums  are 
paid  within  thirty  days  after  the  expiration  of  each  period  of 
insurance.^  However  that  may  be,  the  payment  here  was  not 
made  within  the  thirty  days.  But  then  comes  this  further  con- 
dition :  '  But  this  policy  may  be  revived  within  three  calendar 

1  In  Worden  v.  Guardian,  &c.  Ins.  Co.,  .30  Superior  Ct.  (N.  Y.),  it  was  held, 
under  a  policy  providing  tliat  tlie  "  premium  should  be  paid,"  that  it  might  be 
paid  within  the  days  of  grace,  after  the  death  of  the  insured,  by  anotiier  than 
the  insured;  distinguishing  the  case  from  those  where  tlie  policy  provides  that 
the  assured  shall  pay,  and  use  language  implying  that  he  is  siill  alive.  Sea 
Want  V.  Blunt,  post,  §  357. 

756 


CH.  XVII.]  THE   PREMIUM.  [§  353 

months,  on  satisfactory  proof  of  the  health  of  the  party  on  whose 
life  the  assurance  is  made,  and  the  payment  of  a  fine  of  2s.  6c?. 
per  cent  upon  the  sum  assured,'  &c.  I  am  at  a  loss  to  see  how 
that  provision  aids  the  plaintiff's  case.  It  assumes  that  the 
subject  upon  which  the  insurance  is  to  attach  is  a  living  per- 
son, otherwise  the  stipulation  for  satisfactory  proof  of  liealth 
would  be  idle  and  absurd.  The  very  foundation  of  a  life  pol- 
icy is,  that  it  is  a  contract  for  the  payment  of  a  certain  sum 
on  the  future  death  of  a  person  in  being,  in  consideration  of 
the  present  payment  of  a  premium.  The  renewals,  like  the 
original  policy,  clearly  are  only  for  the  future  assurance  of  a 
living  person.  Then  it  is  said,  that,  by  accepting  the  pre- 
mium after  the  expiration  of  the  thirty  days,  the  directors 
must  be  taken  to  have  waived  the  giving  of  proof  of  the  health 
of  the  party  on  whose  life  the  assurance  was  made,  and  that 
the  payment  inured  as  a  payment  made  in  due  time,  and  that 
the  policy  was  thereby  revived.  Taking  that  literally,  it  is, 
that  the  directors  waived  the  production  of  proof  of  the  state 
of  health  of  a  man  who  was  supposed  to  be  alive,  not  the  fact 
of  his  being  alive.  They  cannot  be  assumed  to  have  waived 
the  condition  that  the  person  whose  life  was  insured  should 
really  be  a  living  person  at  the  time  the  renewal  or  revival  of 
the  policy  took  place.  Then  it  is  said  that  the  payment  and 
acceptance  of  the  premium  created  a  new  contract.  But  in 
truth  it  is  no  new  contract  at  all ;  it  was  intended  as  a  pay- 
ment under  the  original  contract.  The  result  is,  that  the 
policy  was  not  renewed,  and  our  judgment  must  be  for  the 
defendants." 

Byles,  J. :  "I  also  think  that  the  defendants  are  entitled  to 
judgment.  An  important  question  is  glanced  at  here,  namely, 
as  to  the  effect  of  a  payment  of  the  premium  on  a  life  policy 
after  the  expiration  of  the  period  covered  by  the  policy,  and 
within  tlie  number  of  days  usually  allowed  by  the  conditions 
for  making  the  payment,  or,  as  they  have  been  called,  the 
days  of  grace.  I  am  not  aware  of  any  authority  upon  that 
subject  except  what  fell  from  the  court  in  the  recent  case  of 
Simpson  v.  The  Accidental  Death  Company.^     It  is  unneces- 

1  2  C.  B.  N.  s.  257. 

757 


§  354]  INSURANCE :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XVII. 

sary  on  the  present  occasion  to  pronounce  any  opinion  upon 
that  question.  It  may  be  observed  that,  whatever  might  have 
been  the  construction  of  the  policy  if  it  had  been  utterly 
silent  in  this  respect,  here  it  is  in  terms  a  contract  or  under- 
taking against  the  happening  of  a  future  event.  '  Dead  or 
alive  '  —  which  would  be  equivalent  to  '  lost  or  not  lost '  in  a 
marine  policy  —  seems  to  be  excluded  by  the  terms  of  the 
policy  and  the  third  condition.  But  the  objection  that  the 
payment  did  not  take  place  within  the  thirty  days,  clearly 
appears  to  me  to  be  fatal  to  the  plaintiff's  claim.  The  pay- 
ment and  receipt  were  ultra  the  condition  and  under  a  mis- 
take. The  effect  would  1)e  that  the  plaintiff"  might  maintain 
an  action  to  recover  back  the  premium  so  paid,  on  the  ground 
of  its  having  been  paid  and  received  under  a  mistake  of 
facts." 

§  354.  Days  of  Grace  ;  Payment  of  Premium  after  Death.  — 
The  case  of  Simpson  v.  Accidental  Death  Insurance  Com- 
pany, referred  to  in  the  last  section,  was  this.  The  insured 
took  out  a  policy  against  death  by  accident,  the  premium  upon 
which  was  payable  on  the  twenty-second  day  of  January, 
annually.  One  of  the  conditions  provided  that  the  premiums 
should  be  paid  "  within  twenty-one  days  from  the  day  on 
which  the  same  should  accrue  or  become  due,"  and  that, 
"  provided  tlie  same  should  be  from  time  to  time  paid  within 
such  space  of  twenty-one  days,  the  policy  should  not  be  void, 
notwithstanding  the  happening  before  the  expiration  of  such 
space  of  twenty-one  days  of  the  event,  upon  the  happening 
whereof  the  amount  secured  by  the  policy  should,  according 
to  the  terms  hereof,  become  payable."  Another  condition 
provided  that  "  if  the  premium  should  be  unpaid  for  twenty- 
one  days  next  after  it  should  become  due,  the  policy  should 
be  absolutely  void."  And  it  was  also  provided  in  another 
condition  that  "  in  every  case  where  a  new  premium  should 
become  payable,  the  directors  should  be  at  liberty  to  terminate 
the  risk  by  refusing  to  accept  the  premium."  The  insured 
was  killed  by  accident  on  the  1st  of  February,  the  premium 
due  on  the  22d  of  January  preceding  not  having  been  paid 
nor  tendered,  nor  was  it  afterwards  until  after  the  expiration 
758 


CH.  XViI.]  THE    PREMIUM.  [§  355 

of  the  twenty-one  days.  Upon  these  facts  it  was  held  that 
the  premium  was  to  be  paid  by  the  insured  and  not  by  his 
executor,  and  that  if  the  latter  had  tendered  it  within  the 
twenty-one  days,  it  would,  if  not  accepted,  have  been  of  no 
avail ;  that  the  non-payment  within  the  time  limited  rendered 
the  policy  void ;  and  that  under  the  terms  of  the  last  condi- 
tion neither  the  executor  nor  the  assured,  had  he  been  living, 
would  have  had  an  absolute  right  to  keep  the  policy  alive  by 
the  payment  or  tender  of  the  premium  within  the  twenty-one 
days,  as  the  insurers  had  reserved  the  option  to  continue  or  to 
refuse  to  continue,  at  their  discretion.^ 

§  355.  Days  of  Grace;  Payment  of  Premium  after  Death; 
Prospectus. — And  to  the  same  effect  is  Mutual  Benefit  Life 
Insurance  Company  v.  Ruse,^  where  the  policy  was  to  be  void 
if  the  annual  premiums  were  not  paid  on  or  before  a  specified 
day  of  each  year.  But  the  company  issued  a  prospectus,  not 
referred  to  in  the  policy,  stating,  among  other  things,  that  any 
one  neglecting  to  pay  his  premium  for  thirty  days  after  the 
same  became  due,  forfeited  his  insurance.  The  premium  was 
not  paid  on  the  day  specified,  but  was  tendered  before  the 
expiration  of  thirty  days,  though  not  till  after  the  death  of  the 
insured,  and  refused.  The  question  was  whether  the  pro- 
spectus was  admissible  in  evidence  to  control  the  provisions  of 
the  policy  and  to  extend  the  time  of  payment  of  the  premium 
for  thirty  days.  And  the  court  held  the  prospectus  inadmis- 
sible, and  also  if  it  were  admissible,  that  it  could  not  have  the 
effect  of  reviving  a  policy  where  the  insured  had  died  before 
the  payment  of  the  premium  within  the  thirty  days.  "  If," 
said  the  court,  "  a  tender  of  the  premium  had  been  made  in 
this  case  after  the  day  of  payment  named  in  the  policy,  and 
before  the  expiration  of  thirty  days,  the  insured  being  in  life,  I 
should  incline  to  the  opinion  that  they  would  have  been  bound 
by  it ;  but  if  made  within  the  thirty  days,  the  insured  being 
dead,  and  the  fact  of  his  death  known  to  the  parties,  there 
would  be  in  that  event  no  contract,  no  consideration  for  the 

1  Robert  v.  New  England,  &c.  Tns.  Co.  1  Disney  (Supr.  Ct,  Cincinnati),  355. 

2  8  Ga.  534.  See  also  Day  v.  Miit.  Ben.  Life  Ins.  Co.,  1  McArtlmr  (D.  C), 
41 ;  3  Ins.  L.  J.  253 ;  s.  c.  4  Big.  Life  &  Ace.  Ins.  Cas.  15. 

759 


§  356]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,   ETC.       [CH.  XVII. 

insurance,  no  mutuality.  It  would  be  an  act  of  mere  futility, 
out  of  which  no  liability  could  spring.  .  .  .  There  can  be  no 
valid  contract  for  the  insurance  of  the  life  of  a  dead  man." 
And  upon  the  same  facts  the  Court  of  Appeals  of  New  York  ^ 
came  to  the  same  conclusion,  reversing  the  decision  in  the 
same  case  in  the  court  below. ^ 

§  356.  Non-payment  of  Premium  ;  Excuse  ;  Prospectus  ;  Cus- 
tom ;  Notice.  —  Afterwards,  however,  upon  a  motion  for  a 
rehearing,  and  upon  the  citation  of  three  English  cases,^  the 
court  observed  that  the  cases  referred  to  did  certainly  hold 
that  the  prospectus  might  equitably  be  regarded  as  forming  a 
part  of  and  controlling  the  terms  of  the  contract,  and  that  it 
was  not  improbable  that  an  examination  of  these  cases  would 
have  led  to  a  different  conclusion  than  the  one  arrived  at 
upon  that  point ;  but  as  the  judgment  was  right  upon  another 
ground,  it  would  not  disturb  it.*  The  first  two  of  the  Eng- 
lish cases  referred  to  held  that  a  prospectus  issued  by  the 
company,  contemporaneously  with  the  policy,  stating  that 
these  policies  are  indisputable  except  upon  the  ground  of 
fraud,  estop  the  companies  from  setting  up  the  defence  of  a 
misrepresentation,  unless  it  be  alleged  that  it  was  fraudulent 
as  well  as  false.  The  last  case^  merely  holds  that  equity  will 
reform  a  policy  not  made  out  according  to  the  agreement  of 
the  parties.  But  a  still  later  English  case  than  any  of  the 
three  before  cited  ^  holds  that  a  party  interested  may  avail 


1  Ruse  V.  Mut.  Ben.  Life  Ins.  Co.,  23  N.  Y.  516. 

2  26  Barb.  (N.  Y.)  556.  There  seems  to  be  some  confusion  about  the  facts. 
In  the  report  of  the  case  in  tlie  Supreme  Court,  it  is  stated  by  tiie  judge  who 
gave  the  opinion  that  tiie  tender  of  the  premium  was  before  the  deatli,  —  a  fact 
which,  if  true,  would  doubtless  justify  that  decision.  But  the  opinion  in  the 
Court  of  Appeals,  as  well  as  the  same  case  in  Georgia,  shows  tiiat  the  tender 
was  not  till  after  the  death  of  the  insured.  In  neither  case,  however,  do  the 
court  seem  to  lay  much  stress  on  the  fact  of  the  time  of  payment.  See  also 
Smith  V.  Continental,  &c.  Ins.  Co.,  Dist.  Ct.  (Piiila.),  3  Ins.  L.  J.  6o,  which,  how- 
ever, is  contrary  to  the  cases  cited  ante,  §  .344  a. 

3  Wood  V.  Dwarris,  11  Exch.  493;  Wheelton  v.  Hardisty,  8  E.  &  B.  282 ; 
Collett  V.  Morrison,  9  Hare,  162,  173. 

4  24  N.  Y.  633. 

5  Collett  V.  Morrison,  the  earliest  in  date. 

6  Central  Railway  Co.  v.  Kisch,  2  H.  L.  Cas.  99.     See  also  Walsh  v.  .^tna 

760 


CH.  XVII.]  THE   PREMIUM.  [§  356 

himself  of  the  statements  contained  in  such  a  prospectus  to 
relieve  himself  from  the  obligations  of  a  contract  which  he 
has  entered  into,  and  to  which  the  prospectus  refers.  In 
Salvin  V.  James,^  it  seems  to  have  been  taken  for  granted  that 
such  a  prospectus  was  to  be  deemed  a  part  of  the  contract. 
In  the  opinion  of  Lord  Campbell,'-^  a  statement  in  the  pro- 
spectus of  a  company  that  all  policies  will  be  indisputable 
except  for  fraud,  waives  all  forfeitures  except  for  personal 
fraud  on  the  part  of  the  insured.  The  fraud  of  third  parties 
does  not  avoid  such  a  policy,  and  it  is  as  if  the  statement 
were  broadly  that  all  policies  were  indisputable  ;  since  the  law 
would  interpose  to  protect  the  insurers  against  the  personal 
fraud  of  the  insured.  Where  the  policy  had  lapsed  for  non- 
payment of  premium  within  the  usual  days  of  grace,  and  the 
company  wrote  to  the  insured  that  they  would  reinstate  if  he 
would  pay  the  overdue  premium  and  furnish  a  certificate,  and 
this  was  done  within  eight  days,  the  court  sustained  a  bill  in 
equity  to  declare  the  policy  reinstated,  no  good  reason  being 
shown  why  tlie  certificate  should  not  be  accepted,  and  holding 
that  a  certificate  must  be  satisfactory  which  ought  to  be  satis- 
factory .^  It  seems,  also,  that  in  cases  of  improper  refusal  to 
accept  premiums  the  insured  may  elect  to  treat  the  policy 
as  void,  and  sue  for  damages,  or  he  may  wait  till  the  policy 
becomes  payable  by  its  terms,  and  then  avoid  a  forfeiture  by 
plea  of  tender  of  payment ;  but  he  cannot  recover  the  pre- 
miums paid,  and  leave  the  question  of  liability  on  the  policy 
open.^  No  notice  is  required  from  the  insurer  to  the  insured 
that  his  premium,  or  note  given  for  a  premium,  is  about  to 
become  due,  unless  the  custom  and  course  of  dealing  between 
them  has  been  such  as  to  justify  the  insured  in  the  belief  that 

Life  Ins.  Co.,  30  Iowa,  133  ;  Rohrsclineider  v.  Knickerbocker,  &c.  Ins.  Co.  (N.Y.), 
8  Ins.  L.  J.  -iWl. 

1  6  East,  571. 

2  Wlieelton  v.  Hardisty,  8  E.  &  B.  232,  282.  And  sucli  waiver  is  as  good 
a  plea  at  law  as  in  equity.  Robinson  v.  St.  Louis,  &c.  Ins.  Co.,  C.  Ct.  (Mo.),  8 
Ins.  L.  J.  159. 

3  Miesell  v.  Globe  Mut.  Ins.  Co.,  76  N.  Y.  115. 

*  Day  V.  Conn.  Gen.  Life  Ins.  Co.,  45  Conn.  480.  See  also  jwst,  §  568  ;  Hight 
V.  Continental,  &c.  Ins.  Co.,  C.  Ct.  (Ind.),  10  Ins.  L.  J.  223. 

761 


§  356  A]        INSURANCE  :    fire,   life,    accident,    etc.       [CH.  XVII. 

such  notice  would  be  given,  and  induce  him  to  rely  upon  it  to 
his  prejudice ;  ^  or  unless  such  notice  is  necessary  to  inform 
the  insured  of  the  amount  which  is  to  become  due, — that 
amount  being  variable,  and  depending  upon  conditions  known 
only  to  the  insurer.^ 

[§  356  A.  Notice  of  the  Time  of  Payment.  —  In  regard  to 
the  effect  of  a  habit  or  usage  of  sending  notice  of  the  date 
when  each  premium  becomes  due,  opinions  differ.  On  the  one 
hand  it  is  held  that  where  from  the  course  of  dealing  between 
the  parties  the  insured  has  a  right  to  believe  that  notice  will 
be  given  to  him  of  the  amount  due  and  the  time  it  is  to  be 
paid,  the  company  cannot  in  the  absence  of  such  notice  set 
up  tlie  failure  to  i)ay.3  Usage  makes  the  giving  of  notice  a 
part  of  the  contract.^  ^lf  where  there  is  a  usage  to  give 
notice  none  is  sent,  payment  of  the  premium  within  a  reasona- 
ble time  will  save  forfeiture.^  A  notice  that  a  premium  will 
fall  due,  which  does  not  state  that  in  default  of  payment  the 
policy  will  "  become  forfeited  and  void,"  is  not  sufficient 
under  the  New  York  act  of  1877,  ch.  321,  requiring  notice  of 
a  given  form,  although  the  notice  states  that  "  prompt  pay- 
ment is  necessary  to  keep  your  policy  in  force."  "     This  law 


1  Robert  v.  New  England,  &c.  Ins.  Co.,  1  Disney  (Supr.  Ct.  Cincinnati),  355; 
Thompson  v.  Knickerbocker,  &c.  Ins.  Co.,  C.  Ct.  (Ala.),  5  Big.  Life  &  Ace.  Ins. 
Cas.  8;  post,  §  3G1  ;  Lewis  v.  Phoenix  Mut.  Life  Ins.  Co.,  44  Conn.  72;  Union, 
&c.  Ins.  Co.  V.  Pottker,  33  Oliio  St.  459  ;  Welirlin  v.  Piienix  Ins.  Co.,  1  So.  L. 
Rev.  N.  s.  837  ;  Girard  Life  Ins.  Co.  v.  Mutual,  &c.  Ins.  Co.  (Pa.),  10  Ins.  L.  J. 
257;  McLean  v.  Piedmont,  &c.  Ins.  Co.  (Va.),  7  Ins.  L.  J.  380.  So  in  France, 
where  the  custom  is  to  send  out  agents  to  collect  annual  premiums  from  the 
parties  insured,  tliey  may  rely  upon  this  custom,  and  are  not  in  default  till  de- 
mand, though  the  policy  provides  that  premiums  shall  be  paid  at  the  office  of 
the  insurer.  L'Aigle  c.  Aubry,  Dalloz,  Jur.  Ge'n.,  1870,  2,  163;  Comp.  de 
rUnion  c.  Fouvre,  id.  1850,  240;  id.  5,  34.  See  also  Mayer  v.  Mut.  Life  Ins. 
Co  ,  38  Iowa,  304  ;  ante,  §  346. 

2  Home  Life  Ins.  Co.  v.  Pierce,  75  111.  426. 

3  [Attorney-General  v  Continental  Life  Ins.  Co  ,  33  Hun,  138;  Manhattan 
Life  Ins.  Co.  v.  Smith,  44  Ohio  St.  156.] 

4  [Grant  v.  Ala.  Gold  Life  Ins.  Co.,  7G  Ga.  575.] 

5  [Grant  v.  Ala.  Gold  Life  Ins.  Co.,  76  Ga.  583,  disagreeing  with  the  views 
expressed  in  Thompson  v.  Insurance  Co.,  104  U  S.  2-52,  though  not  with  the 
decision,  for  in  that  case  the  premium  was  never  paid  or  tendered.] 

G  [Phelan  v.  Northwestern  Mut.  Life  Ins.  Co.,  113  N.  Y.  147.] 
762 


CH.  XVII.]  THE    PREMIUM.  [§  357 

applies  to  policies  issued  before  it  was  passed.^  The  burden 
of  proof  is  on  the  company  to  show  that  it  has'  served  on  the 
insured  the  notice  of  forfeiture  for  non-payment  of  premium 
required  by  the  New  York  laws.^  A  failure  of  notice  to  pay 
a  premium  to  reach  the  assured  docs  not  prevent  the  avoid- 
ance of  the  policy,  if  the  notice  was  properly  mailed  and  di- 
rected.3  So  under  the  Iowa  statute,  requiring  notice  to  be 
given  to  the  makers  of  premium  notes  when  they  fall  due,  the 
service  is  complete  on  mailing  a  registered  letter,  or  at  least 
when  it  should  be  received  in  due  course  of  mail.*  In  Penn- 
sylvania it  is  held  that  a  custom  to  notify  when  premiums  be- 
come due  is  inadmissible,  unless  it  is  also  shown  that  the 
notice  was  omitted  in  the  particular  case  on  purpose  to  avoid 
the  policy.^  A  company  in  the  habit  of  sending  notice  of 
the  dueness  of  premiums  is  not  obliged  to  continue  the  practice.** 
If  there  is  nothing  in  the  charter  or  by-laws  requiring  the 
company  to  send  notice  of  the  time  when  the  annual  interest 
becomes  due,  a  mere  usage  to  do  so  creates  no  right  to  receive 
such  notice.'^  A  requirement  in  the  notice  that  the  premium 
shall  be  paid  by  noon  may  be  waived  by  a  previous  course  of 
dealing  in  regard  to  such  notices.^] 

§  357.  Payment  of  Premium  ;  Days  of  Grace  ;  Cy  pres  Per- 
formance. —  In  an  early  case,  when  policies  of  insurance  were 
usually  under  seal,  an  attempt  was  made  to  introduce  the 
doctrine  of  cy  pres  into  the  interpretation  of  these  contracts, 
in  analogy  to  the  rule  as  to  the  interpretation  of  conditions 
respecting  real  estate,  claiming  that  such  conditions  need  not 
be  strictly  performed  according  to  the  letter,  but  it  is  enough 
if  they  be  performed  as  near  as  may  be  and  according  to  the 


1  [Carter r.  Brooklyn  Life  Ins.  Co.,  HON.  Y.  15] 

2  [Baxter  v.  Brooklyn  Life   Ins.   Co.,  44   Hun,  184;  Laws  of  1876,  c.  341, 
Laws  of  1877,  c.  321  ;  Wyman  v.  Phoenix  Mut.  Life  Ins.  Co.,  45  Hun,  184.] 

3  [Lothrop  V.  Greenfield  Stock  &  Mut.  Fire  Ins.  Co.,  2  Allen,  82  at  85.] 
*  [McKenna  v.  State  Ins.  Co.,  73  Iowa,  453.] 

5  [Girartl  Life  Ins.,  &c.  Co.  v.  Mutual  Life  Ins.  Co.,  97  Pa.  St.  15.] 
«  [Smith  V.  National  Life  Ins.  Co.,  103  Pa.  St.  177.] 

■J  [Mutual  Fire  Ins.  Co.  v.  Miller  Lodge,  58  Md.  463  ;  Webb  v.  Mut.  Fire  Ins. 
Co  .  63  Md.  213] 

8  [Ala.  Gold  Life  Ins.  Co.  v.  Garmany,  74  Ga.  51  ] 

7^3 


§  357]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XVII. 

intent.  The  case  was  one  where  a  party  lor  the  benefit  of 
his  wife,  in  consideration  of  quarterly  jmyments  to  be  made 
by  him  during  his  Ufe,  stipulated  for  the  payment  of  an  an- 
nuity to  his  wife  from  and  after  his  decease  during  her  life. 
The  insurers  covenanted  to  pay  such  annuity  on  condition 
that  the  assured  should  pay,  in  addition  to  the  quarterly  pre- 
mium, the  proportion  of  contributions  which  the  members  of 
the  society  should,  during  his  life,  be  called  on  to  make ;  and 
by  the  rules  of  tlie  society,  if  any  member  should  neglect  to 
pay  the  quarterly  premiums  for  fifteen  days  after  they  re- 
spectively become  due,  the  policy  should  be  void,  unless  the 
niemher,  continuing  in  as  good  health  as  when  the  policy  expired^ 
should  pay  up  the  arrears  within  six  months.  The  member 
died,  leaving  a  quarterly  payment  due  and  unpaid  at  the  time 
of  his  death,  and  liis  executor  tendered  the  amount  due 
within  fifteen  days  after  it  became  due.  But  the  court,  after 
referring  to  the  autliorities  in  favor  of  such  a  construction  of 
conditions  annexed  to  real  estate,  and  to  the  argument  of  the 
plaintiff  that  the  payment  of  the  premium  in  these  cases  was 
analogous  to  a  condition  to  create  an  estate,  declared  that  the 
analogy  did  not  hold  good,  and  that  the  rules  applicable  to 
conditions  with  respect  to  real  estate  did  not  apply,  and 
that  this  being  a  contract  of  insurauce  must  be  construed 
according  to  the  intent  of  the  parties  expressed  in  the  deed 
or  policy.  The  executor's  tender  of  the  amount  due  within 
fifteen  days  after  it  became  due,  the  insured  not  being  then  a 
member  continuing  in  as  good  health  as  when  the  policy  ex- 
pired, did  not  revive  the  policy.^  And  in  Tarleton  v.  Stani- 
forth,^  in  a  case  of  fire  insurance  where  the  premium  was 
tendered  within  the  fifteen  days'  grace  allowed,  but  not  till 
after  the  loss,  it  was  upon  the  same  principle  held  that  the 
tender  would  not  revive  the  policy.     In  this  case  the  insur^ 


1  Want  V.  Blunt,  12  East,  183;  Donnald  v.  Pied.,  &c.  Life  Ins,  Co.,  Sup.  Ct. 
of  South  Carolina,  4  S.  C.  321.  In  tliis  case  the  condition  was  "that  no 
premium  should  be  received  after  the  day  named  in  the  policy,  unless  the  in- 
sured should  be  in  perfect  health,  and  that  the  risk  should  continue  at  the 
entire  option  of  the  company."     And  see  antp,  §  3-54. 

2  5  T.  R  695 ;  aflarmed  in  the  E.xch.  1  B.  &  P.  470. 

764 


CH.  XVII.]  THE   PREMIUM.  [§  358 

ance  was  from  half-year  to  half-year,  "  as  long  as  the  insur- 
ers should  agree  to  accept  the  same  "  within  fifteen  days 
after  the  expiration  of  the  former  half-year ;  but  there  was 
to  be  no  insurance  till  the  premium  was  actually  paid.^  In 
McDonnell  v.  Carr,^  however,  where  the  policy  was  renewable 
from  year  to  year,  at  the  discretion  of  the  insurers,  but 
provided  tliat  "  no  policy  will  be  considered  valid  for  more 
than  fifteen  days  after  the  expiration  of  the  period  limited 
therein,"  unless  the  premium  be  paid,  it  was  held  that  the 
insurers  were  liable  for  a  loss  occurring  after  the  expiration 
of  the  year,  and  before  payment  of  the  premium  within  fifteen 
days,  as  the  contract  was  in  effect  an  insurance  for  a  year  and 
fifteen  days. 

§  358.  Non-payment  of  Premium  ;  Excuse  ;  Insolvency  of 
Insurers  ;  Policy  declared  forfeited  ;  Extension  of  Time  ;  Change 
of  Agency  ;  Course  of  Business  ;  Suspension  of  Policy.  —  The 
non-payment  of  a  premium  falling  due  after  an  order  issued, 
upon  the  petition  of  the  insurers,  to  wind  up  the  affairs  of  the 
insurance  company,  does  not  work  a  forfeiture  of  the  rights 
of  the  insured  against  the  company.^  This  is  practically  a 
determination  of  the  contract  by  them,  and  not  by  the  policy- 
holder. He  therefore  need  take  no  further  steps  to  keep  iiis 
policy  alive,  but  may  prove  his  claim  for  damages,  as  of  the 
day  when  the  order  to  wind  up  took  effect.*  And  the  meas- 
ure of  damages  in  such  case  is  the  sum  which  an  insurance 
company  charging  the  same  rate  of  premium  will  require  to 
continue  the  policy.^  But  it  is  no  excuse  for  non-payment  of 
premium  that  the  insurance  company  is  under  an  injunction 

1  See  also  Salvin  v.  James,  6  East,  571. 

2  Hayes  &  Jones  (Irish),  256. 

3  [Non-payment  of  a  premium  coming  due  after  the  company  has  become 
insolvent,  does  not  avoid  the  policy.  Jones  v  Life  Ass.,  83  Ky.  75.  One  who 
relies  upon  the  insolvency  of  the  company  as  an  excuse  for  not  paying  his  pre- 
miums, must  show  his  readiness  to  perform  had  the  company  not  been  insol- 
vent, and  also  tliat  the  company  has  been  actually  suspended  either  by  some 
act  of  its  own,  or  by  a  proceeding  instituted  for  the  purpose.  People  v.  Globe 
Mut.  Life  Ins.  Co..  32  Hun.  147.] 

*  Re  Albert  Life  Ins.  Co.,  22  Law  Times,  n.  s.  (James,  V.  C.)  92;  s.  c.  Law 
Rep.  9  Eq.  706  ;  U.  S.  Fire  &  Mar.  Ins.  Co.  v.  Tardy  (Ala.),  2  Ins   L.  J.  673 
5  Re  Albert  Life  Ins.  Co.,  22  Law  Times,  n.  s.  697  ;  Law  Rep  9  Eq.  706. 

765 


§  358]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XVII. 

from  doing  business  pending  an  inquiry  into  its  solvency.^ 
[When  a  foreign  company  has  ceased  to  do  busiuess  in  the 
place  specified  for  the  payment,  a  failure  to  pay  on  the  day 
named  will  not  be  fatal. ^  Policy-holders  are  not  obliged  to 
pay  premiums  after  the  company  discontinues  business.  Nor 
are  they  required  to  go  over  to  a  company  to  which  their 
own  has  sold  out.  One  company  cannot  turn  over  its  policy- 
holders in  such  manner  to  another.^] 

Payment  or  tender  of  payment  of  premiums  is  not  necessary 
where  the  insurers  have  already  declared  the  policy  forfeited, 
or  done  any  other  act  which  is  tantamount  to  a  declaration 
on  their  part  that  they  will  not  receive  it  if  tendered.^  So 
non-payment  of  premium  was  held  excused  under  the  fol- 
lowing circumstances :  A  tender  of  overdue  premiums  was 
refused  on  the  ground  that  the  policy  had  lapsed.  A  decree 
was  obtained  declaring  the  policy  valid,  and  giving  the  plain- 
tiff the  election  of  paying  the  overdue  premiums  in  forty 
days,  or  [demanding  a  paid-up  policy.  The  latter  was  de- 
manded, and  the  policy  returned  to  the  company,  with  an 
instrument  cancelling  the  same.  Both  were  retained  by  the 
company,  which  made  no  response,  but  appealed.  The 
judgment  was  modified  on  appeal  by  striking  out  the  ojition 
to  a  paid-up  policy.  The  insured  subsequently  died,  and  a 
demand  was  made  for  the  return  of  the  policy  and  deed  of 
cancellation,  to  which  no  response  was  made  ;  but  the  com- 
pany again  appealed,  when  the  last  judgment  was  affirmed. 
And  the  company  was  held  to  be  estopped  from  insisting  that 
the  premiums  would  have  been  accepted  if  offered.  Nor 
could  the  company  claim  compound  interest  on  the  overdue 
premiums.^ 

A  policy  containing  a  provision  that  the  same  should  "  cease 

1  Universal  Ins.  Co.  v.  "Wliitehoad  (Miss.),  10  Ins.  L.  J.  3"7.  But  see  contra, 
Coffey  V.  Universal  Life  Ins.  Co.,  C.  Ct.  (Wis.),  10  Ins.  L.  J.  525. 

2  [Dorion  ;;.  Positive  Gov.  Life  Ass.  Co.,  23  L.  C.  Jur.  261  ;  Bardon  v.  Mass. 
Safety  Fund  Ass.,  147  Mass.  3R0.] 

3  [People  I'.  Empire  Mut.  Life  Ins.  Co.,  92  N.  Y.  103] 

*  Pilcher  v.  New  York  Life  Ins.  Co.  (La.),  10  Ins.  L.  J.  312;  [Manhattan  Life 
Ins.  Co.  V.  Smith,  44  Ohio  St.  156.] 

*  Hayner  v.  American,  &c.  Ins.  Co.,  69  N.  Y.  435. 

766 


CH.  XVII.]  THE   PREMIUM.  [§  358 

and  determine "  if  the  premium  should  not  be  paid  when 
due,  is  not  forfeited  by  the  failure  to  pay  such  premium  on 
the  day  it  is  due,  where  the  company  neglected  to  inform  the 
assured  of  a  change  in  the  agent  authorized  to  receive  the 
same,  after  they  had  adopted  a  rule  to  give  such  notice  in  all 
cases,  and  the  assured  tendered  the  premium  in  due  season  to 
the  former  agent  of  the  company,  and  was  unable  to  find  the 
new  agent  after  reasonable  inquiry.  In  such  a  case  the  assured 
is  entitled  to  a  reasonable  time  before  :a  forfeiture  can  be 
declared.  The  failure  to  pay  such  premium  for  sixty  days 
after  it  was  due  is  not,  under  such  circumstances,  an  unreason- 
able time,  where  the  company  had  waived  the  time  of  payment 
in  the  previous  year,  and  it  did  not  appear  at  what  time,  if 
ever,  the  assured  was  informed  of  the  place  of  payment.^ 

So  where  a  company  has  been  in  the  habit  of  giving  notice 
of  the  time  when,  place  where,  or  person  to  whom,  a  premium 
may  be  paid,  the  failure  to  pay  promptly  will  be  excused  by 
failure  to  give  such  notice.^  So  where  it  has  been  the  course 
of  dealing  between  the  parties  that  the  insured  should  pay 
the  premium  about  the  time  it  was  due,  sometimes  before  and 
sometimes  after.^  But  an  assurance  before  the  policy  is 
signed,  that  the  insured  may  have  indulgence  about  his  pay- 
ments, is  of  no  avail,  all  prior  negotiations  being  merged  in 
the  contract.*  It  was  held  in  a  case  where  the  insured  had 
paid  a  loss,  and  waived  the  non-payment  of  a  note,  that  this 
fact  was  evidence  for  a  jury  of  a  waiver  in  a  second  case.^ 

Where  the  policy  provides  for  forfeiture,  and  also  that  the 

1  Seamans  v.  Northwestern  Mut.  Life  Ins.  Co.,  C.  Ct.  (Minn  ),  3  Fed.  Rep. 
325;  s.  c.  10  Ins.  L  J.  15.3;  poxt,  §  300;  Southern  Life  Ins.  Co.  v.  McCain,  96 
U.  S.  84;  Brasweil  v.  American  Life  Ins.  Co.,  75  N.  C.  8.  [A  failure  of  the  com- 
pany to  give  the  assured  notice  of  a  ciiange  of  agency,  by  wliich  he  is  prevented 
from  making  punctual  payments,  estops  the  company.  Briggs  i'.  National  Life 
Ins.  Co.,  11  Fed.  Eep.  458  (Mass.),  1882;  Selvage  v.  John  Hancock  Mut.  Life 
Ins.  Co.,  12  Fed.  Rep.  603  (N.  Y.),  1882.] 

2  Insurance  Co.  v.  Eggleston,  96  U.  S.  572. 

^  Dilleber  r.  Knickerbocker  Life  Ins.  Co.,  7  Daly  (N.  Y.),  540.  See  also  Cot- 
ton States  Ins.  Co.  v.  Lester,  62  Ga.  247 ;  post,  §§  361,  363. 

*  Union  Mut.  Life  Ins.  Co.  v.  Mowry,  96  U.  S.  544 ;  McCraw  v.  Old  North, 
&c.  Ins.  Co.  (N.  C),  8  Ins.  L.  J.  446. 

5  Bowman  v.  Agricultural  Ins.  Co.,  2  N.  Y.  S.  C.  261. 

VOL.  11.-5  767 


§  359]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  X^II. 

insurers  may  cancel  or  maintain  the  policy  on  notice,  the  pol- 
icy remains  valid  till  notice  of  cancellation.^ 

Where  the  risk  is  suspended  while  an  overdue  premium 
remains  unpaid,  during  the  suspension  no  premium  is  earned ; 
and  if  the  company  afterwards  demand  and  receive  the  full 
premium  in  cash,  as  if  no  suspension  had  taken  place,  and 
after  notice  of  a  loss  which  happened  during  the  suspension, 
they  will  be  liable  for  that  loss,  unless  there  is  a  stipulation 
that  in  case  of  such  default  the  whole  premium  shall  be  con- 
sidered as  earned.^ 

§  359.  Premium  ;  Payment  ;  Evidence.  —  The  recital  in  the 
policy  of  the  receipt  of  the  premium  is  prima  facie  evidence 
of  the  payment,  but  only  prima  facie.  Like  all  other  receipts, 
it  is  open  to  explanation.^  In  Southern  Life  Insurance  Com- 
pany V.  Booker,*  it  was  held  that  if  a  policy  acknowledging 
payment  of  the  premium  be  delivered  unconditionally,  and 
without  fraud,  the  insurers  are  estopped  to  deny  the  pay- 
ment as  a  ground  of  forfeiture,^  but  they  may  show  the  non- 


1  Dalloz,  Jiir.  Gen.,  1844,  4,  36,  Comp.  des  Plioenix  c.  Doliis. 

'^  Joliffe  ('.  Madison,  &c.  Ins.  Co.,  33  Wis.  HI.  See  also  ante,  §  4  ;  Gorton  t7. 
Dodge  County,  &c.  Ins.  Co.,  39  Wis.  121 ;  Kirk  v.  Dodge  County,  &c.  Ins.  Co., 
39  id.  138;  Sliultz  v.  Hawkeye  Ins.  Co.,  42  Iowa,  239. 

3  Pitt  V.  Berksliire  Life  Ins.  Co.,  100  Mass.  500;  Sheldon  v.  Atlantic  Fire  & 
Mar.  Ins.  Co.,  26  N.  Y  460;  Baker  i'.  Union  Life  Ins.  Co.,  43  id.  283,  overruling 
8.  c.  6  Abb.  Pr.  n.  s.  144;  New  England  Mut.  Life  Ins.  Co.  r.  Hasbrook,  .32  Ind. 
447;  Miller  v.  Brooklyn  Life  Ins.  Co.,  U.  S.  C.  Ct.  (Md.),  2  Big.  Life  &  Ace. 
Ins.  Cas.  34;  s.  c.  12  Wall.  (U.  S.)  288.  [A  receipt  is  not  conclusive  evidence, 
but  may  be  contradicted,  varied,  or  explained  by  oral  testimony.  Kyan  r. 
Rand,  26  N.  H.  12  at  15;  Life  Ins.  Co.  ".  Davidge,  51  Tex.  244;  Todd  v.  Pied- 
mont, &c.  Life  Ins.  Co.,  34  La.  An.  63  at  66  and  67.]  In  other  courts  the 
acknowledgment,  in  the  absence  of  fraud,  is  held  to  be  conclusive.  Provident 
Life  Ins.  Co.  v.  Fennell,  40  111.  398  ;  Michael  v.  Nashville  Ins.  Co.,  10  La.  An. 
7.37;  La  Compagnie  D.  Ass.,  &c.  v.  Grammon  (Q.  B.  Montreal),  3  Leg.  News, 
19;  Consolidated,  &c.  Ins.  Co.  v.  Cashow,  41  Md.  59;  Trager  v.  Louisiana,  &c. 
Ins.  Co.  (La.),  9  Ins.  L.  J.  817.     And  see  post,  §  584. 

*  9  Heisk.  (Tenn  )  606. 

^  [A  company  cannot  deny  the  payment  of  a  premium  acknowledged  in  the 
policy,  for  the  purpose  nf  denying  the  legal  existence  of  the  policy.  Home  Ins. 
Co.  I'.  Gilman,  112  Ind.  7;  Bosch  v.  Humboldt  Mut.  Fire  &  Mar.  Ins.  Co,  35 
N.  J.  L.  429  at  431 ;  Illinois  Cent.  Ins.  Co.  v.  Wolf,  37  III.  .354  at  .356 ;  Teu- 
tonip.  Ins.  Co  v.  Mueller,  77  111.  22  at  24.  If  the  policy  is  to  be  incontestable 
except  for  fraud,  and  it  states  that  the  premium  was  paid,  the  company  cannot 

768 


en.  XVII.]  THE   PREMIUM.  [§  360 

payment  in  order  to  enforce  the  payment ;  otherwise,  if  the 
policy  be  conditionally  delivered.^  In  Norton  v.  Phoenix  Life 
Insurance  Company,'-^  it  appeared  that  the  local  agent  of  a 
life  insurance  company  took  out  a  policy  on  his  own  life  for 
the  benefit  of  his  wife.  He  was  supplied  by  his  principal 
with  renewal  receipts,  all  of  which  by  their  terms  were  to  be 
valid  only  upon  their  being  countersigned  by  the  agent.  He 
took  a  receipt  for  the  premium  paid  by  him  one  year,  but  did 
not  countersign  it.  It  was  not  disputed  that  the  premium 
was  paid  for  that  year.  But  for  the  next  year  only  a  renewal 
receipt,  not  countersigned  by  him,  was  found  among  his 
papers  after  death,  and  payment  of  the  loss  was  resisted  on 
the  ground  that  the  premium  for  the  last  year  was  not  paid. 
But  an  equally  divided  court  held  that  there  was  no  error  in 
the  instruction  to  the  jury  that  the  last-named  receipt  was 
prima  facie  evidence  of  the  payment  of  the  premium.  And 
in  Myers  v.  Keystone  Mutual  Life  Insurance  Company,^  the 
court  were  inclined  to  the  same  opinion.  But  in  iMassachu- 
setts,  in  a  case  ^  where  the  policy  provided  that  it  should  not 
be  in  force  till  countersigned  by  the  agent,  and  as,  in  the  Con- 
necticut cases,  the  policy  was  upon  the  life  of  such  agent, 
and  was  found  after  his  death  amongst  his  papers,  but  not 
countersigned,  the  court  held  that  the  policy  never  was  in 
force. 

§  360.  Payment  of  Premium  ;  Waiver.  —  The  prepayment 
of  a  premium  may  be  waived  by  an  assurance  that  the  pay- 
ment of  the  money  on  delivery  of  the  policy  "  makes  no  dif- 
ference." °  And  if  the  agent  be  authorized  to  receive  tlie 
premium,  an  agreement  between  the  applicant  and  the  agent 
that  the  latter  will  be  responsible  to  the  company  for  the 
amount,  and  hold  the  applicant  as  his  personal  debtor  there- 
dispute  this  as  against  the  beneficiary,  altliough  the  orders  given  for  a  part  of 
the  premium  were  not  honored.     Kline  v.  National  Ben.  Ass.,  Ill  Ind.  462.J 

1  Whiting  V.  Mass.,  &c.  Ins.  Co.,  129  Mass.  240. 

2  36  Conn.  503. 

3  27  Pa.  St.  268. 

*  Badger  v.  American  Pop.  Life  Ins.  Co.,  103  Mass.  244. 
5  Bragdon  v.  Appleton  Mut.  Ins.  Co.,  42  Me.  259;  Bodine  v.  Exch.  Fire  Ins. 
Co.,  51  N.  Y.  117. 

769 


§  360]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.      [CH.  XYII. 

for,  is  a  waiver  of  the  stipulation  in  the  policy  that  it  shall 
not  be  binding  till  the  premium  is  received  by  the  company 
or  its  accredited  agent.i  The  same  is  true  if  the  language  of 
the  policy  is  that  the  premium  shall  be  paid  before  the 
policy  shall  become  valid;^  And  if  the  policy  requires  actual 
payment,  and  the  assured  offers  to  draw  his  check  for  the 
amount  of  the  premium  upon  the  bank  where  the  agent  also 
keeps  his  account,  the  cashier  telling  him  at  the  time  the 
arrangement  for  insurance  was  made  that  he  could  have  the 
money,  but  the  agent  said,  "  Let  the  money  lie,  and  I  will 
draw  for  it  when  I  want  it,"  and  did  actually  draw  it,  but 
not  till  after  the  loss,  this  is  also  a  waiver  of  prepayment.^ 
And  in  fact  the  delivery  of  the  policy  without  exacting  the 
payment  raises  the  presumption  that  a  credit  is  intended,  and 
is  a  waiver  of  the  condition  of  prepayment.*  The  waiver 
may  also  be  inferred  from  any  circumstances  fairly  showing 
that  the  insurers  did  not  intend  to  insist  upon  the  prepay- 
ment of  the  premium  as  a  condition  precedent.^  And  so  the 
non-payment  of  an  annual  premium  due  on  a  specified  day 
may  be  waived.^  So  if  a  foreign  insurance  company  with- 
draw its  agent,  to  whom  by  the  contract  payment  may  be 
made,  it  cannot  set  up  the  non-payment  as  a  forfeiture,  it 
being  of  the  essence  of  every  contract  that  if  one  party  to  it 
prevents  its  performance  by  the  other,  the  former  cannot  be 
allowed  to   reap  any  benefit  from  the  non-performance." 

1  Sheldon  v.  Conn.  Mut.  Life  Ins.  Co.,  25  Conn.  207  ;  Behler  v.  German  Mut. 
Fire  Ins.  Co.  (Intl.),  9  Ins.  L.  J.  778;  Soutlicrn  Life  Ins.  Co.  v.  Booker,  9  Heisk. 
(Tenn.)  (506.  Contra,  if  the  application  states  that  the  agent  has  not  power  to 
waive  payment.     Greene  v.  Lycoming  Fire  Ins.  Co.,  91  Pa.  St.  387. 

■^  Bouton  V.  American  Mut.  Life  Ins.  Co.,  25  Conn.  542. 

3  New  York  Central  Ins.  Co.  v.  Nat.  Prot.  Ins.  Co.,  20  Barb.  (N.  Y.)  469; 
Hallock  V.  Com.  Ins.  Co.,  2  Dutch.  (N.  J.)  268. 

4  Wood  V.  Poughkeepsie  Ins.  Co.,  32  N.  Y.  619;  Boehen  v.  Williamsburgh 
Ins.  Co.,  35  N.  Y.  131;  Miller  v.  Brooklyn  Life  Ins.  Co.,  12  Wall.  (U.  S.)  285, 
288 ;  Sheldon  v.  Atlantic  Fire  &  Mar.  Ins.  Co.,  26  N.  Y.  460. 

8  Heaton  v.  Manhattan  Fire  Ins.  Co  ,  7  R.  I.  502  ;  Goit  v.  Nat.  Prot.  Ins.  Co., 
25  Barb.  (N.  Y.)  189. 

6  Bouton  V.  Am.  Mut.  Life  Ins.  Co.,  25  Conn.  542 ;  Mowry  v.  Home  Ins.  Co., 
9  R.  L  346  ;  Rockwell  v.  Mut.  Life  Ins.  Co  ,  20  Wis.  335  ;  1  Big.  Life  &  Ace.  Ins. 
Cas.  699. 

7  Ante,    §  356;  Hamilton  v.   Mutual,   &c.  Ins.   Co.    (C.  Ct.),  9  Blatch.  234 ; 

770 


CH.  XVII.]  THE    PREMIUM.  [§  360  A 

If  a  condition  of  the  policy  stipulate  that  acceptance  of 
an  overdue  premium  shall  be  considered  an  act  of  grace  or 
courtesy,  and  not  as  a  waiver  of  forfeiture  if  any  future  pay- 
ment of  premium  be  omitted  on  the  day  it  falls  due,  such 
acceptance  will  nevertheless  be  a  waiver  of  forfeiture  on  ac- 
count of  neglect  to  pay  the  overdue  premium  accepted.^ 
And  such  a  stipulation  will  be  regarded  as  a  mere  notice, 
if  printed  on  the  back  of  the  policy,  and  not  referred  to 
in  it.2 

[§  360  A.  "Waiver  of  Prepayment.  —  A  delivery  of  the 
policy  without  payment  of  the  premium  waives  its  prepay- 
ment as  a  requisite  to  the  contract's  taking  effect,  though 
such  a  condition  is  contained  in  the  policy.^  When  a  policy 
contained  a  clause  declaring  that  the  company  would  not  be 
liable  unless  premiums  should  be  actually  paid  ;  and  where 
the  policy  was  delivered  by  the  company's  agent,  who  waived 
prepayment  and  fixed  no  time  for  the  same ;  and  when  pay- 
ment was  several  times  demanded  but  not  made,  but  the 
policy  was  not  cancelled  nor  any  notification  of  an  intent  to 
cancel  given  ;  it  was  held  that  payment  was  waived  and  the 
company  was  liable.*  A  waiver  of  prepayment  may  be  in- 
ferred from  any  circumstance  indicating  that  the  company 
did  not  intend  to  insist  on  it.^  Sending  the  policy  by 
mail  to  the  agent  of  the  plaintiffs  to  be  delivered  to  them 
is  evidence  to  go  to  the  jury.^  Where  the  company  sent 
the  policy  by  mail,  saying  its  agent  would  call  for  the 
premium,  and  when  he  called  the  plaintiff  was  away,  and 
the  agent  left  word  for  him  to  forward  the  premium,  it  was 
held  that  he  had  a  reasonable  time  in  which  to  do  so,  and  that 

Manhattan  Life  Insurance  Co.  v.  Warrick,  20  Grat.  (Va.)  614;  post,  §§   463, 
488,  505. 

^  American  Life  Ins.  Co.  v.  Green,  57  Ga.  469.     See  also  post,  §  511. 

2  Girard  Life  Ann.  &  Tr.  Co.  v.  Mut.  Life  Ins.  Co.  (Pa.),  9  Weekly  Notes  of 
Cases,  425  (1881) ;  post,  §  368. 

3  [Equitable  Ins.  Co.  r.  McCrea,  Maury  &  Co.,  8  Lea  (Tenn.),  541 ;  Hodge  v. 
Security  Ins.  Co.,  33  Hun,  583;  Little  v.  Insurance  Co.,  38  Ohio  St.  110;  Bodine 
V.  Exchange  Fire  Ins.  Co.,  57  N.  Y.  117  at  123-124.] 

*  [Washoe  Tool  Manuf.  Co.  v.  Hibernia  Fire  Ins.  Co.,  66  N.  Y.  613  at  614.] 

5  [Universal  Fire  Ins.  Co.  v.  Block,  109  Pa.  St.  535,  and  following  case.] 

6  [Equitable  Ins.  Co.  v.  McCrea,  6  Lea  (Tenn.),  541  at  544.] 

771 


"§  360  B]         INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XVII. 

the  company  was  liable  for  a  loss  within  that  time,  though 
after  notice  of  cancellation  and  before  tender  of  premium  and 
in  spite  of  the  provision  in  the  policy  that  it  should  be  void  if 
the  premium  was  unpaid. ^  The  condition  requiring  payment 
of  the  premium  to  the  company  befoi-e  the  policy  goes  into 
effect  may  be  waived  in  many  ways,  and  facts  tending  to  show 
a  waiver  should  go  to  the  jury.^  A  course  of  dealing  between 
the  parties  allowing  credit  on  premiums  governs  the  printed 
condition  as  to  payment  of  premiums.^  Usage  of  the  agents 
and  company  in  their  dealings  generally  may  waive  the  pay- 
ment of  the  premium  as  a  condition  precedent  to  the  attaching 
of  the  risk.*  Evidence  of  a  custom  of  the  company  not  to 
enforce  the  condition  as  to  prepayment  of  premiums,  and 
to  allow  sub-agents  to  give  credit  and  charge  themselves 
with  the  amount,  is  competent  in  showing  a  waiver  of  pre- 
payment.^] 

[§  360  B.  Credit  for  the  Premium.  —  A  distinct  agreement  of 
the  agent  to  give  credit,  or  conduct  indicating  such  intent,  in 
accordance  with  a  usage  will  waive  the  prepayment  of  the 
premium.^  Delivery  of  the  policy  without  payment  of  the 
premium  makes  a  prima  facie  case  of  credit,  and  in  any  case 
where  credit  is  intended  the  policy  is  valid  although  the  pre- 
mium is  never  paid,  and  it  continues  in  effect  until  cancelled 
for  non-payment.'  An  agent  authorized  to  take  and  approve 
risks  and  to  insure  may  allow  credit  for  the  premium.^  A 
general  agent  may  waive  the  condition  as  to  payment  of  the 
first  premium,  and  give  credit,  even  though  the  policy  declares 

1  [Carson  v.  German  Ins.  Co.,  62  Iowa,  4-33.] 

2  [Elkins  V.  Susquehanna  Mut.  Fire  Ins.  Co.,  113  Pa.  St.  386] 

3  [Lebanon  Mut.  Ins.  Co.  v.  Hoover,  113  Pa.  St.  591.] 

4  [Frankle  v.  Pa.  Fire  Ins.  Co.,  12  Ins.  L.  J.  614  (Col.),  1883] 

5  [Peppit  V.  North  Brit.  &  Mer.  Ins.  Co.,  1  Russ.  &  Geld.  (Nov.  Sco  )  219.] 

6  [Yonge  V.  Equitable  Life  Ins.  Co.,  30  Fed.  Rep.  902  (Tenn.),  1887  ;  Ten- 
nant  v.  Travellers'  Ins.  Co.,  31  Fed.  Rep.  322  (Col.),  1887.] 

7  [East  Tex.  Fire  Ins.  Co.  v.  Mims,  1  Tex.  Civ.  Cas.  §  1.323;  Latoix  v.  Ger- 
mania  Ins.  Co.,  27  La.  Ann.  113;  Wilson  v.  Herkimer  Ins.  Co.,  6  N.  Y.  53  ;  Mil- 
ler V.  Life  Ins.  Co.,  12  Wall.  285.] 

8  [Jones  V.  ^tna  Ins.  Co.,  7  Rep.  644  (Mass.)  1879;  Ball,  &c.,  Wascon  Co,  v. 
Aurora  Fire,  &c.  Ins.  Co.,  20  Fed.  Rep.  232  (lud.),  1884;  Insurance  Co.  v.  Colt, 
20  Wall.  560,  (1874).] 

772 


CH.  XVII.]  THE   PREMIUM.  [§  360  B 

that  the  contract  cannot  be  modified  except  by  writing  signed 
by  the  president  or  secretary.^  An  insurer  does  not  lose  his 
right  to  recover  on  a  policy,  because  he  has  not  paid  the 
premium,  if  the  agent  did  not  exact  payment  at  the  time  of 
the  contract,  but  in  response  to  the  request  that  a  bill  of  the 
same  should  be  sent,  said  "  That  was  all  right,"  although  the 
secretary  of  the  company  had  unsuccessfully  tried  to  find 
the  assured  and  get  payment,  in  the  mean  time,  but  had  not 
cancelled  the  policy  or  given  notice  of  an  intent  to  do  so.^ 
Where  an  insurance  agent  with  no  authority  to  give  credit 
had  given  to  the  assured  a  policy  before  payment  of  the  pre- 
mium, but  had  accounted  to  the  company  therefor,  it  was  held 
that  the  company  could  not  then  object  to  the  credit.^  A  sub- 
agent  employed  to  solicit  applications,  collect  premiums,  and 
deliver  policies  has  no  authority  to  give  credit  or  receive  any- 
thing but  cash  in  payment ;  and  therefore  a  company  is  not 
liable  on  a  policy  not  delivered  when  the  sub-agent  has  acted 
contrary  to  the  above  rule,  in  the  absence  of  any  evidence 
showing  that  he  was  allowed  to  substitute  his  own  liability 
to  the  company  in  place  of  the  premium.*  Agents  of  a  stock 
insurance  company  whose  instructions  were  not  to  deliver 
policies  until  the  whole  premiums  were  paid,  did  so  deliver 
before  such  payment,  giving  credit  to  the  insured  and  waiving 
a  cash  payment,  and  it  was  held  that  the  company  was  liable 
on  the  insured's  death.  There  was  evidence  in  this  case  to 
show  that  it  was  the  custom  of  the  agents  to  give  credit,  and 
that  this  was  known  to  the  company.^  Where  the  insured  put 
the  premium  in  the  hands  of  the  broker  who  had  effected  the 
insurance,  and  the  agent  gave  credit  to  the  broker  and  after- 
wards reported  and  paid  the  amount  thereof  to  the  company, 
the  question  of  payment  went  to  the  jury.^] 


1  [O'Brien  v.  Union  Mut.  Ins.  Co.,  22  Fed.  Rep.  586  (Minn.)  1884.] 
^  [La  Societe  de  Bienfaisance,  &o.  v.  Morris,  &c.  Agts.  of  Home  Mut.  Ins. 
Co.,  24  La.  Ann.  347  at  348.] 

3  [Agricultural  Ins.  Co.  v.  Montague,  38  Mich.  548  at  549.] 

4  [Continental,  &c.  Ins.  Co.  v.  WiUets,  24  Mich.  268,  272,  273.    See  §  360  D.| 
6  [Miller  v.  Insurance  Co.,  12  Wall.  285,  303  ] 

•*  [Pittsburg  Boat- Yard  Co.  v.  Insurance  Co.,  118  Pa.  St.  415.] 

773 


§  360  CJ        INSURANCE  :    FIRE,    LIFE,   ACCIDENT,    ETC.       [CH.  XVII. 

[§  360  C.  Waiver  ;  Agent  ;  Method  prescribed  in  Policy.  — 
An  agent  maj  waive  the  condition  respecting  forfeiture  for 
non-payment  of  an  instalment,  and  agree  to  give  notice  when 
each  payment  is  due,  failure  of  which  notice  shall  excuse  pay- 
ment.i  If  an  agent  authorized  to  receive  premiums  wrongly 
informs  the  insured  as  to  the  date  his  premium  is  due,  the 
company  is  estopped.  The  agent  may  not  be  bound  to  give 
such  information,  but  if  he  attempts  to  do  so,  he  must  be 
correct.2  One  who  called  the  day  after  the  premium  was  due 
and  was  told  by  the  agent  that  the  "  life  "  had  attended  to  it 
himself,  may  show  these  facts  as  evidence  of  waiver  of  the 
forfeiture.^  A  circular  issued  by  the  company  stating  that 
it  will  not  insist  on  the  forfeiture  of  policies  because  of  the 
non-payment  of  interest,  is  available  in  a  court  of  law,  to  save 
forfeiture.*  Where  the  policy  specifies  the  only  method  in 
which  its  conditions  can  be  waived,  evidence  tending  to  prove 
waiver  of  non-payment  of  an  instalment  by  other  means  will 
be  excluded.  Evidence  of  laxity  in  collection  and  a  habit  to 
receive  long  after  due,  will  not  be  received.^  If  a  policy  de- 
clares that  only  the  president  and  secretary  have  power  to 
waive  conditions,  no  other  agent  can  waive  the  necessity  of 
prepayment  of  the  premium.^  Voluntary  payment  by  the 
company  in  case  of  an  accident,  in  spite  of  the  fact  that  the 
premiums  had  not  been  paid,  does  not  raise  a  presumption 
that  the  premiums  had  been  paid  so  as  to  compel  the  company 
to  pay  for  a  subsequent  accident.  The  plaintiff  cannot  come 
into  court  saying,  "  It  is  true  the  premiums  were  not  paid, 
but  the  company  has  acted  as  though  they  had  been ;  there- 
fore as  against  it  they  are  conclusively  presumed  to  have  been 
paid."  The  generosity  of  the  company  cannot  be  made  a 
handle  for  injustice.^] 

1  [Alexander  v.  Continental  Ins.  Co.,  67  Wis.  422.] 

2  [Selvage  v.  John  Hancock  Mut.  Life  Ins.  Co.,  11  Ins.  L.  J.  653  (N.  Y.) 
1882.] 

3  [Robertson  v.  Metropolitan  Life  Ins.  Co.,  47  N.  Y.  Super.  377.] 

4  [Robinson  v.  St.  Louis  Mut.  Life  Ins.  Co.,  7  Rep.  358  (Mo.)  1878.] 

5  [Barnes  v.  Continental  Ins.  Co.,  30  Mo.  App.  539] 
8  [Calhoun  v.  Union  Mut.  Ins.  Co.,  19  N.  B.  R.  13.] 
^  [Melin  v.  Accident  Ins.  Co.,  70  Wis.  579,  584.] 

774 


CH,  XVII.]  THE   PREMIUM.  [§  360  F 

[§  360  D.  Waiver  of  Payment  in  Cash.^  —  An  agent  author- 
ized to  deliver  policies  and  receive  payment  may  waive  the 
payment  of  the  premium  in  cash  notwithstanding  a  stipulation 
in  the  policy  to  the  contrary .^  In  another  case  it  was  said 
that  a  general  agent  of  a  foreign  insurance  company  may 
waive  such  a  condition,  but  a  local  agent  cannot.^  The 
president  of  an  insurance  company  certainly  may  waive  the 
condition.*] 

[§  360  E.  Where  the  premium  was  not  paid  when  due  nor 
within  thirty  days  thereafter,  but  on  the  31st  day  the  plain- 
tiff's agent  called  on  the  secretary  of  the  company,  offered 
to  pay  the  premium,  and  was  told  that  the  husband  of  the 
plaintiff  had  attended  to  the  matter,  and  three  or  four  days 
later  finding  that  this  was  a  mistake  plaintiff  tendered  the 
premium,  which  was  then  refused,  it  was  held  that  the  com- 
pany was  not  bound.  The  policy  lapsed  at  the  end  of  the 
thirtieth  day,  and  could  be  revived  only  by  a  new  agreement 
by  the  operation  of  an  estoppel  or  of  a  waiver.  There  was  no 
new  agreement  nor  any  estoppel,  because  the  plaintiff  was  in 
no  way  prejudiced  by  the  untrue  answer  of  the  secretary,  nor 
any  waiver,  because  what  was  said  by  the  secretary  was 
evidently  said  under  a  mistake,  and  not  with  knowledge  of 
the  facts.^J 

[§  360  F.  Decisions  adverse  to  Waiver.  —  An  agent's  au- 
thority to  collect  or  receive  payment  does  not  include  authority 
to  make  an  agreement  to  extend  the  time  of  payment.^  An  in- 
surance solicitor  as  such  has  no  authority  to  waive  the  payment 
of  the  premium.''  When  the  application  states  that  the  pay- 
ment of  the  premium  is  a  condition  .precedent  to  the  contract 
or  issuing  of  the  policy,  the  policy  is  not  in  force  until  the  pre- 
mium is  paid,  and  the  agent  cannot  waive  such  a  condition.^ 

1  [See  §  360  B.] 

2  [Home  Ins.  Co.  v.  Oilman,  112  Ind.  7.] 

3  [Willcuts  V.  Northwestern  Mut.  Life  Ins.  Co.,  81  Ind.  300.] 
*  [Mo.  Valley  Life  Ins.  v.  Dunklee,  16  Kan.  158  at  165.] 

6  [Robertson  v.  Metropolitan  Life  Ins.  Co.,  88  N.  Y.  541,  545.J 

6  [Hutchings  v.  Munger,  41  N.  Y.  155  at  158.] 

7  [Hambleton  ;•.  Home  Ins.  Co.,  6  Biss.  (U.  S.)  91  at  94.] 

8  [Ormond  v.  Insurance  Co.,  96  N.  C.  158.] 

775 


§  361]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XVIx. 

In  the  absence  of  express  authority  an  agent  of  an  insurance 
company  has  no  power  to  waive  the  payment  even  of  a  part 
of  the  premium,!  especially  when  the  policy  states  that  no 
agent  shall  make  any  contract  or  waive  any  condition  of  the 
policy.  The  company  is  not  bound  to  continue  giving  notice 
in  respect  to  payment  of  annual  dues,  merely  because  it  has 
been  accustomed  to  do  so  in  the  past,  and  its  failure  to  do  so 
is  no  waiver  of  the  non-payment.^  A  usage  among  companies 
to  receive  premiums  when  overdue  is  inadmissible  to  save  a 
forfeiture.^] 

[§  360  G.  Waiver  of  Statute  Provisions.  —  A  statute  mak- 
ing policies  binding  for  the  full  amount  for  two  years  after 
the  payment  of  the  first  premium,  anything  in  the  policy  to 
the  contrary  notwithstanding,  may  be  so  far  waived  that  the 
insured  may  agree  to  take  only  a  sum  in  proportion  to  the 
premium  paid.*  But  such  a  law  cannot  be  waived  by  agree- 
ment, so  as  to  make  the  policy  entirely  forfeitable.^] 

§  361.  Practice  of  Company  to  accept  Overdue  Premium.  — 
Forfeitures  are  so  odious  in  law  that  they  will  be  enforced 
only  where  there  is  the  clearest  evidence  that  such  was  the 
intention  of  the  parties.  If  the  practice  of  the  company  and 
its  course  of  dealings  with  the  insured  and  others  known  to 
the  insured,  have  been  such  as  to  induce  a  belief  that  so 
much  of  the  contract  as  provides  for  a  forfeiture  in  a  certain 
event  will  not  be  insisted  on,  the  company  will  not  be  allowed 
to  set  up  such  forfeiture,  as  against  one  in  whom  their 
conduct   has   induced    such   belief.^     Accordingly,  a  custom 

1  [Brown  v.  Mass.  Mut.  Life  Ins.  Co.,  59  N.  H.  298  at  308.] 

2  [Mandego  v.  Centennial  Miit.  Life  Ass.,  64  Iowa,  1.3-4.] 

3  [Girard  Life  Ins.  &c.  Co.  v.  Mut.  Life  Ins.  Co.,  07  Pa.  St.  15.] 

*  [Caffrey  v.  John  Hancock  Mut.  Life  Ins.  Co.,  27  Fed.  Rep.  25  (Mich),  1886.] 

5  [Wall  V.  Equitable  Life  Ass.  Co.  32  Fed.  Rep.  273  (Mo.),  1887.] 

6  [If  the  company  has  in  any  way  induced  an  iionest  and  prudent  belief  that 
premiums  will  be  accepted  after  the  day  appointed,  it  cannot  insist  on  a  forfeit- 
ure; mere  indulgence  will  not  be  enough,  but  an  established  course  of  dealing  be- 
tween the  parties  will  be.  Sweetzer  v.  Odd  Fellows  Mut.  Aid  Ass.,  117  Ind.  97 ; 
Tripp  &  Bailey  i\  Insurance  Co.,  55  Vt.  100.  If  the  company  by  its  habits  of  busi- 
ness induces  the  insured  to  believe  that  payment  may  be  delayed  until  demanded, 
and  no  demand  is  made,  the  company  is  estopped  to  set  up  tlie  forfeiture. 
Home  Protection  Ins.  Co.  v.  Avery,  85  Ala.  348.     A  habit  of  the  company  to 

776 


CH.  XVII.]  THE   PREMIUM.  [§  362 

amongst  insurance  companies  to  receive  premiums,  if  tendered 
at  any  time  witliin  thirty  days  of  the  time  they  fall  due,  pro- 
vided the  insured  is  in  usual  health,  and  evidence  that  this  is 
the  custom  among  companies  issuing  policies  stipulating  that 
non-payment  of  premiums  at  the  day  specified  shall  work  a 
forfeiture,  has  been  held  to  be  admissible  against  a  company 
having  a  similar  provision  for  forfeiture,  which  is  shown  to 
have  repeatedly  received,  within  thirty  days  after  due,  of  the 
assured,  against  whom  it  insists  upon  the  forfeiture,  pre- 
miums, which  by  the  terms  of  the  policy  were  payable  on 
a  certain  day  on  penalty  of  forfeiture.^ 

§  362.  Premium  ;  Acceptance  of  Post  Payment ,  Waiver.  — 
And  generally  the  acceptance  of  a  premium  after  full  knowl- 
edge of  the  violation  of  the  condition  of  a  policy,  respecting 
the  payment  of  the  premium,  or  otherwise,  is  a  waiver  of  any 
forfeiture  thereby.  Tlius,  where  a  policy  inhibits  the  insured 
from  passing  without  the  limits  of  the  United  States,  but  has 
indorsed  thereon  a  permit  to  go  to  California  by  a  certain 
route,  and  the  insured  goes  by  a  different  route,  and  the  in- 
surers after  the  arrival  of  the  insured  in  California,  and  with 
full  knowledge  of  the  fact  of  deviation,  accept  one  or  more 
annual  premiums  (whether  there  is  or  is  not  a  forfeiture  by 
reason  of  the  deviation  is  a  question  which  was  not  decided), 
it  is  not  open  to  the  insurers  to  take  the  objection,  for  the 

receive  premiums  from  tlie  insured  after  maturity  may  estop  tlie  company  as  to 
a  subsequent  premium  paid  about  the  usual  time  after  it  was  due,  altliougli  the 
insured  died  between  its  maturity  and  its  payment.  Spoeri  v.  Mass.  Mut.  Life 
Ins.  Co.,  .39  Fed.  Kep.  752  ( Mo.),  1880.  And  non-payment  is  waived  by  proof  of  a 
general  usage  to  receive  premiums  after  date,  and  it  is  not  necessary  to  show  that 
the  defendant  adopted  the  custom.  BLakiston  v.  Insurance  Co.,  15  Phil.  315.  But 
receiving  overdue  premiums  several  times,  always  with  an  inquiry  into  the  health 
of  the  assured  and  a  statement  that  the  receipt  was  optional  with  the  company, 
will  not  constitute  a  course  of  dealing  that  will  require  the  company  to  receive 
overdue  premiums.  Mut.  Life  Ins.  Co.  v.  Girard  Life  Ins.  Co.,  100  Pa.  St.  172.] 
1  Helme  v.  Philadelphia  Life  Ins.  Co.,  61  Pa.  St.  107  ;  Thompson  v.  St.  Louis 
Ins.  Co.,  Sup.  Ct.  (Mo.),  2  Ins.  L.  J.  422;  Buckbee  v.  U.  S.  Ins.  &  Tr.  Co.,  18 
Barb.  541  ;  Girard  Life  Ann.  &  Tr.  Co.  v.  Mut.  Life  Ins.  Co.  (Pa),  9  Weekly 
Notes  of  Cases,  425.  The  evidence  is  admissible,  even  though  the  policy  be 
forfeitable  "  for  non-payment  of  premium  on  the  day  it  is  due."  Ibid.  ;  Union 
Central  Life  Ins.  Co.  v.  Pottker,  33  Ohio  St.  459 ;  Mayer  v.  Mutual,  &c.  Ins. 
Co.,  38  Iowa,  344.     See  also  a7ite,  §  358. 

777 


§  362]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XVII. 

acceptauce  of  a  subsequently  accruing  premium  with  knowl- 
edge is  a  waiver  of  the  forfeiture,  if  any  there  be.  And  parol 
evidence  is  admissible  to  show  such  knowledge,  and  thus 
establish  the  waiver. ^  And  such  acceptance  has  been  held  to 
be  a  waiver  of  forfeiture  by  reason  of  concealment  in  the 
application.^  So  a  part  payment  of  an  overdue  premium,  if 
accepted,  is  a  waiver  of  the  forfeiture  for  non-payment  when 
due.^  So  is  a  prepayment  to  an  apparently  authorized,  though 
really  unauthorized  agent.*  Consent  of  the  insurers  to  an 
extension  of  the  time  of  payment  of  a  premium  is  a  waiver 
of  forfeiture  for  non-payment  at  maturity.^  But  an  agent 
cannot  revive  a  forfeited  policy  by  giving  an  antedated  re- 
ceipt for  an  overdue  premium :  ^  and  the  failure  to  disclaim 
an  unauthorized  act  of  an  agent  in  receiving,  after  the  death 
of  the  insured,  an  overdue  premium,  and  to  return  the  pre- 
mium, is  not  a  waiver  of  the  forfeiture,  as  it  could  not  pre- 
judice the  rights  of  the  insured.'^  [The  receipt  of  overdue 
premiums  is  a  waiver  of  the  forfeiture  by  their  non-payment,^ 
unless  the  policy  stipulates  that  on  default  the  overdue 
premiums  or  instalments  shall  be  considered  as  earned.^ 
Where  it  is  provided  that  a  policy  may  be  revived  by  a 
'payment  of  the  premium  or  assessment  in  default,  a  mere 
offer  to  receive  the  money  in  default  or  a  demand  of  it,  even 
by  suit,  will  not  amount  to  a  waiver.  There  must  be  actual 
payment  to  revive  the  policy.^*^]     It  has  been  said  that  the 

1  Bevin  v.  Conn.  Mut.  Life  Ins.  Co.,  23  Conn.  244;  Wing  v.  Harvey,  5  De 
G.,  M.  &  G.  265  ;  Froelilich  v.  Atlas  Life  Ins.  Co.,  47  Mo.  406  ;  Georgia,  &c. 
Life  Ins.  Co.  v.  Gibson,  52  Ga.  640.  And  see  ante,  §  .360;  post,  §  554.  Not,  liow- 
ever,  if  the  back  premiums  are  accepted  under  false  impressions  as  to  the 
present  condition  of  the  life,  induced  by  the  untruthful  statements  of  the  life. 
Harris  v.  Equitable,  &c.  Ins.  Co.,  6  T.  &  C.  (N.  Y.)  108. 

2  Armstrong  v.  Turquand,  9  Ir.  C.  L.  Rep.  32. 

8  Hodsdon  v.  Guardian  Life  Ins.  Co.,  97  Mass.  144. 
4  Eclectic,  &c.  Ins.  Co.  v.  Fahrenkrug,  68  111.  463. 

6  Homer  v.  Guardian,  &c.  Ins.  Co.,  G7  N.  Y.  478. 
6  DiboU  V.  MU\3i  Ins.  Co.  (La.),  9  Ins.  L.  J.  827. 
^  Busby  V.  North  America,  &c.  Ins.  Co.,  40  Md.  572. 
^  [Wyman  v.  PhcEnix  Mut.  Life  Ins.  Co.,  45  Hun,  184.] 

9  [Cohen  v.  Insurance  Co.,  67  Tex.  325.] 

10  [Id.  ;  Ware  v.  Millville  Fire  Ins.  Co.,  45  N.  J.  177 ;  Edge  v.  Duke,  18  L.  J. 
Ch.  183.] 

778 


CH.  XVII.]  THE   PREMIUM.  [§  363 

acceptance  of  an  overdue  premium  is  no  waiver  unless  the 
assured  show  that  when  accepted  he  was  in  good  health.^ 
But  this  is  doubtful,  unless  the  acceptance  be  expressly  sub- 
ject to  that  condition.2  But  where  the  receipt  itself  expressly 
stated  that  the  acceptance  of  an  overdue  premium  should  not 
have  the  effect  to  continue  the  policy,  unless  the  insured  was 
at  the  time  of  the  payment  in  good  health,  and  in  point  of 
fact  he  was  dangerously  ill,  it  was  held  that  there  could  be  no 
recovery  .3 

§  363.  Premium  ;  Part  Payment  and  Acceptance  ;  Waiver. 
—  In  Thompson  v.  St.  Louis  Mutual  Life  Insurance  Com- 
pany,* an  attempt  seems  to  have  been  made  to  avoid  the 
effect  which  courts  are  inclined  to  give  to  the  acceptance  of 
postpaid  premiums,  by  a  statement  at  the  foot  of  the  policy 
that  "  if  a  premium  is  received  by  the  company  after  the  day 
named  in  the  policy  for  its  payment,  it  is  considered  by  the 
company  and  by  the  assured  as  an  act  of  grace  or  courtesy, 
and  forms  no  precedent  as  regards  future  payments."  But 
the  court  held,  nevertheless,  a  known  practice  of  receiving 
payments  of  premiums  after  they  were  due  to  be  a  practical 
construction  of  the  force  and  effect  of  the  provision  for 
prompt  payment,  and  a  waiver  of  a  forfeiture  by  reason  of  a 
failure  strictly  to  conform  thereto.  "In  contracts  of  insur- 
ance, as  in  other  contracts,"  said  the  court,  by  Adams,  J., 
"  the  parties  may  make  the  time  of  the  performance  of  any 
stipulation  of  the  very  essence  of  the  contract.  In  such  case 
the  contract  becomes  utterly  at  an  end  or  void  as  soon  as  the 
default  is  made.  The  stipulation  in  regard  to  the  time  of  the 
payment  of  the  premiums  in  this  policy  I  do  not  regard  as  of 
the  essence  of  the  contract.  It  was  not  so  regarded  by  the 
parties  themselves.  By  their  acts  and  conduct  the  parties 
have  construed  this  contract  for  themselves.  It  was  not 
regarded  by  either  party  as  of  the  essence  of  the  policy  that 

1  Mowry  v.  Home  Ins.  Co.,  9  R.  I.  346. 

2  Rockwell  V.  Mut.  Life  Ins.  Co.,  20  Wis.  335. 

3  Bissell  V.  American,  &c.  Ins.  Co.  (Ct.  of  Com.  Pleas,  Lucas  Co.,  Pa  ,  1871), 
2  Big.  Life  &  Ace.  Ins.  Cas.  150 ;  post,  §  502. 

1  52  Mo.  469. 

779 


§  363  a]         INSURANCE  :    fire,   life,   accident,    etc.       [cH.  XVII. 

the  premiums  would  be  paid  on  the  very  day  that  they  became 
due.  The  memorandum  at  the  foot  of  the  policy  did  not  give 
any  additional  force  to  the  stipulation  in  the  policy,  if  we 
may  consider  it  as  having  any  effect  whatever.  If  it  had  any 
force,  it  seemed  to  be  looked  upon  by  the  parties  as  a  license 
or  invitation  to  the  plaintiff  to  disregard  the  exact  day  of 
payment,  and  to  rely  upon  the  courtesy  of  the  company.  The 
plaintiff  pursued  this  course,  and  instead  of  making  his  pay- 
ments on  the  very  day  when  due,  let  them  lie  over  for  a 
short  time,  and  still  they  were  received  without  objection. 
The  plaintiff  was  thus  induced  to  believe  that  a  failure  of 
strict  payment  on  the  day  would  not  prejudice  his  rights."  ^ 

§  363  a.  Non-forfeiture  ;  Paid-up  Policy;  Profits.  —  An  inter- 
esting and  important  case  is  thus  stated  by  Treat,  J. :  — 

"  On  the  29th  day  of  February,  1808,  the  defendant  issued 
a  non-forfeitable  policy.  The  sum  insured  was  $10,000 ; 
annual  premium,  $615.40  ;  number  of  premiums  to  be  paid, 
ten  ;  term,  natural  life  of  the  insured,  '  with  participation  in 
the  profits.'  Payment  of  the  $10,000  was  to  be  made  within 
sixty  days  after  death  and  proof  thereof,  — '  the  balance  of 
the  year's  premium,  if  any,  and  all  indebtedness  due  or  to 
become  due  to  the  company  to  be  first  deducted  therefrom.' 
This  seems  to  contemplate  that  there  would  be,  or  might  be, 
a  part  of  a  year's  premium  and  other  indebtedness  due  at  the 
death  of  the  insured. 

"  The  policy  further  provides  that  '  in  case '  '  the  premium 
as  aforesaid'  shall  not  be  paid  '  on  or  before  the  day  herein 
mentioned  for  the  payment  thereof,  or  any  note  or  notes 
which  may  be  given  to  and  received  by  said  company  in  part 
payment  of  any  premium,  on  the  day  or  days  when  the  same 
shall  become  due,'  the  policy  shall  become  void. 

"  It  further  provides  that  '  the  dividend  of  profits  which 
may  become  payable  by  virtue  of  this  policy  to  the  holder 
thereof  shall  be  applied  toward  the  payment  of  the  note,  taken 
for  part  premiums  aforesaid,'  and  that  if  this  policy  '  shall  be- 
come void,  said  holder  of  the  policy  shall  be  liable  to  pay  to 
said  company  the  amount  of  all  notes  taken  for  premiums 

1  And  see  ante,  §  360;  post,  §§  473,  511. 

780 


CH.  XVII.]  THE   PREMIUM.  [§  363  a 

which  shall  remain  unpaid,  except  the  balance  remaining 
unpaid  on  the  note  taken  for  part  premiums  and  made  pay- 
able at  twelve  months  from  date,  and  that  the  said  last- 
mentioned  note  is  to  be  cancelled  by  said  company  on  the 
surrender  and  cancellation  of  said  policy.' 

"  There  is  also  a  clause  absolving  the  company  from  liabil- 
ity if  the  insured  becomes  an  inebriate,  '  on  paying  to  the 
holder  thereof  .  .  .  the  amount  of  all  unearned  premiums 
actually  received  thereon  up  to  the  time  of  such  payment.' 

"  The  next  and  last  provision  is  as  follows  :  '  After  two 
annual  payments,  should  the  party  wish  to  discontinue  (notice 
to  the  company  being  given  before  the  next  premium  becomes 
due),  the  company  will  issue  a  paid-up  policy  for  as  many 
tenths  of  the  amount  originally  assured  as  there  have  been 
annual  premiums  paid  in  cash.' 

"  In  this  case  the  required  notice  was  given  after  four  pay- 
ments had  been  made,  and  a  paid-up  policy  was  demanded  for 
the  prescribed  four-tenths  of  the  amount  insured.  The  de- 
fendant refused  the  request,  unless  the  plaintiffs  would  first 
pay  their  notes  for  premiums  held  by  the  company  ;  contend- 
ing that  the  last  clause,  cited  above,  contemplated  a  previous 
payment  of  the  annual  premiums  in  cash.  The  plaintiffs,  on 
the  other  hand,  insist  that  those  notes  are  mere  loans  to  them, 
to  be  paid  out  of  their  share  of  dividends,  should  their  share 
equal  the  amount  of  said  notes,  at  the  death  of  the  assured, 
—  said  notes  being  a  lien  on  the  policy  for  tlie  sum  finally  due 
thereon,  —  or,  if  that  be  not  the  true  construction  of  the  pol- 
icy, then  the  defendant  should  issue  a  paid-up  policy  for 
84,000  less  the  amount  of  said  notes. 

"  The  terms  of  the  policy,  as  to  notes  quoted  above,  are  not 
very  clear ;  for  they  seem  to  imply  in  one  phrase  that  many 
notes  for  premiums  may  be  outstanding,  and  in  another 
phrase,  that  there  can  be  only  one  outstanding  note  of  the 
kind,  and  that  for  a  part  of  the  last  premium  due. 

"The  course  of  dealing  between  the  parties,  however,  has 
put  a  practical  construction  on  the  contracts.  The  receipt 
for  each  annual  premium  paid  (as  for  the  last  in  this  case)  is 
as  follows :  — 

781 


§  363  a]         INSURANCE  :    fire,   life,   accident,   etc.       [cH.  XVII. 

"  'Received  from  Clinton  O.  Dutcher  S615.40,  which  continues 
in  force  polic}'  No.  3718,  issued  b}-  this  company,  until  the  29th 
daj^  of  Februaiy,  1872,  in  accordance  with  the  terms  and  condi- 
tions of  said  polic}'. 

"  '  Old  note  returned  herewith,  the  indebtedness  being  debited 

against  the  policy $547.48. 

Amount  of  premium  loaned  this  year  246.16  —  $793.64.' 

"  The  original  agreement,  it  is  admitted,  was  that  of  the 
$615.40  for  the  annual  premium,  8369.24  should  be  paid  in 
cash,  and  -$246.16  in  a  note  at  twelve  months  at  seven  per 
cent  interest,  whereupon  a  receipt  for  payment  of  the  whole 
premium  should  be  given,  the  amount  of  said  note  to  be  a 
permanent  loan  by  the  company  until  paid  by  dividends,  and 
that  at  the  maturity  of  said  note,  a  new  note,  at  the  same 
rate  of  interest,  should  be  given,  including  the  -^246.16,  and 
the  amount  of  the  former  note  less  the  dividend  applicable 
to  its  payment.     This  was  the  mode  pursued  each  year. 

"  It  is  further  admitted  in  this  case  that  defendant  had 
always,  prior  to  January  20th,  1871,  issued  paid-up  policies 
on  demand  without  deducting  the  loans  on  outstanding  notes, 
holding  such  notes  as  a  lien  against  the  paid-up  policy  ;  and 
that  since  that  date  the  defendant  has  uniformly  refused  to 
issue  a  paid-up  policy  unless  the  holder  first  paid  the  outstand- 
ing loans  or  notes. 

"  As  there  are  many  like  suits  pending  against  this  defend- 
ant on  somewhat  similar  policies,  issued  at  different  times,  it 
may  be  well  to  examine  them  with  reference  to  any  changes 
made  by  the  company  in  the  terms  of  its  subsequent  con- 
tracts. Thus,  policy  No.  6060,  issued  March,  1869,  is  the 
same  as  that  with  reference  to  "which  this  suit  is  instituted, 
except  that  on  the  back  thereof,  in  print  and  writing,  the 
cash  surrender  value  of  the  policy  is  stated  for  successive 
years,  —  that  value  being  '  exclusive  of  the  value  of  any  divi- 
dend, deposits,  or  reversions,  which  the  company  will  pay  in 
addition ; '  also  that  '  the  above  amounts,  less  any  outstand- 
ing loans  or  notes,  will  be  paid  on  the  surrender  of  this 
policy,  duly  receipted,  within  two  months  after  being  for- 
feited by  non-payment  of  premiums.' 
782 


CH.  XVII.]  THE   PREMIUM.  [§  363  a 

"The  policies  of  the  defendant  were  stated  from  the  first 
to  be  non-forfeitable  ;  yet  they  contained  clauses  of  forfeiture. 
Subsequently,  as  above,  the  non-forfeitable  provisions  were 
attempted  to  be  defined  ;  that  is,  a  surrender  cash  value  was 
stated,  if  the  policy  was  surrendered  within  two  months  after 
forfeiture.  Still,  in  the  body  of  the  policy,  the  forfeiture 
clause  for  non-payment  of  premium  and  notes  when  due  was 
retained. 

"  Policy  5633,  issued  in  January,  1869,  omits  the  words 
*  non-forfeiture  policy,'  and  substitutes  for  the  provision 
above  quoted  as  the  last  in  the  policy  No.  3718  (that  in 
question)  these  words  : — 

"  '  On  the  surrender  of  this  policy,  while  in  force,  after  the 
full  amount  of  two  or  more  annual  premiums  have  been  paid 
m  cash,  including  the  payment  of  any  note  or  notes  given 
on  account  of  premiums,  the  company  will  issue  a  paid-up 
policy  for  the  amount  of  premiums  paid,  less  any  and  all 
dividends  paid  on  said  policy.' 

"  On  the  back  of  policy  (No.  5633)  was  the  same  agree- 
ment as  to  cash  surrender  value  as  that  indorsed  on  policy 
No.  6060. 

"  The  company  had  thus  added  to  the  new  policies,  subse- 
quent to  plaintiffs',  the  requirement  of  previous  payment  of 
notes  given  on  account  of  premiums  ;  indicating  on  its  part 
that  there  was  previous  uncei'tainty  on  that  point. 

"  It  thus  appears  that  the  policies  issued  by  this  company 
at  the  commencement  were  designed  to  induce  the  holders 
to  understand  that  they  included  several  distinct  provisions 
favorable  to  the  insured,  viz. :  — 

"  1.  They  were  non-forfeitable.  Afterward  they  defined, 
under  the  head  of  cash  surrender  value,  the  precise  meaning 
of  their  non-forfeitable  qualities,  and  limited  to  two  months 
the  condition  of  non-forfeiture  ;  still  retaining  on  the  face  of 
the  policy  their  non-forfeiture  designation,  and  among  the 
conditions  a  forfeiture  clause.  Such  seemingly  inconsistent 
and  conflicting  provisions  exact  a  construction  against  the 
company  most  favorable  to  tlie  insured. 

"  2.  They  gave  to  the  insured  a  participation  in  the  profits. 

VOL.  II.  — 6  783 


§  363a]      insurance:  fire,  life,  accident,  etc.     [ch.  xvii. 

For  what  period  of  time?  When  he  was  insured  for  his 
natural  life,  would  not  his  participation  in  the  profits  con- 
tinue until  his  death  ?  It  matters  not  that  the  annual  pre- 
miums were  to  cease  at  the  expiration  of  ten  years,  if  the 
insurance  was  for  life.  The  participation  in  profits  may  be  iii 
various  ways, —  either  by  corresponding  reduction  of  pre- 
miums, in  annual  cash  dividends,  or  in  additions,  with  or  with- 
out accumulations  of  interest,  to  the  principal  sum  assured. 

"  3.  The  defendant's  policies  determined  the  mode  of  par- 
ticipation in  profits  when  part-payment  of  annual  premiums 
was  by  note.     At   the    time   of   the    next   annual   premium, 
which  would  be  the  same  time    the    previous  note  fell  due, 
there  would  be  credited  on  the  note  the  dividend  of  profits  to 
which  it  was  entitled.     Then  the  balance,  together  with  the 
amount  payable   by  note   for   the    next   premium,  would   be 
included  in  the  new  note,  and  the  former  note  would  be  can- 
celled.    In  that  way  there  would  be  only  one  note  outstand- 
ing.    Such  was  the  practical  construction   given  and  assented 
to  ;  yet  serious  difficulties  might  have  arisen    if  a  forfeiture 
had  been  claimed;  for  it  is  provided  that  the  holder,  when 
forfeiture  occurs,  shall  be  liable  to  pay  all  unpaid  notes  taken 
for   premium,  '  except  the  balance  remaining  unpaid  on  the 
note  taken  for  part  premiums   and  made  payable  at  twelve 
months  from  date,'  and  said  last  note  is  to  be  surrendered 
and  cancelled  on  surrender  and  cancellation  of  the  policy.     If 
that  was  the  only  note  which  could,  in  the  routine  of  busi- 
ness, be  outstanding,  and  that  was  to  be  surrendered  and  can- 
celled, for  what  would  the  holder  be  liable  ?     It  would  seem 
he  would  lose  only  the  cash  paid  on  the  premiums,  and  that 
his  notes  would  be  surrendered.     But  under  the  clause  con- 
cerning inebriates,  when  the  the  company  cancels  a  policy,  it 
must  pay  back  the  amount  of  all  unearned  premiums  actually 
•  received.     What  is  meant  thereby?     Actually  received  only 
in  cash,  or  both  in  cash  and  notes  ?     The  main  question  in 
dispute  here  is,  whether  the    defendant   is  bound  to  issue  a 
paid-up  policy  except  when  the  annual  payments  are  actually 
paid  in  cash,  or  the  notes  given  are  also  first  paid  in  cash. 
Under  the  clause  concerning   inebriates,  the  company  must 
784 


CH.  XVII.]  THE   PREMIUM.  [§  363  a 

pay  back  the  amount  of  unearned  premiums  actually  received. 
How  received  ?  In  cash  merely  ?  Certainly,  it  cannot  be 
fairly  contended  tliat  the  company  would  absolve  itself  under 
that  clause  by  returning  the  cash  payments  and  holding  the 
assured  lialjle  on  his  notes  for  premiums.  The  payment  of 
premiums  includes  both  cash  and  notes  given.  Why,  then, 
should  not  the  phrase  in  the  last  clause  as  to  annual  pre- 
miums, '  paid  in  cash,'  receive  equally  as  broad  and  favorable 
a  construction  ? 

"  4.  The  policies  contemplated  part  payment  by  note,  and 
indicated  how  the  notes  should  be  treated  in  connection  with 
the  profits,  and  also  how  the  sum  due  on  said  notes  should  be 
met  when  the  policy  became  payable ;  viz.,  that  the  sum  in- 
sured should  be  paid,  less  the  amount  due  on  the  notes. 

"5.  If  the  ten  annual  payments  had  been  made,  the  origi- 
nal policy  would  have  stood  as  a  paid-up  policy,  and  the  last 
note  would  have  been  outstanding,  payable  in  twelve  months, 
by  its  terms,  less  dividend  accrued.  Was  it  contemplated 
that  it  should  be  paid  at  the  end  of  twelve  months,  when  it  is 
admitted  that  the  sum  named  therein  was  to  be  a  permanent 
loan  at  seven  per  cent  debited  against  the  policy  ?  If  so, 
what  was  the  inducement  as  to  part  payment  by  note,  and  as 
to  participation  in  profits  to  be  applied  to  the  payment  of  the 
note  ?  How  was  the  participation  of  profits  to  be  thereafter 
enjoyed  ? 

"  The  theory  of  the  plan  proposed  and  acted  on  was  a  re- 
ceipt for  the  annual  premiums  as  for  cash,  while  actually  cash 
was  to  be  paid  for  part,  and  a  note  was  to  be  received  as  a  cash 
payment  for  the  balance.  Throughout  the  ten  years  no  actual 
payment,  even  of  interest  on  the  notes,  was  expected,  but  the 
balance  due  thereon  was  carried  into  a  new  note. 

"  Practically,  it  seems,  the  plan  offered  to  the  insured  was 
found  not  to  work  satisfactorily  to  tlie  company,  and  hence  it 
changed  not  only  the  phraseology  of  its  later  policies,  but  its 
own  interpretation  of  the  earlier  policies.  It  changed  the  last 
clause  concerning  paid-up  policies  for  tenths,  as  to  '  annual 
premiums  paid  in  cash,'  so  that  it  should  read, '  including  the 
payment  of  any  note  or  notes  given,'  <tc. 

785 


§  363  a]        INSURANCE  :    fire,   life,   accident,   etc.       [CH.  XVII. 

"  Through  all  the  various  provisions  concerning  the  non- 
forfeiture, cash  surrender,  issuing  of  paid-up  policies  for 
tenths,  the  giving  of  notes,  the  way  those  notes  should  be 
treated  on  cash  surrenders,  or  cancellation  in  case  of  inebri- 
ates ;  in  short,  throughout  the  various  contingencies  attempted 
to  be  provided  for,  the  notes  are  treated  as  sums  to  be  ac- 
counted for  on  the  final  payment  of  the  policies,  and  not 
before.  It  is  impossible  to  reconcile  the  various  provisions 
with  each  other,  or  with  the  manifest  theory  on  which  the 
earlier  policies  were  based,  or  with  the  practical  construction 
given,  unless  it  is  held  that  paid-up  policies  were  to  be  issued 
for  the  tenths  named,  without  the  previous  payment  of  the 
notes,  or  the  deduction  of  them  from  the  amount  of  said 
tenths.  If  deducted,  what  was  to  become  of  the  participa- 
tion of  profits,  and  what  of  the  interest  they  bore  ?  The 
conclusion  is,  that  plaintiffs  are  entitled,  on  the  facts  agreed, 
to  their  paid-up  policy.  The  company  will  hold  the  notes 
bearing  seven  per  cent  interest,  and  whatever  balance  due, 
less  dividends,  there  may  be  at  the  time  of  the  death  of  the 
assured  will  be  deducted  from  the  tenths  assured. 

"  The  defendant  agreed  that  plaintiffs  should  participate  in 
the  profits  during  the  natural  life  of  the  assured ;  that  they 
should  give  notes  for  part  of  annual  premiums  ;  that  at  the 
expiration  of  ten  annual  premiums  the  policy  should  be  con- 
sidered paid  up ;  that  the  dividend  should  be  applied  toward 
payment  of  the  notes ;  that  the  amount  payable  at  the  death 
of  the  assured  should  be  ■'i!l  0,000,  less  the  balance  due  on  the 
final  note  given  as  above  stated.  It  could  not  be  determined 
until  the  death  what  would  be  due  on  that  note,  for  while  it 
bore  seven  per  cent  interest  annually,  it  was  subject  to  reduc- 
tion for  dividends.  It  was  uncertain  whether  the  dividends 
would  exceed  the  interest,  or  amount  to  the  whole  note,  prin- 
cipal and  interest.  Hence,  when  the  paid-up  policies  for 
tenths  were  demanded,  the  plaintiffs  were  entitled  thereto, 
without  previous  payment  of  the  notes."  ^ 

>   Diitclier  v.  Brooklyn  Ins.  Co.,  C.  Ct.  (Mo.),  4  Ins.  L.  J.  812.     As  to  return 
p  cmiums,  see  anff,^  4;  jio.st,  §§  567,  569.     As  to  payment  of  assessments,  see 

786 


CH.  XVII.]  THE    PREMIUM.  [§  363  B 

[§  363  B.  "Wrong  Refusal  to  receive  Premiums.  —  If  a  com- 
pany improperly  refuses  to  receive  a  premium,  the  measure  of 
damages  is  the  amount  required  to  get  other  insurance  as 
good  as  the  policy  in  question,^  or  the  insured  may  treat  the 
policy  as  at  an  end  and  recover  all  he  has  paid  the  company.''^ 

In  the  West  Virginia  case  the  company  did  not  insure  per- 
sons above  sixty-five  years  of  age,  and  the  agents  had  no  rates 
for  any  age  above  that  nor  any  authority  to  insure  older 
persons.  McCall  stated  to  the  agent  that  he  was  sixty-five 
years  old,  adding  that  he  was  born  on  the  tenth  of  July,  1807 
(which  was  the  true  date),  and  that  the  agents  could  from 
that  fact  ascertain  his  age.  At  the  end  of  the  first  year  the 
plaintiff  desiring  a  renewal,  paid  to  the  agents  the  money 
therefor,  and  left  his  policy  with  them.  The  company,  how- 
ever, refused  to  further  carry  the  risk,  retained  the  policy 
from  the  plaintiff,  lapsed  it  on  its  books,  and  refused  to 
refund  the  premiums,  on  the  ground  that  the  plaintiff  was 
really  sixty-six  years  old  at  the  time  of  application.  The 
jury  gave  a  verdict  for  the  plaintiff ;  and  the  supreme  court 
refused  to  interfere  with  it,  remarking  that  the  company  was 
bound  by  the  knowledge  of  its  agents,  and  that  even  if  it  had 
a  right  to  cancel  the  policy,  it  went  too  far  in  refusing  to 
refund  the  premium. 

In  the  Missouri  case  a  wife  insured  the  life  of  her  husband 
for  the  benefit  of  herself  and  children.  Afterward  she  obtained 
a  divorce  from  him,  but  continued  to  pay  premiums  on  the 
policy.  Finally  the  company  declared  the  policy  avoided  by 
the  divorce,  the  wife  no  longer  having  an  insurable  interest  in 
the  husband's  life,  and  refused  to  refund  even  the  premiums 
paid  after  the  procurement  of  the  divorce. 

The  court  held  that  in  any  event  this  refusal  was  unjust, 
and  expressed  a  strong  feeling  that  the  insurable  interest  of 
the  wife  and  children  was  not  terminated  by  the  divorce. 

On  the  question  of  the  measure  of  damages,  the  court  re- 
marked, "  Certainly  the  mere  return  of  the  premiums  with 

1  [Piedmont,  &c.  Life  Ins.  Co.  r.  Fitzgerald,  1  Tex.  Civ.  Cas.  §  1348  ] 

2  [McCall  0.  Phoenix  Mut.  Life  Ins  Co.,  9  W.  Va.  237  ;  McKee  v.  Phoenix 
Ins.  Co.,  28  Mo  383.] 

787 


§  363  B]        INSURANCE  :    fire,    life,    accident,    etc.      [cH.  XVII. 

interest  would  not  be  the  standard  in  all  cases.  In  many  it 
would  be  very  unjust,  especially  after  the  policy  had  continued 
for  years  and  the  period  of  existence  had  consequently  been 
shortened.  If  the  person  whose  life  is  insured,  though  alive, 
should  be  laboring  under  a  disease  that  must  speedily  result 
in  his  dissolution,  the  insurer  would  not  be  permitted  to 
escape  the  payment  of  the  amount  for  which  the  life  was 
assured,  by  putting  an  end  to  the  contract  of  insurance."  ^] 

(1  28  Mo.  p.  387] 
788 


CH.  XVIII.]       OTHER   INSURANCE   AND    OVERVALUATION. 


CHAPTER  XVIII. 

OTHER   INSURANCE   AND    OVERVALUATION. 

Analysis. 

§§  364,  364  A.  Insurers  wish  to  know  the  amount  of  other  insurance  at  any 
time  obtained,  in  order  to  determine  the  motive  of  the 
insured  to  preserve  or  to  destroy  the  subject-matter, 
and  to  enable  them  to  calculate  their  share  of  any  loss, 
§364. 

Policies  usually  provide  that  other  insurance  without  no- 
tice is  fatal.  The  condition  is  valid,  §  364,  and  its 
breach  avoids  the  policy,  even  though  the  amount  of 
insurance  may  be  reduced  below  that  allowed  by  the 
policy,  §  364  A.  A  charter  provision  is  sufficient  if 
attention  is  called  to  it  in  the  policy,  §  364  A.  Some- 
times the  provision  is  simjdy  that  other  insurance  shall 
not  exceed  a  certain  sum,  §  364  A. 
§§  365  -  365  C.  Other,  over,  or  double  insurance,  is  prior  or  subsequent  insu- 
rance of  the  same  subject,  risk,  or  interest,  by  the 
same  insured,  or  for  his  benefit,  with  his  knowledge 
and  assent  (365  et  seq.,  definition  and  examples).  A 
substituted  insurance,  or  a  renewal  of  insurance,  of 
which  the  company  was  once  notified,  is  not  other  in- 
surance, §  365. 

nor  an  existing  policy  known  and  cancelled  the  same  day, 
§  365. 

nor  a  subsequent  policy  issued  by  mistake  and  not  recog- 
nized, §  365. 

nor  insurance  by  another  without  right,  nor  in  general  any 
insurance  without  the  knowledge  of  the  assured,  nor 
by  insurance  of  a  distinct  interest  in  the  property,  as 
in  case  of  mortgagor  and  mortgagee,  §§  365  n,  366. 
In  case  of  a  warranty,  of  course  the  insured  may  be 
bound  even  by  insurance  unknown  to  him,  §  365  n. 

Insurance  "to  be  made"  refers  to  subsequent  contracts. 
Siimdtaneous  policies.  The  companies  must  have  recip- 
rocal notices.  If  the  same  agent  makes  all  the  ]ioli- 
cies,  his  knowledge  is  that  of  all  the  companies.  Parts 
of  a  day  are  taken  into  account  in  deciding  which  of  two 
policies  was  the  prior,  §  365  a. 

Where  two  policies  are  taken  out,  each  containing  a  pro- 
vision against  other  insurance,  a  question  arises  which 
has  given  the  judges  full  opportunity  to  display  all  varia- 
tions of  logic,  not  to  say  anything  uncomplimentary. 

789 


INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XVIII. 

It  has  been  held, 

(1)  that  the  question  is  upon  the  validity  of  the  other  policy 

on  its  face  and  the  facts  at  the  time  of  insurance, 
not  of  loss,  §  365  B. 

(2)  that  if  the  second  policy  is  not  valid  on  the  facts  at  the 

time  of  loss,  the  first  is  good,  §  365,  unless  the  inva- 
lidity has  been  waived,  §  365. 

(3)  that  if  the  second  is  void  on  its  face,  the  first  is  good, 

but  that  evidence  of  extrinsic  facts  cannot  be  re- 
ceived, §  365  B. 

(4)  that  if  good  on  its  face,  it  is  fatal,  though  void  by  exter- 

nal facts,  §  365  B. 

(5)  that  the  first  is  good  if  the  second  is  invalid,  either  void  or 

voidable  for  breach  of  condition,  although  the  second 
company  has  actually  paid  its  policy,  §  365  and  notes. 

(6)  that  the  second  is  good  because  the  first  is  avoided  in- 

stantly by  the  taking  out  of  the  second,  §  365  B. 

(7)  that  the  first  is  good,  for  the  second  never  came  into  ex- 

istence, because  the  existence  of  the  former  broke 
one  of  the  conditions  of  its  existence,  §  365  B. 

(8)  that  if  the  second  com{)any  pay  their  policy  the  first 

is  void  ;  if  the  second  is  treated  as  void  the  first  is 
good,  365  B.  (Suppose  the  second  company  has  not 
acted  at  the  time  of  suing  the  first,  quaere. ) 

(9)  that  if  the  policy  is  to  be  void  by  other  insurance,  "valid 

or  otherwise,"  subsecjuent  insurance,  although  void, 
is  fatal,  §  365  B,  and  contra,  §  365  B. 
(10)  that  the  policy  is  rendered  voidable  (§  365)  by  other 
insurance,  whether  enforceable  or  not,  unless  it  can 
be  shown,  not  only  that  the  other  policy  was  void, 
but  that  the  insured  understood  it  to  be  so.  If  the 
uisured  thought  he  had  double  insurance,  the  spirit 
and  reason  of  the  condition  is  broken.  Such  a  state 
of  facts  at  the  time  tiie  policy  in  (juestion  was  issued 
is  fatal,  though  tlie  first  insurance  is  removed  before 
loss,  otherwise  with  subsequent  insurance  cleared 
away  before  loss,  unless  the  agreement  is  clearly  to 
the  eff'ect  that  the  takiiig  of  other  insurance  shall  be 
fatal,  then  the  procurement  will  avoid,  irrespective 
of  continuance,  §  365  C. 
Tills  tenth  view  seems  to  me  correct.  A  subsequent 
policy  issued  under  a  mutual  mistake  as  to  the  exist- 
ence of  the  former  will  not  be  fatal,  §  365  C. 
§  366.  If  any  part  of  the  property  or  interest  is  covered  by  another  pol- 

icy, it  is  a  case  of  double  insurance. 
§  367.  This  condition,  like  others  working  forfeiture,  is  strictly  con- 

strued. 
§§  368-372.  Notice  of  other  insurance  is  usually  required,  and  often  it  is 

provided  that  consent  of  the  company  must  be  indorsed 
on  the  policy,  or  at  least  obtained  in  writing,  §§  368-372. 
a  condition  requiring  notice  of  other  insurance  applies  to 
prior  as  well  as  subsequent  policies,  §  368. 

790 


CH.  XVIII.]       OTHER    INSURANCE   AND    OVERVALUATION. 


§  372  E. 
§  372  F. 

§§  373-5. 


I 


notice  to  one  no  longer  agent  is  insufficient,  §  368. 

notice  of  intention  to  secure  other  insurance  is  sufficient, 

§  368. 
(-  where  notice  in  writing  is  required,  mere  knowledge  of  the 
j  agent  is  liot  sufficient,  §  369. 

j  so  if  written  consent  is  required,  parol  will  not  do,  §  369. 
Und  indorsement  must  be  made  if  required,  §  369. 
C  on  the  contrary,  other  courts  hold  that  it  is  the  duty  of 
the  company,  upon  learning  of  other  insurance,  to 
indorse  consent,   or  disapprove  within  a  reasonable 
time,  and  if  it  does  neither  it  is  estopped,  §  370. 
the  condition  requiring  indorsement  can  be  waived  as  well 

as  any  other,  §§  370,  365. 
and  written  consent  is  sufficient,  though  not  indorsed  as 

retjuired,  §  370. 
renewal  does  not  require  reconsent,  §  370. 
Waiver,  §§  370-372  D. 

by  notice  to  a  general  agent,  with  his  assent  or  without 
objection,  within  reasonable  time,  §§  370,  372  A, 
372  B,  although  the  policy  required  written  assent, 
§  372  B  (delay  of  three  months  fatal,  §  372  B),  other- 
wise as  to  a  mere  soliciting  agent,  §  372  A. 
the  assured  is  protected  in  bona  fide  following  the  agent's 

advice  as  to  notice,  §  372  A. 
knowledge  of  the  agent  at  the  issue  of  the  policy  waives 
a  breach  by  prior  insurance,  §  372  C. 
and  a  misstatement  by  the  agent  in  filling  oiit  the 
application  will  not  avail  the  company,  372  C, 
unless  the  insured  knew  of  the  misstatement, 
§373B. 
but  mere  constructive  knowledge  by  the  agent  is  not 

enough,  §  372  C. 
nor  incomplete  knowledge,    the  amount   not  being 

named,  §  372  D. 
nor  mere  knowledge,    without  comment,   receipt  of 
premium,   or  other  misleading   act,    §§  372  D, 
369. 
nor  is  the  insured  protected  by  the  agent's  knowl- 
edge of  a  policy  which  he  promises  not  to  renew, 
but  breaks  his  promise,  §  372  D. 
Misrepresentation  as  to  other  insurance  is  material  and  fatal  if 
such  as  the  company  is  justified  in  relying  upon. 

Evidence.  .    . 

proofs  of  loss  showing  other  insurance  are  admissions, 

§  372  F. 
parol  inadmissible  where  no  ambiguity  exists. 
Overvaluation  is  frequently  stipulated  against  for  the  same  rea- 
son as  other  insurance,  namely,  that  it  influences  the 
assured  against  the  preservation  of  the  property.     Evi- 
dence of  value,  §  373. 
In  some  cases  it  is  held  that  the  overvaluation  must  be 
intentional  to  be  fatal,  §§  373,  373  A. 

791 


§  364]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XVIU. 

But  others  hold,  with  more  reason,  that  a  wilful  neglect 
of  the  means  of  infoiTnation  wUl  avoid  the  policy, 
even  though  there  is  no  intended  fraud,  §§  373  n, 
373  A. 

And  a  mistake  has  been  held  fatal,  §§  373,  373  A. 

It  has  been  said  that  onlj'  a  gross  and  clear  overvaluation 
will  be  fatal,  and  that  it  will  be  so  whether  there  is 
any  condition  on  the  subject  or  not,  §  373. 

Others  hold  a  siibstanlml  excess  sufficient,  §  373  A. 

Want  of  education  is  no  excuse,  §  373  A. 

A  claim  more  than  double  the  truth  \i  prima  facie  fraud- 
ulent, §  373  A,  but  not  20  per  cent  nor  75  per  cent 
excess,  §  373  A. 

A  warranty,  of  course,  shuts  out  the  question  of  intent, 
unless  other  parts  of  the  policy  qualify  it,  §  373  A. 

Overvaluation  of  part  of  the  property  does  not  affect  the 
rest,  §  373  B. 

Overvaluation  that  is  known  to  the  company,  or  ought  to 
be  known,  is  waived  by  rejecting  the  claim  on  other 
grounds.  §  373  B. 
but   not  if  it  is  a  fraud  and  the  fact  is  unknown, 

§  373  B. 
ror  will  knowledge  of  the  agent  be  sufficient  where 
the  assured  knows  that  the  company  is  being 
deceived,  §  373  B. 

Under  the  Maine  statute  the  question  is  whether  the  risk 
is  increased,  §  373  B. 

If  the  liability  is  not  to  exceed  three-fourths  of  the  value 
at  the  time  of  loss,  overvaluation  at  the  time  of  in- 
surance is  immaterial,  §  373  B. 

The  rule  of  this  topic  does  not  apply  to  a  changing  stock 
of  goods,  nor  in  any  case  where  the  insurer  is  only 
liable  for  a  percentage  of  the  actual  loss,  §  374. 

In  case  of  property  on  which  the  insurance  is  renewed,  a 
depreciation  since  the  first  insurance  does  not  give 
rise  to  a  fraudulent  overvaluation,  §  375. 
§  376.  A  violation  of  the  charter,   by  insuring  for  too  large  a 

percentage  of  the  real  value,  does  not  avoid  the  policy 
between  the  parties. 

§  364.  other  Insurance.  —  The  insurers  may  wish  to  know 
the  amount  of  insurance  upon  tlie  particular  subject-matter, 
in  order  that  they  may  duly  estimate  the  risk,  since  the  greater 
the  amount  of  the  insurance  the  greater  the  temptation  to 
destroy  the  property  or  life  or  other  subject-matter,  or  in 
some  other  way  to  bring  about  the  event  upon  which  tlie  loss 
is  made  payable.  And  it  is  obvious  that  the  interest  to  know 
the  fact  of  other  insurance  is  the  same,  whether  it  exist  at 
the  time  of  entering  into  the  new  contract  or  be  procured 
792 


CH.  XVIIl.]      OTHER  INSURANCE   AND   OVERVALUATION.  [§  364 

afterwards.  Such  insurance  is  sometimes  called  over-in- 
surance or  double  insurance.  It  is  also  of  importance  to  the 
insurer  to  know  of  other  insurance,  that  he  may  determine 
his  proportionate  liability,  in  case  of  being  called  upon  to  con- 
tribute towards  the  indemnity  for  a  loss.  Insurers  may  be 
presumed  to  rely  more  upon  the  interest  than  upon  the  char- 
acter of  the  insured  for  protection  against  the  carelessness 
and  fraud  of  the  owners,  and  therefore  take  care  that  the 
property  be  so  far  uncovered  by  insurance  that  it  is  for  the 
interest  of  the  owner  that  it  should  not  be  destroyed.  To  en- 
able them  to  do  this,  it  is  necessary  that  they  should  be  in- 
formed whether  the  property  on  which  insurance  is  applied 
for  is  elsewhere  insured,  and  to  what  extent ;  and  that  this 
interest  of  the  insured  may  not  afterwards  be  decreased  by 
his  procurement  of  further  insurance,  the  stipulation  that  the 
policy  shall  be  void  if  other  insurance  exist  at  the  time  and 
be  not  disclosed,  or  subsequent  insurance  be  obtained  and  be 
not  notified  to  the  company,  is  resorted  to.i  The  general 
doctrine  that  a  previous  or  subsequent  insurance  without  no- 
tice, under  a  policy  requiring  notice  of  such  insurance,  upon 
pain  of  forfeiture,  discharges  the  insurers  from  any  obliga- 
tion to  pay  for  a  loss  happening  under  such  circumstances,  is 
well  settled  and  universally  recognized.  That  this  should  be 
the  effect  of  the  concealment  or  failure  to  give  notice,  as  the 
case  may  be,  is  not  only  a  part  of  the  contract,  and  obligatory 
upon  that  ground,  but  the  forfeiture  is  just  and  reasonable. 
The  insurer  can  never  know  the  full  extent  of  his  risk,  unless 
he  knows  everything  that  bears  upon  the  risk.  He  has  a 
riffht  to  take  into  account  the  fact  that  the  insured  has  a 
greater  or  less  unprotected  interest,  whereby  his  vigilance 
may  be  quickened  in  the  preservation  of  the  property  ;  but, 
in  order  to  estimate  this  interest  truly,  he  must  know  to  what 

1  Hutchinson  v.  West.  Ins.  Co.,  21  Mo.  97 ;  Harris  v.  Oliio  Ins.  Co.,  5  Oliio, 
467.  The  mere  failure  to  mention  the  fact  that  there  is  other  existing  insurance 
on  the  subject-matter  upon  which  further  insurance  is  obtained,  there  being  no 
inquiry  on  that  point,  is  not  a  concealment  wliich  will  avoid  the  policy,  —  at 
least,  unless  it  be  found  by  the  jury  material  to  the  risk.  Parsons  v.  Citizens' 
Ins.  Co.,  43  U.  C.  (Q.  B.)  261;  McDonell  v.  Beacon  Fire  &  Life  Ins.  Co.,  7  C. 
P.  (U.  C.)  308. 

793 


§  364  A]       INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XVIII. 

extent  insurance  is  actually  had.  It  may  be  that  the  in- 
surance is  to  such  an  amount  as  to  stimulate  to  neglect  in 
the  preservation,  or  even  to  the  fraudulent  destruction,  of 
the  property  insured.  This  prudent  insurers  should  endeavor 
to  guard  against ;  and  deception  or  failure  to  notify  when  re- 
quired on  this  point  operates  as  a  fraud  upon  them.  If  they 
have  contracted  for  that  protection,  they  have  a  right  to  its 
advantages ;  and  the  insured  cannot  be  permitted  to  show 
that  there  was  no  fraud  in  fact ;  that  the  property  was  vigi- 
lantly guarded ;  that  the  insured  could  not  have  prevented 
the  loss ;  or  even  that  the  insurer  —  as  in  case  the  loss  is  less 
than  the  amount  insured  by  all  the  policies  —  is  benefited  by 
the  over-insurance,  since  he  will  only  be  required  to  pay,  by 
way  of  contribution,  his  proportion  of  the  loss  instead  of  the 
whole  amount  stipulated.  This  is  one  of  those  provisions  not 
regarded  with  the  jealousy  due  to  those  ordinarily  working 
forfeitures,  but  will  be  upheld  without  reluctance  as  a  fair 
and  just  provision  for  a  reasonable  and  proper  purpose.^ 

[§  364  A.  A  breach  of  a  condition  in  a  policy  as  to  taking 
other  insurance  without  notice  avoids  the  policy. ^  Subse- 
quent insurance  avoids  a  prior  policy  conditioned  against  it, 
although  two  other  policies  contemporaneous  with  the  said 
prior  policy  are  avoided  by  the  same  act,  so  that  the  amount 
of  insurance  is  thereby  reduced  within  the  limit  allowed 
by  said  prior  policy .^  Other  insurance  ijiso  facto  avoids  the 
policy  without  any  action  of  the  company  looking  toward 
cancellation.^  When  the  charter  provided  that  the  policy 
should  be  void  for  double  insurance  such  insurance  was  held 
to  avoid  it,  although  on  the  back  of  the  policy  only  two 
out  of  many  sections  of  the  company's  charter  were  printed, 
which  two  contained  no  such  provision.^      They  were,  however, 

1  Obermeyer  v.  Globe  Mut.  Ins.  Co.,  43  Mo.  573.     See  also  ante,  §  13. 

2  [Battaiiie  v.  Merchants'  Ins.  Co.,  3  Rob.  (La.)  384  at  386;  Duclos  v.  Citi- 
zens' Mut.  Ins.  Co.,  23  La.  Ann.  332  at  3.33;  Funks  v.  Minn.  Mut.  Ins.  Co., 
29  Minn.  347  at  354  ;  Sanders  v.  Cooper,  115  N.  Y.  279;  Moulthrop  v.  Farmers' 
Mut.  Fire  Ins.  Co.,  52  Vt.  123.] 

3  (Hoyal  Ins.  Co.  v.  McCrea,  Maury,  &  Co.,  8  Lea  (Tenn.),  531.] 

*  Jolmson  V.  Amer.  Fire  Ins.  Co.,  18  Ins.  L.  J.  724  (Minn.),  August  12,  1889.J 
5  [Fabyan  v.  Union  Mut.  Fire  Ins.  Co.,  33  N.  H.  203  at  208.] 

794 


CH-.  XVIII.]       OTHER   INSURANCE    AND    OVERVALUATION.  [§  365 

amply  sufficient  to  call  attention  to  the  charter,  and  it  was 
manifest  on  the  slightest  attention  that  the  whole  act  was  not 
there,  and  a  prudent  man  M^ould  have  found  out  what  the  other 
sections  contained.  When  the  policy  provides  that  the  ag- 
gregate insurance  shall  not  exceed  a  certain  sum,  insurance 
to  a  greater  extent  than  this  avoids  the  policy. ^  If  the  policy 
provides  that  the  total  insurance  shall  not  exceed  two-thirds 
of  the  cash  value  of  the  property  and  the  plaintiff's  evidence 
shows  that  it  did  exceed  two-thirds,  he  will  be  nonsuited. ^j 

§  365.  What  amounts  to  Other,  Over,  or  Double  Insurance.  — 
It  is  additional  and  valid  insurance,  prior  or  subsequent,  upon 
the  same  subject,  risk,  and  interest,  effected  by  the  same  in- 
sured or  for  his  benefit,  and  with  his  knowledge  or  con- 
sent.3  Owners  of  different  interests  in  the  same  property 
and  joint  owners  may  respectively  insure  their  interests, 
without  risk  of  violating  a  provision  against  other  insurance.^ 

1  [Insurance  Co.  v.  Slockbower,  26  Pa.  St.  199  at  202.] 

2  [Baliner  v.  Insurance  Co.,  127  Pa.  St.  464.] 

3  Tyler  v.  JFAna  Ins.  Co.,  12  Wend.  (N.  Y.)  507;  s.  c.  affirmed,  16  Wend. 
387  ;  Sloat  v.  Royal  Ins.  Co.,  49  Pa.  St.  14 ;  Forbush  v.  West  Mass.  Ins.  Co.,  4 
Gray  (Mass.),  337;  Nichols  v.  Fayette  Mut.  Ins.  Co.,  1  Allen  (Mass  ),  63;  Har- 
ris V.  Ohio  Ins.  Co.,  5  Ohio,  467;  Franklin  Mar.  &  Fire  Ins.  Co  v.  Drake, 
2  B.  Mon.  (Ky.)  47;  Park  v.  Phoenix  Ins.  Co.,  19  U.  C.  (Q.  B.)  110;  Roots  v. 
Cincinnati  Ins.  Co.,  1  Disney  (Ohio),  138;  Kelly  ik  Liverpool,  &c.  Ins.  Co.,  2 
Hannay  (N.  B.),  266.  See  also  post,  §  366.  [Subsequent  further  insurance  by 
another  without  right  is  of  no  effect.  Com.  Union  Ass.  Co.  v.  Scammon,  126 
111.  355.  The  condition  pertaining  to  other  insurance  applies  only  to  such  as  is 
procured  by  the  insured  or  with  his  assent,  and  not  to  such  as  may  be  thrust 
upon  him  by  officious  persons,  without  his  knowledge  or  assent,  and  which  he 
repudiates.  London,  &c.  Fire  Ins.  Co.  v.  Turnbull,  86  Ky,  230.  Where  a  con- 
signor effected  insurance,  with  the  warranty  "  no  other  insurance,"  and  un- 
known to  him  the  consignees  also  insured  tlie  same  goods,  the  first  policy  was 
held  not  avoided.  Williams  v.  Crescent  Ins.  Co  ,  15  La.  Ann.  051  at  652.  The 
question  in  a  part  of  the  policy  (the  application)  was  "  What  is  your  title  to  the 
property?"  —  answer,  ''Contract;"  question,  "How  much  insured  in  other 
companies  ?  " —  answer,  "  None  ;  "  and  it  was  held  that  the  fair  interpretation 
of  these  questions  and  answers  was  that  the  insured  held  the  property  by  a 
contract  for  the  purchase  of  it,  and  that  he  had  no  sum  insured  in  other  com- 
panies. Hence,  that  it  was  no  breach  of  the  warranty  that  his  vendor  was 
otherwise  insured.  Sprague  v.  Holland  Purch.  Ins.  Co.,  69  N.  Y.  128  at  130. 
Subsequent  insurance  by  a  mortgagee  cannot  affect  a  policy  obtained  by  the 
mortgagor.  Guest  v.  Fire  Ins.  Co.,  66  Mich.  98.  Prior  insurance  without  the 
knowledge  of  the  plaintiff  is  no  breach  of  the  other  insurance   clause.      A 

795 


§  365]  INSUEANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XVIIl. 

[When  both  parties  knew  of  another  policy  in  existence  which 
was  to  be  cancelled  on  the  issuance  of  the  second  policy,  and 
which  was  in  fact  cancelled  the  day  after,  the  second  was  held 
not  avoided.^  Where  a  policy  was  to  be  void  "  if  any  sub- 
sequent insurance  is  effected  in  any  other  company,"  it  is  held 
that  subsequent  insurance  means  further  insurance,  and  that 
a  subsequent  policy  of  the  same  amount  as  a  prior  policy 
which  lapsed  is  not  a  breach  of  the  condition.-]  Substituted 
insurance,  not  increasing  the  amount,  though  changing  it,  is 
not  new  insurance  ;  ^  but  it  may  be  "  subsequent "  insurance, 
though  less  in  amount.'*     Nor  is  a  renewal  "  other  insurance," 

mortgagee  insured,  and  afterward  the  mortgagor  not  knowing  of  the  former  pol- 
icy insured  her  interest,  stating  the  mortgage  and  that  the  mortgagee  had  a 
right  to  insure.  It  was  huld  that  her  polic}'  was  good.  Carpenter  v.  Conti- 
nental Ins.  Co.,  61  Mich.  6-35.  A  mortgagee  insured  his  interest  in  the  projierty 
by  a  policy  payable  to  himself,  and  containing  a  stipulation  for  apportionment 
of  loss  in  case  of  other  insurance.  Without  his  knowledge  the  mortgagor  in- 
sured his  interest  by  a  policy  payable  to  the  mortgagee  as  his  interest  might 
appear.  Upon  loss  he  received  payment  from  the  latter  policy,  and  then  sued 
on  tiie  former,  and  it  was  held  that  he  could  recover  in  full.  Johnson  v.  North 
Britisii  &  M.  Ins.  Co.,  1  Holmes  U.  S.  117  at  119.  Where  a  mortgagor  assigned 
his  policy  to  a  mortgagee  as  collateral  security,  and  then  got  other  insurance, 
the  mortgagee  could  recover  on  the  policy.  Williams  v.  Warbasse,  44  N.  J.  Eq. 
89.  In  this  case  tlie  mortgagee  knew  that  the  mortgagor  was  going  to  obtain 
other  insurance,  and  the  mortgagee  promised  to  notify  the  company,  but  failed 
to  do  so,  query  could  tlie  mortgagor  hold  the  mortgagee  liable  on  his  promise. 
But  a  mortgagor  who  takes  out  a  policy  payable  to  the  mortgagee,  ami  after- 
wards insures  his  own  interest,  avoids  the  first  policy.  Parol  to  show  tliat  tlie  in- 
sured in  the  first  policy  was  not  the  real  party  interested  is  inadmissible.  Lias 
V.  Roger  Williams  Ins.  Co.,  8  Fed.  Rep.  187 ;  1st.  Cir.  (N.  H.)  1880,  9  Ins.  L.  J. 
154  ;  10  Rep.  719.  So  where  a  mortgagee  took  out  insurance,  and  the  policy  was 
made  to  the  mor^^d^ors  payable  to  the  mortgagee,  and  stipulated  ngainst  other 
insurance,  subsequent  insurance  by  one  of  the  mortgagors  avoided  the  policy. 
The  mortgagee  was  bound  by  his  agreement.  Gillett  v.  Liverpool  &  L.  &  G. 
Ins.  Co.,  73  Wis.  203.  The  element  of  knowledge  is  not  always  conclusive. 
The  existence  of  other  insurance  though  unknown  to  the  insured  maj*  avoid  a 
policy,  as  where  his  policy  contains  a  warranty  tliat  no  other  insurance  exists. 
Phoenix  Ins.  Co.  v.  Copeland,  86  Ala.  551.  A  policy  issued  to  the  mortgagee 
prohibited  other  insurance  on  a  canal  boat  to  exceed  a  certain  sum.  The 
owner  procured  such  insurance,  and  it  was  held  that  the  first  policy  was 
avoided.     Van  Alstyne  v.  Mina,  Ins.  Co.,  14  Hun,  360  at  .364.] 

1  [Continental  Ins.  Co.  v.  Horton,  28  Mich.  173  at  177.] 

2  [Parsons  v.  Standard  Fire  Ins.  Co.,  5  Can.  Supr.  Ct.  233.] 

3  Pacaud  v.  Monarch  Ins.  Co.,  1  L.  C.  Jur.  284. 

*  Burt  V.  People's,  &c.  Ins.  Co.,  2  Gray  (Mass.),  397. 

796 


CH.  XYIII.]       OTHER   INSURANCE    AND    OVERVALUATION.  [§  365 

SO  as  to  require  notice,  if  notice  was  given  at  the  time  of  the 
original  insurance,^  unless,  the  interest  meanwhile  having 
changed,  the  renewal  is  in  a'  new  name.^  The  additional  in- 
surance must  be  valid.  Subsequent  insurance,  void  by  its 
own  terms,  is  no  insurance  within  the  meaning  of  the  usual 
condition  against  other  insurance,  although  the  subsequent 
insurance  be  in  fact  paid.^  And  a  policy  entered  into  by  a 
mutual  mistake  of  the  parties  as  to  prior  existing  insurance  is 
not  valid,  and  therefore  not  other  insurance  :  ■*  but  a  policy  is- 
sued by  a  company  unauthorized  to  act  in  the  State  by  reason 
of  non-compliance  with  certain  statutory  regulations,  is  not  a 
void  policy.^  So  if  a  prior  insurance  is  void  by  reason  of  a 
violation  of  some  other  condition,  its  non-disclosure  will  not 
avoid  a  policy  requiring  notice  of  prior  insurance.^  This  doc- 
trine is,  however,  denied  by  some  most  respectable  authori- 
ties."    In  Georgia,  by  the  Code,  a  second  insurance,  without 

1  Pitney  v.  Glen's  Falls  Ins.  Co.,  65  N.  Y.  6. 

2  Continental  Ins.  Co.  v.  Hcilman  (111.),  9  Ins.  L.  J.  91. 

^  Hardy  i'.  Union  Mut.  Fire  Ins.  Co.,  4  Allen  (Mass.),  217  ;  Stacey  v.  Frank- 
lin Ins.  Co.,  2  W.  &  S.  (Pa.)  506  ;  Jackson  v.  Mass.  Mut.  Fire  Ins.  Co.,  2.S  I'ick. 
(Mass.)  418 ;  Gale  v.  Belknap  County  Ins.  Co.,  41  N.  H.  170;  Sdienck  v.  Mercer 
County  Mut.  Ins.  Co.,  4  Zabr.  (N.  J.)  447 ;  Pliilbrook  r.  New  England  Mut.  Ins. 
Co.,  37  Me.  137  ;  Rising  Sun  Ins.  Co.  v.  Slaughter,  20  Ind.  520.  [The  condition 
against  subsequent  insurance  is  not  broken  by  subsequent  policies  whicli  never 
took  effect  because  of  breach  of  the  condition  as  to  absolute  and  sole  ownership. 
An  attempt  to  insure  is  not  an  insurance,  and  it  makes  no  difference  that  the  in- 
surers regarded  these  after-policies  as  valid,  and  paid  money  qn  them  to  the 
insured.  The  rights  of  the  parties  on  the  policy  here  sued  on  became  fixed  at 
the  time  the  loss  occurred,  and  could  not  be  affected  by  what  was  subsequently 
done  between  tlie  insured  and  third  persons.  Fireman's  Ins.  Co.  v.  Holt,  35  Ohio 
St.  189,  195;  Thomas  v.  Builders'  Ins.  Co.,  119  Mass.  121  at  123.  Such  deci- 
sions are  outrageous  violations  of  the  spirit  as  well  as  the  letter  of  the  agree- 
ment made  hy  the  parties.] 

*  Wilson  0.  Queen  Ins.  Co.,  C.  Ct.  (Pa.),  10  Ins.  L.J.  302;  Clark  v.  New 
England  Mut.  Ins.  Co.,  6  Cush.  (Mass.)  342. 

5  Behler  v.  Germania  Ins.  Co.  (Ind.),  9  Ins.  L.  J.  778. 

6  Jackson  v.  Farmers'  Mut.  Ins.  Co.,  5  Gray  (Mass.),  52;  McLacklin  u.  JFAna 
Ins.  Co.,  4  Allen  (N.  B.),  113.  And  see  also  Neve  v.  Columbia  Ins.  Co.,  2  Mc- 
Mullan  (S.  C),  437.  In  Upper  Canada,  subsequent  invalid  insurance,  if  actually 
paid,  has  been  held  to  work  a  forfeiture.  Dafoe  v.  Johnstown,  &c.  Ins.  Co.,  7 
U.  C.  (C.  P.)  55;  Gauthier  v.  Waterloo  Ins.  Co.,  U.  C.  (Q.  B.),  16  Can.  L.  J.  29 
(18S0).  But  the  law  is  otherwise  here.  Fireman's  Ins.  Co.  v.  Holt  (Ohio),  9 
Ins.  L.  J.  212,  and  cases  before  cited  in  this  note. 

"  Bigler  v.  New  York  Central  Ins.  Co.,  22  N.  Y.  402;  Campbell  v.  ^tna  Ins. 

797 


§  365]  INSURANCE  ;    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XVIII. 

consent  of  the  first  insurers,  avoids  the  policy  ;  and  it  is  there- 
also  held  that  a  second  insurance,  though  invalid,  avoids  the 
policy.^  A  distinction  has,  however,  been  taken  between  a 
policy  apparently  securing  over-insurance  which  was  void  at 
the  time  of  the  loss,  in  which  case  recovery  may  be  had,  and 
a  like  policy  which  is  voidable  only  by  reason  of  some  breach  of 
condition  which  works  a  forfeiture,  but  which  forfeiture  has 
been  waived,  in  which  case  the  over-insurance  is  at  the  time 
of  the  loss  an  existing  fact,  and  a  recovery  cannot  be  had.^ 
In  Atlantic  Insurance  Company  v.  Goodall,^  it  was  held  that, 
where  a  policy  was  upon  condition  to  be  void  if  other  insur- 
ance should  not  be  indorsed  on  it,  the  existence  of  prior  in- 
sui'ance  did  not  make  it  absolutely  void.  l)ut  voidable  only,  and 
that  it  might  be  confirmed  and  made  valid  by  acts  of  the  com- 
pany, showing  a  waiver  of  the  defect ;  and  in  New  England 
Fire  Insurance  Company  v.  Schettler,'*  it  was  held  that  if  the 
other  insurance  had  ceased  by  its  own  limitation,  before  the 
loss  claimed  under  a  subsequent  policy,  the  right  of  recovery 
on  the  last  policy  would  not  be  affected.  In  David  v.  Hartford 
Insui-ance  Company,-^  it  was  held  that  a  policy  securing  sub- 
sequent insurance,  upon  its  face  valid,  and  the  amount  of 
which  upon  a  loss  happening  had  been  paid,  constituted  addi- 
tional insurance  within  the  meaning  of  the  condition,  al- 
though it  might  have  been  avoided  by  extrinsic  evidence  of  a 
forfeiture  for  condition  broken ;  and  in  Mitchell  v.  Lycoming 
Mutual  Insurance  Company,^  the  rule  was  stated  thus:  When 

Co.,  Cochran,  vol.  8,  p.  1  (Nova   Scotia),  21  ;  Ramsay,  &c.  v.  Mut.  Fire  Ins.  Co., 
11  U.  C.  (Q.  B.)  510. 

1  Lackey  v.  Georgia  Home  Ins.  Co.,  42  Ga.  450,  457.  See  also  Mason  v.  Andes 
Ins.  Co.,  28  U.  C.  (C.  P.)  37  ;  Gros  c.  Le  Nord,  Dalloz,  Jar.  Gen.  1870,  2,  70. 

2  Mitchell  V.  Lycoming  Mut.  Ins.  Co.,  51  Pa.  402;  Carpenter  v.  Prov.  Ins. 
Co.,  16  Pet.  (U.  S.)  495  ;  Jacobs  v.  Equitable  Ins.  Co.,  19  U.  C.  (Q.  B.)  250,257  ; 
Obernieyer  v.  Globe  Ins.  Co.,  43  Mo.  573.  [If  there  is  a  prior  policy  the  condi- 
tions of  which  have  been  broken,  but  which  has  not  been  cancelled  by  the  com- 
pany, it  is  error  to  rule  that  such  former  policy  is  not  a  breach  of  the  conditions 
of  the  new  policy  against  other  insurance.  The  breach  of  tiie  former  policy  ren- 
dered it  voidable  only,  not  void.  Landers  v.  Watertown  Fire  Ins.  Co.,  86  N.  Y. 
414.] 

8  35  N.  H.  328  ;  Fishbeck  v.  Phoenix  Ins.  Co.  (Cal.),  11  Reptr.  218. 

*  .38  111.  166.     See  also  ante,  §  101. 

6  13  Iowa,  69.  6  61  Pa.  St.  402,  408. 

798 


CH.  XVIII.]       OTHER    INSURANCE   AND    OVERVALUATION.  [§  365 

policies,  alleged  to  be  for  other  insurance,  are  void  at  the  time 
of  the  loss,  they  are  no  obstacle  to  a  recovery  on  the  policy 
on  which  the"  claim  is  made ;  but  if  voidable  only  for  some 
breach  of  condition  for  which  the  insurers  might  have  avoided 
them,  but  which  nevertheless  they  have  waived,  double  in- 
surance exists.  In  Kentucky,  where  the  first  policy  was  to 
be  void  if  there  was  further  insurance,  and  there  was  further 
insurance,  to  be  void  if  prior  insurance  had  been  obtained, 
the  first  policy  is  held  to  be  void  on  the  obtaining  new  insur- 
ance, and  the  second  policy  only  voidable  at  the  option  of  the 
insurer.^  This  subject  was  also  much  discussed  in  a  case  in 
Iowa,2  where  there  were  two  policies  on  the  same  property, 
each  having  a  condition  against  both  prior  and  subsequent 
insurance.  The  opinion  of  the  majority  of  the  court  ^  upon 
this  point  was  given  by  Beck,  J.,  who,  after  stating  the  con- 
clusions of  the  court  upon  two  preliminary  questions, —  first, 
that  the  policy  of  the  Hartford  company  was  prior  in  date, 
and  second,  that  the  receipt  given  by  the  agent  of  the  Phoe- 
nix company  amounted  to  a  contract  of  insurance  upon  the 
usual  terms  and  conditions  as  expressed  in  the  policy,  which 
the  agent  was  empowered  to  issue,  —  thus  proceeds  :  — 

"  The  policy  which  is  the  foundation  of  this  action  contains 
a  condition  in  the  following  words :  '  If  the  assured  shall 
have,  or  shall  hereafter  make,  any  other  insurance  upon  the 
property  hereby  insured,  without  the  consent  of  the  company 
written  hereon,  in  such  case  this  policy  shall  be  void.'  As  a 
defence  the  defendant  alleges  that,  in  violation  of  the  condi- 
tion, the  insured,  Howe,  did  cause  the  property  to  be  insured 
by  a  policy  issued  by  the  Phcenix  Insurance  Company,  Jan. 
21,  18G7.     The  policy  sued  on  is  dated  Jan.  19,  1867. 

"  It  appears  from  the  evidence  that  Howe  applied  to  the 

'  Suggs  V.  Liverpool,  &c.  Ins.  Co.,  9  Ins.  L.  J.  657 ;  Baer  v.  Phoenix  Ins.  Co., 
4  Bush  (Ky.),  242. 

2  Hubbard  v.  Hartford  Fire  Ins.  Co.,  33  Iowa,  325,  very  similar  to  Gale  v. 
Belknap  Ins.  Co  ,  41  N.  H.  170. 

^  Miller,  J.,  dissented,  on  the  ground  that  when  the  policy  was  taken  from  tlie 
Plioenix  office,  there  was  no  insurance  in  the  other,  and  tlierefore  it  became  void 
when  the  policy  was  received  from  the  Hartford  office  the  next  day,  there  being 
then  for  the  first  time  double  insurance. 

VOL.  11.  —  7  799 


§  365]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC,       [CH.  XVIII. 

agent  of  the  defendant  on  the  eighteenth  day  of  December, 
1867,   for   insurance,   and    it  was  arranged    that    the  policy 
should  be  issued  and  sent  to  him  on  that  day.      Howe  not 
having  received  the  policy  from  defendant's  agent,  nor  heard 
from  him  in  regard    to  the    business,   on    the    21st   of    the 
same  month  applied  to  the  agent  of  the  Phoenix  Insurance 
Company  for  a  policy  covering  his  property.     The  terms  of 
the  insurance  were  agreed  upon ;    but    the  agent,  having  no 
blank  policies,  executed  a  receipt  to  Howe  for  the  amount  of 
the  premium  then  paid  him,  specifying  the  property  to  be  in- 
sured, which  was  the  same   covered  by  the  policy  issued  by 
defendant,  and  stipulating  that  a  policy  would  be  issued  as 
soon  as  the  blanks  should  be  received.      The   agent  of   the 
Phoenix  company  was  not  informed  by  Howe  of  his  applica- 
tion to  defendant's  agent  for  insurance ;  and  it  appears  that 
Howe,  at  the  time,  did  not  expect  to  receive  the  policy  of  the 
defendant,  as  it  had  not  been  sent  to  him,  according  to  the 
prior  arrangement.     On  the   22d,  the  day  subsequent  to  the 
transaction  with  the  agent  of  the  Phoonix  company,  the  agent 
of  the  defendant  delivered  to  Howe  the  policy  sued  on,  dated 
on  the  18tli,  and  received  payment  of  the  premium.     Howe 
did  not  inform  him  of  his  transaction  with  the  Phoenix  com- 
pany.    The  property  covered  by  these  policies  was  destroyed 
by  fire  on  the  26th.     Under  these  facts  defendant  insists  that 
the  transaction  with  the  Phoenix  Insurance  Company  is  in 
violation  of  the  conditions  of  the  policy  against  other  insur- 
ance quoted  above,  and  that  defendant's  contract  is  avoided 
thereby.     The  question  here  presented  is  of  very  great  diffi- 
culty ;  and  its  solution,  either  upon  principle  or  authority,  is 
not  entirely  free  from  doubt.  ...    We  now  have  the  case  of 
two  policies,  given  at  different  dates,  covering  the  same  prop- 
erty, each  having  a  condition  against  other  insurance,  both 
prior   and  subsequent,  and  providing   that  a  breach  thereof 
shall  avoid  the  respective  instruments.     The  question  for  us 
to  determine  is  which,  if  either,  of  these  instruments  is  valid, 
and  which  is  avoided    by  the  operation  of  a  breach  of  the 
condition. 

"  It  will  be  remembered  that  a  breach  of  the  condition  does 
800 


CH.  XVIII.]       OTHER    INSURANCE    AND    OVERVALUATION,  [§  3G5 

not  absolutely  render  void  and  of  no  effect  the  policy  ;  it  sim- 
])ly  renders  it  voidable,  —  its  binding  force  and  effect  being 
subject  to  be  defeated  at  the  option  of  the  company  issuing 
the  instruments.  If  no  objection  be  made  by  the  company  on 
account  of  the  breach  of  the  condition,  the  policy  may  be 
enforced  as  though  no  forfeiture  had  ever  happened.  The  act 
of  the  company,  whereby  it  is  shown  that  the  instrument  is 
treated  as  avoided,  must  be  shown  in  order  to  defeat  recovery 
thereon.  If  no  such  act  or  objection  on  the  part  of  the  com- 
pany be  shown,  the  contract  will  be  considered  binding.^  It 
is  not  necessary  here  to  state  what  will  amount  to  an  act 
avoiding  the  contract,  or  when  it  must  be  done,  further  than 
to  observe  that  it  must  appear  that  the  imderwriter  relied 
upon  the  breach  of  the  condition  to  defeat  the  contract. 

"  Of  course  the  company  issuing  the  subsequent  policy 
could  not  rely  upon  the  breach  of  the  condition  in  order  to 
avoid  the  instrument  until  knowledge  thereof  was  acquired ; 
and  its  acts  treating  the  policy  as  avoided  would  be  sufficient, 
if  shown  to  have  been  done  after  such  knowledge.  The  same 
principles  will  apply  to  the  prior  policy.  It  was  not  abso- 
lutely void  on  account  of  the  subsequent  insurance,  but  was 
voidable  only.  It  was  a  binding  instrument  when  executed, 
and  would  so  continue  until  some  act  done  by  defendant  in- 
tended to  avoid  it,  on  account  of  the  breach  of  the  condition 
against  the  subsequent  insurance.  But  it  could  not  bo  avoided 
on  account  of  the  Phoenix  policy,  unless  that  instrument  it- 
self was  valid.  If  it  so  happened  that  when  the  action  was 
brought  on  defendant's  policy,  or  even  at  the  trial,  it  was 
made  to  appear  that  the  Phoenix  policy  couH  not  be  en- 
forced, being  avoided  on  account  of  the  breach  of  condition 
therein,  it  is  obvious  that  the  existence  of  that  instrument, 
shown  to  be  in  operation,  would  not  constitute  a  breach  of  the 
condition  in  defendant's  policy  against  subsequent  insurance. 
That  condition  is  against  actual  insurance  to  be  subsequently 

^  See  also  upon  this  point  Pechner  v.  Phoenix  Tns.  Co.,  65  N.  Y.  195  ;  Canada 
Landed,  &c.  Co.  c.  Canada  Agr.  Ins.  Co.,  17  Grant's  Cli.  (U.  C.)  418  ;  Comp.  du 
PlicEnix  c.  Doliis,  Dalloz,  Jur.  Gen.  1844,  4,  36;  Anson  v.  Winnesiieik  Ins.  Co., 
23  Iowa,  84  ;  post,  §  372. 

801 


§  oG5]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XVIII. 

made.  The  Phcenix  policy  created  no  insurance :  it  was 
avoided  by  the  act  of  tlie  company,  and  therefore  did  not 
constitute  a  breach  of  defendant's  policy.  The  general  prin- 
ciple of  law  may  be  stated  as  follows  :  In  order  to  avoid  a 
policy  on  account  of  a  subsequent  insurance  against  an  ex- 
press condition  therein,  it  must  appear  that  such  subsequent 
insurance  is  valid,  and  that  the  policy  upon  which  it  is  made 
is  capable  of  being  enforced.  If  it  cannot  be  enforced,  it  is 
no  breach  of  the  prior  policy.  .  .  .  The  doctrine  which  we 
have  assumed  does  not  go  to  the  full  extent  of  some  of  the 
cases  just  cited.^  It  is  held  in  Philbrook  v.  New  England 
Mutual  Insurance  Company  that  the  prior  policy  is  valid, 
even  though  the  subsequent  policy  is  not  avoided  by  the 
underwriter  issuing  it,  but  the  loss  thereon  is  paid  ;  and  in 
others  of  these  cases,  the  rule  is  not  expressly  based  upon  the 
fact  that  the  subsequent  policy  was  treated  by  the  underwriter 
issuing  it  as  avoided. 

"  The  doctrine  which  we  recognize  here  is  based  upon  the 
fact  that  the  subsequent  policy  was  treated  and  considered  as 
avoided  by  the  company  issuing  it  as  soon  as  it  had  notice  of 
the  prior  insurance.  In  our  view  this  is  a  most  important 
consideration  ;  for,  if  the  underwriter  in  the  second  policy 
does  not  treat  it  as  avoided,  it  cannot  be  so  considered  by  the 
insured,  or  the  company  issuing  the  prior  policy.  The  condi- 
tion against  prior  insurance  in  the  subsequent  policy  is  for  the 
benefit  of  the  insurer,  who  may,  at  his  option,  waive  it  or  in- 
sist upon  enforcing  its  terms.  If  he  seeks  to  enforce  the  con- 
dition, and  treats  the  policy  as  a  void  contract,  it  is  indeed 
difficult  to  see  upon  what  grounds  it  may  be  regarded  as  valid, 
as  an  insurance  that  will  defeat  the  prior  policy.  In  this 
view,  our  conclusion  is  not  in  conflict  with  David  v.  Hartford 
Insurance  Company  and  Bigler  v.  New  York  Central  Insurance 
Company.  In  the  first  of  these  cases  an  action  was  brought 
upon  a  policy  containing  a  condition  against  subsequent  in- 
surance. Other  insurance,  taken  after  the  date  of  the  pol- 
icy, was  relied  on  to  defeat  it.     The  plaintiff  claimed  that  the 

1  The  cases  of  Gale,  Schenck,  Stacey,  Pliilbrook,  Clark,  and  of  the  two  Jack- 
sons,  cited  supra. 
800 


CH.  XVIil.]       OTHER   INSURANCE   AND    OVERVALUATION.  [§  365 

subsequent  policies,  on  account  of  certain  conditions  therein 
which  were  violated,  were  void.  It  was  held  that  these  pol 
icies  are  not  void,  but,  on  account  of  the  breach  of  these  con- 
ditions, might  have  been  avoided.  As  they  were  treated  as 
valid  contracts  by  both  of  the  parties  tliereto,  the  losses  oc- 
curring thereon  having  been  paid  by  the  companies  executing 
the  subsequent  policies,  the  breaches  of  the  conditions  were 
regarded  as  waived,  and  the  instruments  held  to  be  binding 
upon  the  respective  underwriters.  The  argument  supporting 
the  conclusion  reached  by  the  court  may  not  entirely  accord 
with  the  reasoning  we  have  above  adopted,  but  the  result 
reached,  we  believe,  is  not  inconsistent  with  the  views  herein 
expressed.  Bigler  v.  New  York  Central  Insurance  Company 
in  its  facts  very  nearly  resembles  that  case,  the  underwriter 
taking  the  subsequent  risk  liaving  waived  the  forfeiture  and 
paid  the  loss  under  the  policy.  There  are  arguments  and 
positions  taken  in  the  opinions  in  this  case  which  are  not 
consistent  with  the  views  we  have  adopted.  They  reach 
further  than  the  mere  support  of  tlie  conclusion  arrived  at 
upon  the  facts  involved  in  the  case,  the  Court  of  Appeals 
holding  (two  justices  dissenting)  that  the- first  policy  would 
be  defeated  even  though  the  second  was  utterly  void.  This 
point  was  not  in  the  case.  While  we  may  not  be  inclined  to 
dispute  the  conclusion  arrived  at  upon  the  facts  presented, 
which  we  think  not  at  all  in  conflict  with  our  views,  we  can- 
not assent  either  to  the  reasoning  adopted  by  the  court, 
or  the  conclusions  reached  upon  facts  not  before  it  for 
adjudication. 

"  Carpenter  v.  Providence  Washington  Insurance  Company  ^ 
is  cited  in  support  of  the  rule  that  where  there  are  two  in- 
surance policies,  both  containing  conditions  of  avoidance  on 
account  of  other  prior  or  subsequent  insurance  without  notice, 
the  first  may  be  avoided  on  account  of  the  second  insurance. 
This  case,  we  have  observed,  is  often  cited  in  support  of  this 
rule,  and  was  so  in  the  two  cases  just  referred  to.  If  such  a 
rule  be  found  in  the  case, —  but  it  does  not  so  appear  to  us, — ■ 
its  annunciation  was  not  called  for  by  the  facts  before  the 

1  16  Pet.  (U.  S.)  495. 

803 


§  365]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT.    ETC.       [CH.  XVIII. 

court  and  made  the  basis  of  the  decision.  The  policy  upon 
which  the  suit  was  brought  is  considered  in  the  opinion  the 
second  instrument,  and  the  court  holds  that  it  was  defective 
by  a  condition  therein  against  prior  insurance  which  in  fact 
existed  when  it  was  issued.^  The  conclusion  arrived  at,  we 
think,  is  not  in  conflict  with  the  course  of  argument  adopted 
by  us,  and  the  result  reached  in  this  case.  The  argument, 
however,  adopted  by  the  court  in  reaching  the  conclusion  is 
hardly  consistent  either  with  our  reasoning  or  its  results. 
But  inasmuch  as  the  facts  are  dissimilar  to  those  before  us 
and  the  point  ruled  not  necessarily  in  conflict  with  our  deci- 
sion, the  case  cannot  be  regarded  as  an  authority  against  the 
principles  we  herein  recognize."^ 

Insurance  effected  by  a  valid  interim  receipt  is  also  other 
insurance.'^  "When  other  insurance  was  applied  for  and  an 
interim  receipt  given,  binding  the  company  till  notice  of  repu- 
diation, which  was  not  given  till  after  a  fire  had  occurred 
and  in  ignorance  of  it,  the  failure  to  give  notice  of  this  receipt 
was  held  to  avoid  a  prior  policy  conditioned  to  be  void  on 
subsequent  insurance  without  notice.*  But  a  contract  for  a 
"  regular  policy  "  means  only  that  other  insurance  shall  be  in- 
dorsed when  the  regular  policy  shall  issue.^  Further  insurance 
by  "  said  insured  or  assignees,"  means  assignees  of  the  policy, 
and  not  of  the  property.^     [If  A.  and  0.  jointly  insure  their 

1  IGPet.  (U.  S.)  500. 

2  See  also  Allison  v.  Phoenix  Ins.  Co.,  U.  S.  C.  Ct.  (Iowa),  Dillon,  J.,  4  Ins. 
L.  J.  198,  where  the  doctrine  of  Iluhbard's  case  is  adopted,  after  a  careful  review 
of  all  the  cases.  Sutherland  v.  Old  Dominion,  &c.  Ins.  Co.,  31  Grat.  17tt  ;  Knight 
V.  Eureka,  &c.  Ins.  Co.,  26  Ohio  St.  664  ;  Gale  v.  Insurance  Co..  41  N.  H.  170. 
To  avoid  any  question  upon  this  point  some  policies  provide  that  other  insur- 
ance, "  whether  valid  or  not,"  shall  avoid  the  policy  ;  and  this  provision  has 
been  frequently  recognized  by  the  courts  as  effectual.  Lackey  v.  Georgia  Ins. 
Co.,  42  Ga.  456  459;  Liverpool,  &c.  Ins.  Co.  v.  Verdier,  35  Mich.  3n5  ;  Bigler  v. 
New  York  Central  Ins.  Co.,  22  N.  Y.  96;  Continental  Ins.  Co.  v.  Heilman  (111.), 
9  Ins.  L.  J.  91.  But  in  Gee  v.  Cheshire,  &c.  Ins.  Co.,  55  N.  H.  65,  the  court  held 
that  a  nugatory  contract  was  no  contract  at  all,  and  that  such  a  condition  was 
repugnant,  and  inconsistent  with  the  scope  and  purpose  of  the  contract. 

3  Hatton  V.  Beacon  Ins.  Co.,  16  U.  C.  (Q.  B.)  816. 

4  Bruce  v.  Gore.  &c.  Ins.  Co  ,  20  U.  C  (C.  P.)  207. 
8  Dayton  Ins.  Co.  i-.  Kelly,  24  Ohio  St.  345. 

^  Bates  V.  Commercial  Ins.  Co.,  Superior  Ct.  (Cincinnati),  4  Ins.  L.J.  716; 

804 


CH.  XV]I1.]       OTHER   INSURANCE   AND    OVERVALUATION.       [§  365  a 

mules,  which  are  sometimes  kept  in  a  barn  belonging  to  B. 
alone,  by  the  burning  of  which  they  were  destroyed,  and  B. 
liad  a  policy  on  this  barn  and  contents,  this  is  a  breach  of  the 
condition  against  other  insurance.^] 

§  365  a.  Simultaneous  Policies  Insurance  ''  to  be  made  ; 
Assignee  having  Prior  Insurance.  —  If  the  policy  provides  that 
it  shall  be  void  if  any  other  insurance  be  made,  reference  is 
had  only  to  subsequent  insurance  ;  ^  and  if  two  policies  are 
made  out  and  delivered  simultaneously  by  two  companies,  co- 
operating together,  the  clause  in  either  policy  requiring  notice 
of  prior  or  subsequent  insurance  can  have  no  application.^ 
One  of  two  policies,  however,  issued  at  the  same  hour  by 
companies  not  co-operating,  is  not  to  be  presumed  prior  or 
subsequent,  nor  are  they  both  to  be  presumed  to  have  been 
issued  simultaneously.  The  safe  course  is  to  resort  to  recip- 
rocal notices.'*  And  where  the  same  agent  negotiates  several 
policies,  he  should  give  notice  to  all  the  companies,^  unless 
they  may  be  presumed  to  be  concurrent  in  point  of  time,^  or 
unless,  as- seems  to  be  the  reasonable  rule,  notice  to  the  agent 
is  notice  to  all  his  principals,  and  a  waiver  of  indorsement." 
In  France  the  rule  is  that  where  two  policies  are  taken  out 
simultaneously  by  the  same  agent  of  different  companies,  each 
is  held  to  have  notice  of  the  other  insurance,  and  the  respec- 
tive companies  must  contribute  fro  rata?'  And  it  has  been 
held  that  when  a  party  who  already  has  insurance  takes  by 

Holbrook  v.  American  Ins.  Co.,  1  Curtis  C.  Ct.  (Mass.)  193;  Wilson  v.  Hill,  ?> 
Met.  (Mass.)  06.  Held  however,  to  apply  to  the  assignee  of  tlie  property  also, 
in  Dickson  v.  Provincial  Ins.  Co.,  24  U.  C.  (C.  V.)  157;  Hendrickson  v.  Queen 
Ins.  Co.,  31  U.  C.  (Q.  B.)  547. 

1  [Horridge  v.  Dweliing-House  Ins.  Co.,  75  Iowa,  374.J 

2  Mussey  v.  Atlas  Mut.  Ins.  Co.,  4  Ker.  (N.  Y.)  79. 

3  Washington  Fire  Ins.  Co.  v.  Davison  e^  a/.,  30  Md.  91.     And  see  fost,  §  370. 
*  Manhattan  Ins.  Co.  v.  Stein,  5  Bush  (Ky.),  652. 

6  Insurance  Co.  of  North  America  i".  McDowell,  50  111.  120. 

6  Farmers'  &c.  Ins.  Co.  v.  Taylor,  73  Pa.  St.  342. 

7  Kenton  Ins.  Co.  v.  Shea,  6  Bush  (Ky.),  174;  Pitney  v.  Glen's  Falls  Ins.  Co., 
65  N.  Y.  6;  Insurance  Co.  of  North  America  i'.  McDowell,  supra  ;  Shurtleff  v. 
Phoenix  Ins.  Co.,  57  Me.  137.  See  also  post,  §  -370;  Richmond  v.  Niagara,  &c. 
Ins   Co.  (N.  Y.),9Ins.  L.J.  117. 

8  L'Agricole  c.  Chauuiiere.  Jur.  Gen.,  Ct.  of  Cass.,  Dalloz,  1867,  5  Ass. 
28. 

805 


§  365  B]       INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XVIIl. 

assignment  a  policy  requiring  notice  of  prior  insurance,  a 
failure  to  give  notice  of  the  prior  insurance  will  avoid  the 
policy.^  [When  two  policies  are  executed  concurrently,  each 
to  be  void  by  prior  insurance,  the  assured  may  sue  on  either. 
But  parts  of  a  day  are  taken  into  account  in  such  a  case,  and 
the  companies  may  show  the  precise  time  of  execution.^] 

[§  365  B.  The  Problem  of  Two  Policies  each  containing  a 
Condition  against  Other  Insurance,  has  worried  the  judges  a 
great  deal,  as  is  apparent  on  reading  this,  the  following,  and 
the  two  preceding  sections.  Almost  every  conceivable  solution 
has  been  adopted  in  some  jurisdiction  or  other,  and  tliere 
hardly  exists  in  the  law  a  more  variegated  chapter  than  this. 
The  question  whether  a  policy  is  void  by  other  insurance  de- 
pends on  the  validity  of  the  other  insurance,  and  this  must  be 
decided  upon  the  face  of  the  policies  and  the  facts  at  the  date 
of  issuance  of  over-insurance  and  not  at  the  date  of  the  loss. 
It  is  error  to  tell  the  jury  that  the  insurance  which  would 
come  within  the  condition  of  over-insurance,  must  be  insur- 
ance valid  at  the  time  of  loss.^  If  there  is  no  valid  other 
insurance  at  the  time  of  the  loss  the  policy  is  not  void.  The 
question  is  not  whether  the  other  policy  is«void  on  its  face,  but 
whether  on  all  the  facts  it  is  really  an  existing  valid  insur- 
ance.* If  the  subsequent  policy  is  void  on  its  face  it  does  not 
constitute  other  insurance,  but  if  extrinsic  facts  such  as  the 
existence  of  prior  insurance  must  be  shown  to  bring  out  its 
invalidity,  and  it  has  been  accepted  by  the  insured  as  addi- 
tional insurance,  and  held  by  him  as  a  subsisting  policy  at 
the  time  of  loss,  it  constitutes  a  breach  of  the  condition  in  the 

1  Leavitt  v.  Western  Mar.  &  Fire  Ins.  Co.,  7  Rob.  (La.)  351  ;  "Walton  i-.  La. 
St.  Mar.  &  Fire  Ins.  Co.,  2  id.  563.  But  see  Vose  v.  Hamilton,  &c.  Ins.  Co.,  39 
Barb.  (N.  Y.)  302. 

2  [Potter  V.  Marine  Ins.  Co.,  2  Mason,  475  at  477.] 

3  [Equitable  Ins.  Co.  r.  MoCrea,  Maury,  &  Co.,  8  Lea  (Tenn.),  541,  547.] 

*  [Dahlberg  v.  St.  Louis  Mut.  Ins.  Co.,  6  Mo.  App.  121,  12G,  citing  Jackson 
V.  Mass.,  &c.  Ins.  Co.,  23  Pick.  423 ;  Stacey  v.  Franklin,  &c.  Ins.  Co.,  2  Watts  & 
S.,  544 ;  Clark  v.  N.  E.,  &c.  Ins.  Co.,  6  Cash.  842 ;  Hardy  v.  Union,  &c.  Ins.  Co., 
4  Allen,  217  ;  Gale  v.  Belknap  Ins.  Co.,  41  N.  H.  170  ;  Philbrook  i-.  Insurance 
Co.,  37  Me.  137  ;  Obernieyer  v.  Globe  Ins.  Co.,  43  Mo.  573;  and  opposing  the 
strong  cases,  Bigler  v.  Insurance  Co.,  22  N.  Y.  402,  and  Carpenter  v.  Providence 
Wash.  Ins.  Co  ,  16  Pet.  510.] 

806 


CH.  XVIII.]       OTHER   INSURANCE    AND    OVERVALUATION.      [§  365  B 

prior  policy.^  A  condition  against  other  insurance  is  broken 
by  procuring  another  policy,  good  on  its  face,  though  void  by 
reason  of  false  representations  and  by  reason  of  the  prior 
insurance.^  When  both  policies  declare  that  other  insurance 
shall  avoid  them,  the  second  does  not  avoid  the  first,  for  it 
never  effected  any  insurance.^  So  in  New  York,  when  a  policy 
provided  that  if  the  assured  should  have  any  other  insurance  on 
the  premises  not  consented  to,  &c.,  it  should  be  void ;  and 
when  the  assured  had  at  the  time  another  policy  on  the  same 
premises  which  provided  that  if  any  other  insurance  should  be 
put  on,  &c.,  it  should  be  void  ;  it  was  held  (one  judge  dissenting) 
that  the  first  policy  was  void  and  the  latter  good.*  A  Michi- 
gan case  holds  the  second  policy  good,  the  first  being  void 
instantly  the  second  is  taken.^  In  this  case,  however,  the 
agent  negotiating  the  second  knew  of  the  first  policy.  In  a 
subsequent  case  it  was  held  that  if  the  first  policy  is  in  effect  at 
the  time  of  obtaining  the  second,  the  latter  is  avoided,  for  it  is 
obtained  in  direct  violation  of  one  of  the  conditions  on  which 
its  validity  rests.^  The  effect  of  subsequent  insurance  depends 
upon  its  validity,  and  this  upon  the  action  of  the  company  in 
reference  to  it.  If  the  second  company  waive  the  breach  and 
pay  the  loss,  the  first  policy  is  void,  but  if  the  second  com- 
pany avoid  their  policy,  the  first  is  good.'  If  a  policy  is  to  be 
void  by' other  insurance  "  valid  or  otherwise,"  the  fact  that 
subsequent  policies  may  be  void  will  not  prevent  forfeiture.^ 
It  has  been  held  that  tlie  clause  against  other  insurance 
"  valid  or  not,"  is  not  violated  by  a  prior  policy  which  had 
become  absolutely  void  by  its  terms.^  It  is  difficult  to  see 
why  the  words  "  valid  or  not "  do  not  in  all  common  sense 
cover  a  void  policy.] 

1  [American  Ins.  Co.  v.  Replogle,  114  Ind.  1.] 

2  [Funke  v.  Minn.  Farmers'  Mat.  Fire  Ins.  Ass.,  29  Minn.  347.1 

3  [Jersey  City  Ins.  Co.  v.  Nichol,  35  N.  J.  Eq.  291  at  299.] 

*  [Landers  v.  Watertown  Fire  Ins.  Co.,  19  Hun,  174  at  178,  Learned,  P.  J., 
dissenting.] 

6  [Emery  v.  Mut.  City,  &c.  Fire  Ins.  Co.,  51  Mich.  469] 

6  [Keyser  v.  Hartford  Fire  Ins.  Co.,  66  Mich.  664,  667,  Sherwood,  J.] 

7  [Hubbard  v.  Hartford  Fire  Ins.  Co.,  ?,?,  Iowa,  325,  329,  331.] 

8  [Sugg  V.  Insurance  Co.,  98  N.  C.  143.] 

9  [Stevens  v.  Citizens'  Ins.  Co.,  69  Iowa,  658.] 

807 


§  365  C]       INSURANCE  :    FIRE,    LIFE,   ACCIDENT,   ETC.       [CH.  XYIII. 

[§  365  C.  The  True  View.  — In  spite  of  all  the  shortsighted- 
ness and  dreams  of  the  courts  in  respect  to  this  interesting 
topic  there  is  some  good  authority  for  what  is  beyond  ques- 
tion the  view  that  accords  with  the  fundamental  purposes 
and  principles  of  insurance,  viz.,  that  the  real  test  (warranty 
aside)  is  the  condition  of  the  insured's  motive  for  the  preser- 
vation of  the  property.  If  he  thinks  he  has  double  insurance, 
the  very  evil  the  company  intended  to  avoid  exists.  If  such 
is  the  state  of  facts  at  the  time  of  insurance  his  bad  faitli 
should  avoid  the  policy  though  the  other  insurance  be  after- 
ward removed  befoi'e  loss,  but  if  the  other  insurance  occurs 
after  the  policy  in  question  was  taken  out  and  was  removed 
from  the  field  entirely,  before  loss,  then  the  insured  should 
recover 'as  in  case  of  temporary  breach  of  any  other  condi- 
tion, unless  the  agreement  of  the  parties  is  clearly  to  the  effect 
that  the  mere  act  of  taking  out  other  insurance  shall  be  fatal. 
The  condition  against  other  insurance  is  l)rokcn  and  the  policy 
avoided  by  a  subsequent  policy,  although  the  latter  contains  a 
similar  condition.  The  clause  was  intended  to  prevent  the 
insured  from  taking  out  other  insurance  which  he  supposes  is 
good,  and  it  makes  no  difference  whether  it  is  really  valid  or 
not.  Under  the  rule  adopted  by  the  current  of  authority  that 
this  condition  is  only  broken  by  other  insurance  valid  at  the 
time  of  loss,  if  the  ground  of  avoidance  is  waived  and  the 
money  paid  by  the  second  company,  the  courts  are  compelled 
to  allow  the  insured  to  collect  the  double  insurance  against 
wdiich  the  condition  was  intended  to  guard.^  The  taking  out 
of  a  subsequent  policy  whether  voidable  or  not,  and  whether 
actually  resisted  or  not,  is  a  breach  of  the  condition  against 
other  insurance,  and  fatal.^     So  in  a  late  case  in  Kentucky,  it 

1  [Somerfield  r.  Insurance  Co.,  8  Lea  (Tenn.),  547,  550.] 

2  [Turner  v.  Meriden  Fire  Ins.  Co  ,  16  Ferl.  Rep.  454;  22  Am  L.  Reg.  U.  S. 
275,  1st  Cir.  (R.  I.),  1883,  citing,  as  cases  that  !ioid  first  policy  good  if  second  is 
invalid  at  time  of  loss,  even  thougii  tlie  second  company  may  waive  the  breach 
and  i)ay  the  loss,  119  Mass.  121  ;  23  Pick.  418  ;  G  Cash.  342  ;  4  Allen,  217 ;  65 
Me.  3(58;  37  Me.  137;  55  N.  H.  65;  41  N.  H.  170;  4  Zabr.  447;  35  N.  J.  Eq. 
291  ;  2  Watts  &  S.,  506  ;  8  Ins.  L.  J.  181 ;  35  Ohio  St.  189;  26  Id.  604;  20  Ind. 
520;  3  Dill.  480;  and  as  cases  that  a  subsequent  policy,  whether  enfurceable  or 
not,  works  a  forfeiture,  8  Lea,  547  ;  15  Repr.  114;  9  Ins.  L.  J.  657  ;  30  La.  An. 

808 


CH.  XVIII.]       OTHER   INSURANCE    AND    OVERVALUATION.         §  365  C 

was  held  that  the  condition  is  broken  although  the  subsequent 
insurance  is  void.^  So  in  Tennessee  ^  and  in  Indiana,  where 
at  the  issue  of  the  policy  in  suit  conditioned  to  be  void  by  other 
insurance,  there  was  a  prior  policy  containing  a  similar  jjro- 
vision,  it  was  contended  that  the  prior  policy  was  avoided  by 
taking  out  the  one  in  suit,  and  therefore  did  not  break  the  con- 
dition of  the  latter.  The  court  remarked  that  the  only  reason 
of  such  conditions  was  to  take  away  the  motive  which  the 
insured  might  otherwise  have  for  the  destruction  of  his  prop- 
erty. "  Such  being  confessed  by  the  purpose  of  the  contract,  it 
is  not  perceived  how  its  object  is  in  any  degree  promoted  by 
the  conclusion  that  notwithstanding  the  insured  may  have 
intended  to  secure  over-insurance,  and  may  have  firmly  be- 
lieved he  had  succeeded  in  doing  so,  it  is  only  where  the  at- 
tempt is  actually  successful,  that  the  prohibitory  condition  is 
operative.  It  might  be  said  with  much  reason  that  such  a 
construction  defeats  the  purpose  of  the  provision,  and  renders 
it  practically  nugatory.  Moreover,  to  hold  that  only  such 
other  insurance  as  is  not  void,  and  cannot  be  avoided  by 
extraneous  facts,  is  within  the  prohibition  of  the  contract, 
affords  the  opportunity  for  the  anomalous  spectacle  of  an  in- 
sured avoiding  the  effect  of  apparent  over-insurance  and  com- 
pelling payment  of  one  policy  by  exhibiting  his  own  turpitude 
in  obtaining  another."  ^  In  this  case  the  policy  was  to  be  void 
by  other  insurance  "  whether  valid  or  not,"  but  the  court  does 
not  confine  itself  to  that  ground.  If  the  prior  policy  has 
been  avoided  by  an  alteration  increasing  the  risk,  and  such 
is  understood  to  be  the  fact,  the  old  company  refusing  the 
new  risk,  the  new  policy  is  not  void  for  other  insurance.* 
Subsequent  insurance  that  is  invalid,  and  is  so  treated  by  the 

1.368  ;  42  Ga.  456  ;  2  N.  Y.  402 ;  86  N.  Y.  414 ;  16  Pet.  495 ;  19  U.  C.  (Q.  B.)  250 ; 
11  Id.  516  ;  :37  U.  C.  (C.  P.)  47 ;  8  Lea,  531 ;  Id.  541 ;  and  the  case  in  33  Iowa, 
825,  to  the  effect  that  the  question  of  recovery  on  tlie  first  poUcy  turns  on  the 
question  wliether  the  second  has  been  in  fact  avoided.] 

1  [Stevenson  v.  Plicenix  Ins.  Co.,  83  Ky.  7.] 

2  [Somerfield  v.  State  Ins.  Co.,  8  Lea  (Tenn),  547  at  551.] 

3  [Phoenix  Ins.  Co.  v.  Lamar,  106  Ind.  513,  515.] 

*  [Leibrandt,  &c.  Co.  v.  Fireman's  Insurance  Co.,  35  Fed.  Rep.  30  (Md.), 
1888] 

809 


§  366]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XVIII. 

company  is  no  breach.^  But  where  there  is  a  warranty  that 
there  is  no  other  insurance  valid  or  invalid,  and  that  such  will 
avoid  the  policy,  evidence  will  not  be  received  to  show  that 
the  plaintiff  thought  there  was  no  other  insurance.^  "  War- 
ranted no  other  insurance  "  means  that  there  shall  be  none 
during  the  continuance  of  the  risk.^] 

§  366.  Identity  of  Interest.  —  When  it  is  said  that  the  insur- 
ance, in  order  to  come  within  the  prohibition,  must  be  the 
same,  it  is  not  meant  that  it  is  the  same  in  all  respects ;  i.  e., 
that  the  description  of  the  sul^ject-matter  of  insurance  be  the 
same  in  both.  It  is  enough  if  the  subsequent  insurance  cov- 
ers a  part  of  the  interest  embraced  in  the  prior  insurance,  as 
when  an  undivided  half  of  a  house,  or  a  part  of  the  goods 
already  insured,  is  covered  by  tlie  new  insurance;*  or  the 
subject-matter  of  the  subsequent  insurance  embraces  the  prop- 
erty covered  by  the  prior  insurance  and  other  property  be- 
sides.^ Thus,  removing  goods  located  in  one  store  already 
insured  into  another  store,  having  its  goods  insured  in  an- 
other policy  which  covers  accruing  goods,  though  both  lots  of 
goods  belong  to  the  same  person,  is  a  case  of  double  insur- 
ance.^ If,  however,  after  removal  a  policy  is  obtained  upon 
the  removed  goods,  which  by  its  terms  might  cover  part  of 
the  goods  already  there  and  insured, that  this  would  not  neces- 
sarily be  double  insurance  may  be  shown  by  facts  and  circum- 

1  [Behrens  v.  Germania  Fire  Ins.  Co.,  64  Iowa,  19.] 

2  [Zinck  V.  Pliocnix  Ins.  Co.,  60  Iowa,  206.] 

3  [Butler  V.  Mercli.  M.  Ins.  Co.,  5  Russ.  &  Geld.  (Nova  Scotia),  301,  (xMcDon- 
ald,  C.  J.  dissenting.)] 

*  Columbus  Ins.  Co.  v.  Walsh,  18  Mo.  229 ;  Liscom  v.  Boston  Mut.  Fire  Ins. 
Co..  9  Met.  (Mass.)  205 ;  Mussey  v.  Atlas  Mut.  Ins.  Co.,  4  Ker  (N.  Y.),  79  ;  As- 
sociated Fire  Ins.  Co.  v.  Assum,  5  Md.  165;  ante,  §  .365;  Ogden  v.  East  River 
Ins.  Co.,  50  N.  Y.  389,  overruling  Howard  Ins.  Co.  v.  Scribner,  5  Hill  (N.  Y.), 
298 ;  Pitney  v.  Glens  Falls  Ins.  Co.,  69  N.  Y.  6 ;  Phoenix  Ins.  Co.  v.  Michigan, 
&c.  R.  R.  Co.,  28  Ohio  St.  69. 

5  Ramsay,  &c.  v.  Mutual  Fire  Insurance  Co.,  11  U.  C.  (Q.  B.)  516;  Mc- 
Mahon  v.  Portsmouth  Fire  Insurance  Co.,  2  Fost.  (N.  H.)  15;  Sliannon  v.  Gore 
Dist.  Ins.  Co.,  2  Ont.  App.  Rep.  396.  Contra,  Sloat  v.  Royal  Insurance  Co., 
49  Pa.  St.  14. 

«  Walton  i;.  La.  St.  Mar.  &  Fire  Ins.  Co.,  2  Rob.  (La.)  563  ;  Washington  Ins. 
Co.  i\  Hayes,  17  Ohio  St.  432.  Contra,  Vose  v.  Hamilton  Mut.  Ins.  Co.,  39  Barb. 
(N.  Y.)  302. 

810 


CH.  XVIII.]       OTHER   INSURANCE   AND    OVERVALUATION.  [§  366 

stances  outside  the  policy,  showing  that  such    was  not  the 
intention.! 

The  somewhat  peculiar  case  of  Hough  et  al.,  Appellants,  v. 
People's  Insurance  Company  ^  was  this :  The  Baltimore  Ware- 
house Company,  which  received  goods  on  storage,  and  issued 
receipts  or  certificates  therefor  to  the  depositors,  effected  an 
insurance  in  the  Associated  Firemen's  Company  for  -f  10,000 
against  loss  by  fire  for  one  year,  "  on  merchandise  generally, 
hazardous  or  extra-hazardous,  held  by  them  or  in  trust,"  con- 
tained in  a  particular  warehouse  ;  they  also  took  out  a  policy 
in  the  Home  Insurance  Company,  to  the  amount  of  $20,000, 
"  on  merchandise,  hazardous  or  extra-hazardous,  their  own, 
or  held  by  them  in  trust,  or  in  which  they  had  an  interest  or 
liability,"  contained  in  the  same  warehouse.  The  appellants, 
on  the  20th  of  June,  1870,  deposited  fifteen  bales  of  cotton 
in  the  same  warehouse,  and  received  a  receipt  or  certificate 
therefor  from  the  warehouse  company,  and  on  the  same  day 
procured  a  policy  of  insurance  on  the  cotton  so  deposited 
from  the  appellee.  On  the  27th  of  June  they  deposited  thir- 
teen bales,  for  which  a  like  receipt  was  given,  and  on  tlie  same 
day  they  effected  an  insurance  for  the  cotton  with  the  appel- 
lee. Under  the  policies  issued  to  the  appellants,  the  loss,  if 
any,  was  payable  to  the  Baltimore  Warehouse  Company. 
The  appellants  had  other  cotton  to  a  large  amount  stored 
with  the  warehouse  company.  The  warehouse  company  ad- 
vanced to  the  appellants  over  148,000  upon  the  cotton  belong- 
ing to  them,  and  stored  in  the  warehouse.  In  the  policies  to 
the  appellants,  as  well  as  in  those  to  the  warehouse  company, 
it  was  stipulated  that  in  case  of  loss  the  assured  should  not 
be  entitled  to  recover  on  such  policy  any  greater  proportion 
of  the  loss  or  damage  sustained  to  the  subject  insured  than 
the  amount  thereby  insured  should  bear  to  the  whole  amount 
of  the  several  insurances  thereon.  On  the  18th  of  July, 
1870,  the  warehouse  was  burned,  and  of  the  cotton  stored 
therein  some  of  the  bales  were  saved,  some  were  partially 

1  Mauger  v.  Holyoke  Ins.  Co.,  C.  Ct.  (Mass.),  1  Holmes,  287  ;  s.  c.  3  Ins.  L.  J. 
5.5.  See  also  Wliitwell  v.  Putnam,  &c.  Ins.  Co.,  6  Lans.  (N.  Y.)  166 ;  post,  §  367; 
Pitney  v.  Glens  Falls  Ins.  Co..  69  N.  Y.  6.  2  35  Md.  398. 

811 


§  366]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XVIII. 

destroyed,  and  others  totally  destroyed.  In  an  action  by  the 
appellants,  for  the  use  of  the  warehouse  company,  on  the 
policies  of  insurance  issued  by  the  appellee,  upon  these  facts 
it  was  held  that  the  policies  sued  on,  having  been  made  pay- 
able to  the  warehouse  company,  inured  to  the  benefit  of  the 
company,  and  might  be  considered  as  in  favor  of  the  same 
assured,  on  the  same  interest,  the  same  subject,  and  against 
the  same  risks  as  the  policies  which  were  issued  directly  to  the 
warehouse  company,  and  with  the  latter  policies  constituted  a 
double  insurance ;  and  the  companies  therefore  issuing  the 
policies  were  bound  to  contribute  their  respective  portions  of 
the  loss.^  Where,  however,  a  warehouseman  insures  goods, 
"  his  own,  in  trust  or  on  commission,"  with  the  understanding 
that  his  policy  covers  "  anything  under  his  care,"  and  after- 
wards receives  into  his  warehouse  wheat  already  covered  by 
a  floating  policy,  —  which,  however,  expired  before  the  fire, 
—  this  was  held  to  be  no  double  insurance,  and  the  ware- 
houseman and  the  owner  of  the  wheat  were  allowed  to 
maintain  a  joint  action  for  the  value  of  the  wheat,  the  ware- 
houseman having  been  previously  paid  for  the  loss  on  his 
other  go^ds.2  Nor  is  insurance  of  the  whole  of  the  property 
by  the  owner  who  lias  agreed  to  sell  one-half,  and  to  pay  one- 
half  the  proceeds  in  case  of  loss  to  the  vendee,  double  insurance 
"  by  any  other  person  at  the  same  time."  ^  But  where  a  ship 
was  insured  "  for  account  of  owners,  as  interest  may  appear," 
and  two  of  the  owners  afterwards  procured  insurance,  this 
was  held  to  be  other  insurance.'*  And  insurance  upon  the  same 
life,  applied  for  by  the  same  person,  though  payable  to  a  differ- 
ent person  from  the  payee  in  a  second  policy,  is  other  insur- 
ance within  the  meaning  of  a  proviso  making  a  policy  void 
if  there  be  other    insurance  undisclosed.^     The  interests    of 

1  Hough  et  at.  v.  People's  Ins.  Co.,  8G  Md.  398.  See  also  Home  Ins.  Co.  v. 
Baltimore  Warehouse  Co.,  93  U.  S.  527  ;  Sturm  v.  Atlantic,  &c.  Ins.  Co.,  63 
N.  Y.  77.     And  see  post,  §§  436-438. 

2  Plioenix  Ins.  Co.  v.  Hamilton,  14  Wall.  (U.  S.)  504. 

3  Bnrbank  i'.  Rockingham  Ins.  Co.,  4  Fost.  (N.  H.)  550. 
*  Mussey  v.  Atlas  Ins.  Co.,  4  Ker.  (N.  Y.)  79. 

5  Sparrow  v.  Mut.  Ben.  Life  Ins.  Co.,  C.  Ct.  (Mass.),  Shepley,  J.,  tried  in 
April,  1873 

812 


CH.  XVIII.]       OTHER   INSURANCE   AND    OVERVALUATION.  [§  367 

mortgagor  and  mortgagee  are  distinct,  and  therefore  insur- 
ance by  a  mortgagee  of  his  interest  at  his  own  expense  is  not 
within  the  prohibitory  clause  of  a  prior  policy  in  favor  of  the 
mortgagor.  If,  however,  such  insurance  is  at  the  expense  of 
the  mortgagor,  and  for  his  benefit,  it  is  within  the  clause.* 
But  where  the  mortgagor  was  insured,  loss  payable  to  mort- 
gagee, and  the  mortgage  authorized  insurance  at  the  expense 
of  the  mortgagor  in  case  of  default  by  mortgagor,  further 
insurance  by  the  mortgagee  before  the  mortgagor's  default, 
and  without  his  knowledge  or  consent,  is  not  other  insurance 
by  the  "  assured."  ^  [Where  however,  M.  knows  of  prior  insur- 
ance obtained  by  D.,  the  policy  issued  to  M.  is  void.^]  The 
different  interests  of  joint  owners  are  likewise  distinct.^ 

§  367.  Other  Insurance ;  Condition  construed  strictly.  — 
And  this  condition,  like  others  working  forfeitures,  will  be 
construed  strictly.  Thus,  under  a  policy  insuring  a  building, 
and  prohibiting  other  insurance  upon  property  "  connected 
with  it,"  insurance  upon  goods  in  the  building  is  not  other  in- 
surance within  the  meaning  of  the  prohibition.''  And  though 
the  description  of  the  property  in  the  respective  policies  may 
cover,  and  apparently  does  cover,  the  same  interests,  it  is  a 
matter  of  evidence  whether  it  does  or  not.^  So  where  the 
same  person  had  three  several  policies  issued  by  separate 
offices  on  "  a  stock  of  dry-goods  contained  in  a  four-story 
brick  store,"  and  afterwards  obtained  another  policy  from  a 
different  company  on  "a  stock  of  merchandise  contained  in 
the  chambers  of  a  four-story  brick  and  slated  building,"  being 
the  same  building,  it  was  claimed  by  the  last  company  that 
as  the  goods  lost  were  in  the  same  building,  they  were  liable 
only  to  their  proportionate  loss.      But  it  being  shown  that 

1  Holbrook  v.  American  Ins.  Co.,  1  Curtis,  C.  Ct.  (Mass.)  193. 

2  Titus  V.  Glens  Falls  Ins.  Co.  (N.  Y.),  0  Ins.  L.  J.  664. 

3  [Doran  v.  Franklin  Fire  Ins.  Co.,  86  N.  Y.  635.] 

*  Franklin  Mar.  &  Fire  Ins.  Co.  v.  Drake,  2  B.  Mon.  (Ky.)  47;  Woodbury 
Savings  Bank  v.  Ciiartcr  Oak  Ins.  Co.,  31  Conn.  518. 

5  Jones  V.  Maine  Mut.  Fire  Ins.  Co.,  18  Me.  155  ;  Illinois  Mut.  Ins.  Co.  v. 
O'Neile,  13  111.  89.     And  see  ante,  §  243. 

«  Stacey  v.  Franklin  Ins.  Co.,  2  W.  &  S.  (Pa.)  506  ;  Clark  v.  Hamilton  Mnt. 
Ins.  Co.,  9  Gray  (Mass.),  148;  Neve  v.  Columbia  Ins.  Co.,  2  McMulian  (S.  C), 
220  ,  ante,  §  365. 

813 


§  368]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XVIII. 

when  the  first  three  policies  were  issued  the  plaintiff  did  not 
occupy  the  chambers,  and  had  no  goods  there,  —  evidence 
held  admissible  as  explanatory  of  a  doubt  as  to  what  goods 
the  several  policies  might  apply,  —  the  defendants  were  held 
to  be  liable  for  the  whole  loss  on  the  goods  in  the  chambers. 
This  in  fact  was  no  additional  insurance,  but  was  as  much 
an  independent  risk  as  if  the  goods  had  been  in  a  different 
building.^ 

§  368.  Notice  ;  What  sufficient ;  "When  and  how  to  be  given. 
—  Parol  notice,  and  to  a  local  agent,  is  sufficient,  unless  other 
notice  be  required.*'^  Notice  must  be  within  reasonable  time, 
and  need  not  be  till  a  reasonable  time  has  elapsed.  What 
would  be  a  reasonable  time  is  a  question  for  the  jury,  if  the 
facts  are  in  dispute  ;  otherwise  it  is  a  question  of  law  for  the 
court.^  Notice  given  seven  months  after  the  destruction  of 
the  property  is  not  within  reasonable  time.  An  unexplained 
delay  of  nineteen  days  is  unreasonable.*  Notice  deficient  or 
erroneous  in  some  particulars  which  are  not  necessary  unless 
inquired  for,  if  the  amount  of  the  other  insurance  be  correctly 
given,  is  sufficient;^  or  even  if  it  be  incorrectly  given,  if  the 
mistake  does  not  prejudice  the  insurers  who  object,  as  where 
subsequent  insurance  is  stated  at  too  large  an  amount.^     And 

1  Storer  v.  Elliot  Fire  Ins.  Co  ,  45  Me.  175. 

2  McEwen  v.  Montgomery  County  Mut.  Ins.  Co.,  5  Hill  (N.  Y.),  101 ;  Sclienck 
V.  Mercer  County  Mut.  Ins.  Co.,  4  Zabr.  (N  J.)  447;  Hendrickson  v.  Queen  Ins. 
Co.,  31  U.  C.  (Q.  B.)  547  ;  affirming  s.  c.  30  id.  108.  Where  further  insurance 
is  proiiibited  by  law,  the  agent's  consent  is  held  to  be  no  waiver  in  Indiana. 
Behler  v.  German  Ins.  Co.,  68  Ind.  347. 

3  Jacobs  V.  Equitable  Ins.  Co.,  19  U.  C.  250,  257  ;  Kimball  v.  Howard  Fire 
Ins.  Co.,  8  Gray  (Mass.),  33.  In  Canada  it  is  said  that  no  question  of  reasona- 
ble time  arises ;  and  when  notice  is  due  it  is  at  the  risk  of  the  insured  if  he  do 
not  give  it  before  a  fire.  Weinaugh  v.  Provincial  Ins.  Co., 20  U.  C.  (C.  P.)  405; 
post,  §  370.  The  insured  takes  the  risk  if  he  adopt  any  other  mode  of  notice 
than  that  provided  for,  as  by  sending  through  the  mail,  when  the  policy  pro- 
vides that  the  notice  shall  be  "  given  to  the  secretary."  Plath  v.  Minnesota  Ins. 
Co.,  23  Minn.  470. 

*  Mellen  v.  Hamilton  Fire  Ins.  Co.,  17  N.  Y.  609,  affirming  s.  c.  5  Duer 
(N.  Y.  Sup.  Ct.),101. 

6  Benjamin  v.  Saratoga  County  Mut.  Ins.  Co.,  17  N.  Y.  415 ;  McMahon  v. 
Portsmouth,  &c.  Ins.  Co  ,  2  Fost.  (N.  H.)  15. 

6  Osser  V.  Provincial  Ins.  Co.,  12  U.  C.  (C.  P.)  133. 

814 


CH.  XVIII.]       OTHER   INSURANCE    AND    OVERVALUATION.  [§  369 

it  seems  that  notice  should  be  given,  where  the  subsequent 
insurance  is  applied  for  a  few  days  before  the  destruction  of 
the  property  insured  in  the  prior  policy,  but  the  policy  is  not 
delivered  till  after.^  Consent  induced  after  the  act  for  which 
consent  is  to  be  had  is  sufficient.^  Notice  after  the  fire  is 
sufficient,  under  a  policy  which  specially  authorizes  subse- 
quent insurance  on  notice  in  order  that  the  subsequent  insur- 
ance may  be  indorsed  on  the  policy,  though  the  by-laws 
printed  on  the  back  of  the  policy,  and  the  charter,  require 
that  such  notice  be  given  and  such  insurance  be  indorsed  on 
the  policy  on  pain  of  forfeiture.^  It  was  held  otherwise, 
however,  where  the  policy  simply  required  notice,  without 
stating  its  object.*  [A  condition  that  the  insured  must  give 
notice  of  "  any  other  insurance  effected  "  applies  to  all  other 
policies  before  or  after  the  one  in  question.^  Notice  of  further 
insurance  given  to  one  formerly  an  agent  of  the  company  but 
who  had  given  proper  notice  of  his  withdrawal,  is  not  suffi- 
cient. It  is  the  duty  of  the  assured  under  such  circumstances 
to  know  who  is  the  agent.^  A  condition  that  notice  of  other 
insurance  must  be  given,  is  satisfied  by  notice  of  an  intentio7i 
to  procure  other  insurance  and  the  assent  of  the  agent  receiv- 
ing the  notice.^] 

§  369.  other  Insurance  ;  Notice  in  Writing  ;  Indorsement 
on  Policy. —  In  many  policies  the  notice  of  other  insurance  is 
required  to  be  in  writing  and  indorsed  on  the  policy.  And  it 
has  formerly  ^  been  frequently  held  to  be  essential  that  these 

1  Inland  Ins.,  &c.  Co.  v.  Stauffer,  3:?  Pa.  St.  397  ;  ante,  §§  365,  365  a. 

2  Wlieeler  v.  VVatertown,  &c.  Ins.  Co.  (Mass.),  10  Ins.  L.  J.  354. 

3  Soupras  v.  Mut.  Fire  Ins.  Co.  (Sup.  Ct.  Montreal),  1  L.  C.  Jurist,  197. 

*  Western  Ass.  Co.  v.  Atwell,  2  L.  C.  Jurist,  181. 

&  [Warwick  v.  Monmoutli,  &c.  Ins.  Co.,  44  N.  J.  83.] 

6  [Illinois  Mut.  Fire  Insurance  Co.  v.  Malloy,  50  111.  419  at-421.] 

"  [N.  0.  Ins.  Ass.  (,'.  Griffin,  66  Tex.  282  J 

*  [There  is  not  lacking  recent  authority  to  the  same  effect.  For  example,  it 
is  held  that  where  notice  in  writing  is  to  be  given  of  other  insurance,  mere 
knowledge  of  the  agent  is  not  sufficient.  Commonwealth  Mut.  Fire  Ins.  Co.  v. 
Huntzinger,  98  Pa.  St.  41.  And  again  where  the  policy  provides  that  other  in- 
surance shall  not  be  obtained  without  written  consent,  the  parol  acquiescence  of 
the  agent  cannot  avail  the  plaintiff.  He  is  presumed  to  know  the  terms  of  his 
agreement,  which  give  him  notice  that  the  agent  possesses  no  such  power. 
Cleaver  v.  Insurance  Co.,  65  Mich.  527.    When  a  policy  prohibited  further  insur- 

VOL.  II.  —  8  815 


§  369]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XVIII. 

particulars  should  be  literally  complied  with,  and  that  verbal 
notice,  or  anything  short  of  the  notice  and  the  formalities 
subsequent  thereto  required  by  the  condition,  would  subject 
the  delinquent  to  forfeiture.  Thus  where  the  insured,  after 
procuring  subsequent  insurance,  gave  a  memorandum  of  it  to 
the  agent  of  the  company  which  issued  the  prior  policy,  to  be 
entered  on  the  records,  the  policy  not  being  at  hand,  the 
agent  saying  that  such  entry  would  answer  every  purpose, 
and  the  agent  afterwards  told  the  assured  that  he  had 
made  the  entry,  it  was  held  that  the  condition  was  violated. ^ 
The  indorsement,  it  seems,  is  of  the  notice,  and  not  of 
consent.^ 


ance  except  by  consent  of  the  company  written  on  the  policy,  and  the  assured 
procured  other  policies,  afterwards  writing  totlie  company's  agent,  asking  about 
the  same  and  receiving  a  reply  offering  to  place  him  in  other  companies,  and 
also  saying,  "  We  will  of  course  allow  other  concurrent  insurance,  &c.,"  it  was 
held  that  the  policy  was  avoided,  as  its  provisions  had  not  been  complied  with. 
Allemania  Fire  Ins.  Co.  v.  Kurd,  37  Mich.  11  at  13 ;  N  Y.  Central  Ins.  Co.  v. 
Watson,  23  Mich.  486,  487,  488.  Where  the  additional  subsequent  policy  was 
shown  to  the  agent,  and  looked  at  by  him  without  comment,  it  was  held  insuffi- 
cient to  establish  a  waiver  of  the  condition  requiring  written  consent,  and  the 
former  policy  was  held  void.  Robinson  v.  Fire  Ass.,  Go  Mich  90,  05,  (many  cases 
cited  during  the  argument  to  show  that  silence  alone  is  not  a  waiver  in  such 
case).  Mere  verbal  notice  to  the  agent  witliout  indorsement  will  not  be  sufficient. 
Western  Ass.  Co.  v.  DouU,  12  Can.  Supr.  Ct.  446.  Conversations  between  the 
assured  and  insurer,  prior  to,  or  at  the  time  of  the  issuing  of  the  policy,  are  inad- 
missible to  prove  waiver  by  an  omission  of  the  company  to  indorse  on  the  pol- 
icy prior  insurance  of  which  it  had  notice.  Madison  Ins.  Co.  v  Fellowes,  1  Dis. 
(Ont.)  217  at  223.] 

1  Worcester  Bank  v.  Hartford  Fire  Ins.  Co.,  11  Cush.  (Mass.)  265.  And  see 
also  Conway  Tool  Co.  v.  Hudson  R.  Ins.  Co.,  12  id.  144;  Pendar  y.  American 
Mut.  Ins.  Co.,  id.  469;  Forbes  v.  Agawam  Ins.  Co.,  9  Cush.  (Mass.)  470;  Stark 
County  Mut.  Ins.  Co.  v.  Hurd,  19  Oliio,  140;  Carpenter  v.  Prov.  Wash.  Ins.  Co., 
16  Pet.  (U.S.)  495;  Hale  v.  Mechanics'  Mut.  Ins.  Co.,  6  Gray  (Mass.),  169; 
Couch  V.  City  Fire  Ins.  Co.,  38  Conn.  181;  Carpenter  v.  Providence  Ins.  Co.,  4 
How.  (U.S.)  185.  Notice  of  intention  to  insure  is  not  notice  of  insurance. 
McCrea  v.  Waterloo  County  Mut.  Ins.  Co.,  26  U.  C.  (C.  P.)  431,  437 ;  Healey  v. 
Imperial  Fire  Insurance  Co.,  5  Nev.  268.  A  mortgagee  protected  against  for- 
feiture by  a  sale  or  transfer  of  the  property,  is  also  protected  from  its  probable 
consequence  —  as  from  a  further  insurance  — by  the  grantee,  and  need  give  no 
notice.  City  Five  Cents  Savings  Bank  v.  Penn  Ins.  Co.,  122  Mass.  165 ;  Has- 
tings V.  Westchester  Fire  Ins.  Co.,  78  N.  Y.  141. 

2  Wakefield  v.  Orient  Ins.  Co.  (Wis.),  10  Ins.  L.  J.  249.  See  also  Westlake 
V.  St.  Lawrence,  &c.  Ins.  Co.,  14  Barb.  (N.  Y.)  206. 

816 


CH.  XVIII.]       OTHER    INSURANCE    AND    OVERVALUATION.  [§  370 

§  370.  Other  Insurance  ;  Notice  ;  Consent  in  Writing. —  But 
the  courts  have  become  more  liberal  in  favor  of  the  assured 
in  their  construction  of  this  sort  of  provision,  whether  it  be 
contained  in  the  charter  or  in  the  policy.  While,  as  we  have 
seen,  the  old  rule  required  the  consent  to  be  in  writing  and 
indorsed  on  the  policy,  it  is  the  decided  tendency  of  the 
modern  cases  to  hold  that  if  the  notice  of  the  additional 
insurance  be  duly  given  to  the  company,  or  its  agent,  and  no 
objection  is  made,  the  company  will  be  estopped  from  insist- 
ing on  a  forfeiture  of  the  policy,  because  their  consent  thereto 
was  not  indorsed,  as  literally  required  by  the  stipulation. ^ 
[When  the  company  knew  that  its  own  agent  was  effecting 
additional  insurance  in  another  company,  on  property  they 
had  already  insured,  it  was  their  duty  to  indorse  consent,  or 
express  disapproval,  and  without  doing  one  of  these  they 
could  not  set  up  the  extra  insurance  as  a  defence.^  The  re- 
quirement that  other  insurance  must  be  assented  to  in  writing 
is  valid,  but  may  be  waived  by  verbal  assent  of  the  agent  with 
any  facts  that  would  make  it  unfair  for  the  company  to  insist 
on  the  condition.^  If  an  agent  whose  duty  it  is  to  indorse  on 
the  policy  subsequent  insurance  allowable  under  its  terms, 
has  knowledge  of  such  insurance,  but  delays  making  the  in- 
dorsement to  suit  his  convenience,  his  conduct  is  a  waiver  of 
the  condition  requiring  indorsement,  and  if  a  loss  occur  before 
indorsement  the  company  is  liable.^]     An  office  which  issues 

1  Thompson  v.  St.  Louis  Mut.  Life  Ins.  Co.,  52  Mo.  469 ;  Hayward  i'.  Na- 
tional Ins.  Co.,  52  id.  181,  overruling  Hutchinson  v.  Western  Ins.  Co.,  21  id. 
97;  Horwitz  v.  Equitable  Mut.  Ins.  Co.,  40  id.  557;  Franklin  v.  Atlantic  Fire 
Ins.  Co.,  42  id.  456;  Combs  v.  Ham.  Sav.  &  Ins.  Co.,  43  id.  148  ;  Northup  v. 
Miss.  Val.  Ins.  Co.,  47  id.  435 ;  Viele  v.  Germania  Ins.  Co.,  26  Iowa,  9,  55 ; 
Walsh  ;;.  ^tna  Life  Ins.  Co.,  30  id.  133;  Von  Bories  v.  United  Life,  Fire  & 
Mar.  Ins.  Co.,  8  Bush  (Ky.),  133;  Peck  v.  New  London  County  Mut.  Ins.  Co., 
22  Conn.  575;  Hatton  v.  Beacon  Ins.  Co.,  16  U.  C.  (Q.  B.)  316;  National  Fire 
Ins.  Co.  V.  Crane  (in  equity),  16  Md.  260.  See  also  post,  §§  376,  383,  387 ;  Hunt 
V.  Hudson  River,  &c.  Ins.  Co.,  2  Duer  {N.  Y.  Superior  Ct.),  481. 

2  [Horwitz  V.  Equitable  Mut.  Ins.  Co.,  40  Mo.  557  at  560  ;  Pelkington  v.  Nat. 
In-s.  Co.,  55  Mo.  172  at  177  ;  Planters'  Mut.  Ins.  Co.  v.  Lyons,  38  Tex.  253  at 
272.] 

3  [New  Orleans  Ins.  Ass.  i'.  Griffin,  66  Tex.  232  ;  Morrison  v.  Insurance  Co., 
69  Tex.  353.] 

4  [America  Cent.  Ins.  Co.  v.  McCrea,  Maury  &  Co.,  8  Lea  (Tenn.),  573.] 

817 


§  371]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XVIII. 

a  subsequent  policy  will  be  presumed  to  have  notice  of  the 
prior  one.i  And  where  both  policies  are  negotiated  through 
the  same  person,  who  is  agent  for  both  companies,  his  knowl- 
edge is  the  knowledge  of  each  company.^  But  the  knowledge 
of  or  notice  to  the  broker  through  which  both  insurances  are 
effected,  is  not  the  knowledge  of  or  notice  to  the  insurers.^ 
[A  consent  in  writing  to  other  insurance  is  sufficient  though 
not  on  the  policy  as  its  provisions  require^  If  the  required 
consent  is  obtained  for  another  policy,  this  policy  may  be 
renewed  without  reconsent.^] 

§  371.  Other  Insurance  ;  Approval ;  Consent.  —  Where  the 
approval  of  other  insurance  is  required  in  writing,  a  letter 
from  the  secretary  of  the  insurers,  in  reply  to  a  notice  from 
the  insurer,  and  stating  that  he  has  received  the  notice  of 
additional  insurance,  is  an  approval  in  writing  witiiin  the 
meaning  of  the  condition.  Thus  where,  in  case  of  further  in- 
surance, the  insured  is  to  give  notice  thereof  to  the  company, 
and  have  the  same  indorsed  on  the  policy,  or  otherwise  ac- 
knowledged or  approved  by  them  in  writing,  and  such  insur- 
ance is  obtained,  notice  whereof  is  immediately  given  to  the 
secretary  of  the  company,  who  acknowledges  by  letter  the 
receipt  of  the  notice,  without  more,  it  has  been  held  that  this 
is  an  ajiproval  in  writing,  or,  at  least,  that  after  such  notice 
the  policy  remains  in  force  till  the  insurers  signify  their  option 
to  disapprove.  Under  a  similar  policy,  which  also  provided 
that  after  notice  of  such  further  insurance  the  insurers  should 
have  the  right  to  cancel  upon  payment  of  the  pro  rata  por- 
tion of  the  premium  for  the  unexpired  portion  of  the  time, 


1  Barnes  ?>.  Union  Ins.  Co.,  45  N.  H.  21  ;  ITorwitz  v.  Equitable  Ins.  To.,  40 
Mo.  557  ;  [Russell  v.  State  Ins.  Co.,  55  Mo.  585  at  501 ;  Ridiniond  v.  Niagara 
Falls  Ins.  Co.,  79  N.  Y.  230,  239.] 

2  Vop  Bories  v.  United  Life.  &c.  Ins.  Co.,  8  Bush  (Ky.),  133.  See  also  War- 
ner V.  Peoria,  &c.  Ins.  Co..  14  Wis.  318 ;  ante,  §  305  a. 

3  Mellen  i'.  Hamilton  Mut.  Fire  Ins.  Co  ,  17  N.  Y.  609,  affirming  s.  c.  5  Duer 
(N.  Y.  Superior  Ct.),  101  ;  McLaclilnn  v.  JEtna  Ins.  Co.,  4  Allen  (N.  B  ),  173. 
But  see  Fishbeck  v.  Phenix  Insurance  Company,  54  Cal.  422.  And  see  also 
post,  §  371. 

*  [Mattocks  V.  Des  Moines  Ins.  Co.,  74  Iowa,  2^3.] 
6  [New  Orleans  Ins.  Ass.  v.  Holberg,  61  Miss.  51.] 

818 


CH.  XVIII.]       OTHER   INSURANCE   AND    OVERVALUATION.  [§  -371 

the  insurers  must  either  indorse  or  cancel.  They  cannot  re- 
fuse to  do  both,  and  retain  the  whole  consideration.^  And 
where  the  consent  of  the  directors  is  required,  it  need  not  be 
signified  by  formal  vote,  or  even  in  writing,  but  may  be  in- 
ferred from  the  proof  of  other  facts,  as  of  their  knowledge  of 
all  the  facts,  where  two  directors  in  one  company,  being  also 
directors  in  another  company,  took  the  additional  insurance. 
So  if  it  be  required  that  prior  insurance  be  indorsed  on  the 
subsequent  policy  when  it  issues,  leave  to  keep  insured  to  an 
amount  greater  than  is  stated  in  the  policy  thus  issued,  in- 
dorsed on  the  policy,  or  by  parol  and  by  an  agent  even  after 
the  delivery  of  the  policy,  is  the  equivalent  of  such  indorse- 
ment, as  it  may  refer  to  prior  as  well  as  subsequent  insurance.^ 
So  is  the  fact  that  the  prior  insurance  is  stated  in  the  policy  ;  ^ 
so  if  other  insurance  is  permitted  without  notice  in  the  subse- 
quent policy,  this  is  a  waiver  of  notice  of  prior  or  subsequent 
insurance.*  Assent  to  subsequent  insurance  is  also  assent  to 
a  renewal  of  the  same,  in  the  same  or  any  other  office.^  And 
notice  of  prior  insurance  in  the  application  for  a  subsequent 
policy  is  notice  of  a  renewal  of  the  prior  insurance.^  But  in 
Massachusetts.'  in  a  case  wliere  the  insurance  was  not  a  re- 
newal strictly,  but  an  insurance  in  another  company,  for  a 
less  amount,  to  take  the  place  of  an  insurance  which  had 
been  assented  to,  though  for  a  less  amount,  it  Avas  held  that 
the  assent  did  not  apply  to  the  substituted  insurance.     But 

1  Demill  v.  Hartford  Ins  Co ,  4  Allen  (N.  B  ),  341.  And  see  posf,%  372. 
Failure  to  dissent  for  an  unreasonable  time  raises  the  presumption  of  assent. 
Shannon  v.  Hastings  Mut.  Ins.  Co.,  2  Ont.  App.  81. 

^  Blake  v.  Excli.  Ins.  Co.,  12  Gray  (Mass.),  148;  Pliilbrook  v.  New  England 
Mut.  Ins.  Co.,  87  Me.  187  ;  Kimball  v.  Howard  Fire  Ins.  Co.,  8  Gray  (Mass.), 
33;  Benedict  v.  Ocean  Ins.  Co.,  1  Daly  (N.  Y.  Sup.  Ct),  8;  s.  c.  affirmed,  31 
N.  Y.  38.9;  Warner  v.  Peoria  Mar.  &  Fire  Ins.  Co.,  14  Wis.  318;  Carrugi  i-.  At- 
lantic, &c.  Ins.  Co.,  40  Ga.  135. 

3  Baptist  Soc.  V.  Hillsborough  Mnt.  Fire  Ins.  Co.,  10  N.  H.  580;  Ames  v 
New  York  Union  Ins.  Co.,  14  N.  Y.  203,  258  ;  Parsons  v.  Queen  Ins.  Co.,  43 
U.  C.  (Q.  B.)  271. 

*  Frederick,  &c.  Ins.  Co.  v.  Deford,  38  Md.  404. 

5  Baptist  Soc.?'.  HiUsborougli  Mut.  Fire  Ins.  Co.,  19  N.  H.  580;  Pechner  v. 
Phoenix  Ins.  Co.,  6  Lans.  (N.  Y.)  411. 

6  Brown  r.  Cattaraugus  County  Mnt.  Fire  Ins.  Co.,  18  N.  Y.  385. 

7  Burt  V.  People's  Mut.  Ins.  Co.,  2  Gray  (Mass.),  397.    But  see  an/e,  §  365. 

819 


§  372]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XVIII, 

notice  of  "  changes  in  additional  insurances "  is  sometimes 
required  by  the  terms  of  the  policy,  and  this  applies  where 
the  aggregate  insurance  remains  the  same,  but  there  is  a 
change  in  the  distribution  amongst  the  subject-matters  insured.^ 
In  Sykes  v.  Perry  County  Mutual  Fire  Insurance  Company ,2 
the  distinction  is  taken  between  notice  and  knowledge  of  an 
alteration,  at  least  so  far  as  an  agent  is  concerned,  that 
while  knowledge  of  the  agent  is  not  knowledge  of  the 
company,  notice  to  the  agent  would  be  notice  to  the  com- 
pany. But  knowledge  of  the  agent  of  a  fact  existing  at 
the  time  insurance  is  effected,  is  knowledge  of  the  insurers.^ 
And  this  knowledge  runs  through  all  renewals  of  the  same 
insurance.* 

§  372.  Other  Insurance  ;  Permission  in  Policy  ;  Previous  Con- 
sent ;  Waiver  of  Forfeiture  for  Breach  of  Condition.  —  But,  as 
has  already  been  seen,^  forfeiture  by  reason  of  a  breach  of  the 
condition  may  be  waived  by  any  act  of  the  insurers  recogniz- 
ing the  validity  of  the  policy  after  knowledge  of  a  breach  of 
the  condition.  A  failure  to  give  notice  of  such  insurance, 
when  in  fact  it  is  already  known  to  the  insurers  themselves, 
or  their  agent,  as  where  they  have  issued  a  prior  but  still 
outstanding  policy  on  the  same  property,  will  not  avoid  the 
policy,  the  issue  of  the  subsequent  policy  with  knowledge 
being  a  waiver  of  the  condition.^  And  the  acceptance  of  a 
renewal  premium  has  the  same  effect.'^  And  if  the  company 
liave  a  right  to  avoid  after  notice  of  breach,  and  neglect  so  to 
do  for  an  unreasonable  time,  or  by  any  act  recognize  the  con- 
tinued validity  of  the  policy,  it  will  be  a  waiver  of  the  for- 


1  Simpson  v.  Penn  Fire  Ins.  Co.,  38  Pa.  St.  250. 

2  34  Pa.  St.  79.     And  see  ante,  §  370. 

3  People's  Ins.  Co.  v.  Spencer,  53  Pa.  St.  353 ;  Roberts  v.  Continental  Ins. 
Co.,  41  Wis.  321. 

4  Ibid. ;  LifWle  v.  Market  Fire  Ins.  Co.,  4  Bosw.  (N.  Y.)  179. 

5  Ante,  §§  143,  365.  See  also  Hay  ward  v.  National  Iiis.  Co.,  52  Mo.  181, 
overruling  Hutchinson  v.  Western  Ins.  Co.,  21  id.  97  ;  Elliott  v.  Lycoming  Ins. 
Co.,  66  Pa.  St.  22. 

6  Rowley  v.  Empire  Ins.  Co.,  36  N.  Y.  550 ;  Wash.  Ins.  Co.  v.  Davison,  30 
Md.  91 ;  Webster  v.  Phoenix  Ins.  Co.,  36  Wis.  67. 

'  Carroll  v.  Charter  Oak  Ins.  Co.,  1  Abb.  Ct.  of  App.  Dec.  316. 
820 


CH.  XVIII.]       OTHER   INSURANCE   AND    OVERVALUATION.      [§  372  A 

feiture.^  So  will  taking  part  in  making  the  adjustment,^  un- 
less some  act  be  done  in  the  course  of  the  attempted  adjust- 
ment, inconsistent  with  an  intention  to  recognize  the  existing 
validity  of  the  policy,  as,  for  instance,  returning  the  unearned 
premium.^  If  the  policy  on  its  face  allows  further  insurance 
to  a  limited  amount,  this  will  be  equivalent  to  consent  in 
writing  on  the  policy,  and  a  renewal  of  a  lapsed  policy  to  the 
same  amount  is  no  violation  of  the  condition  against  other 
insurance.'*  Previous  autliority  given  by  the  secretary  of  an 
insurance  company  to  effect  further  insurance  without  notice 
is  a  waiver  of  the  condition  in  the  policy  requiring  subse- 
quent notice  and  approval  by  the  company.^ 

[§  372  A.  Waiver.  — Notice  to  a  general  agent  of  other  in- 
surance, and  his  assent,  prevents  forfeiture  under  the  condition 
against  other  assurance  without  consent  of  the  company,*^  and  if 
notice  comes  to  such  an  agent,  and  no  objection  is  made  within 
a  reasonable  time,  the  breach  of  condition  is  waived.  To  al- 
low the  company  to  object  after  long  silence  would  be  to  con- 
summate a  fraud.7  The  agent  of  the  company,  with  power  to 
make  and  break  contracts,  is  the  proper  person  to  give  such 
consent,  and  in  the  absence  of  restriction  known  to  the  in- 
sured it  will  bind  the  company.  But  notice  to  a  soliciting 
ao-ent  of  breach  of  the  condition  as  to  other  insurance  is  not 

1  Von  Bories  v.  United  Life,  Fire,  &  Mar.  Ins.  Co.,  8  Bush  (Ky.),  133,  135; 
Lafleur  v.  Citizens'  Ass.  Co.,  Q.  B.  22  L.  C.  Jur.  247  ;  Pechner  v.  Piioenix  Ins.  Co., 
65  N.  Y.  195,  affirming  s.  c.  6Lans.  411  ;  Pitney  c.  Glens  Falls  Ins.  Co.,  65  N.  Y. 
6,  affirming  s.  c.  61  Barb.  335 ;  Brandup  v.  St.  Paul,  &c.  Ins.  Co.  (Minn.),  10  Ins. 
L.  J.  228 ;  Hadley  v.  New  Hampshire  Ins.  Co.,  55  N.  H.  110 ;  Smith  v.  Commer- 
cial Ins.  Co.,  33  U.  C.  (Q.  B.)  69;  City  Fire  Ins.  Co.  v.  Carrugi,  41  Ga.  660; 
Sparrow  v.  Mut.  Benefit,  &c.  Ins.  Co.,  C.  Ct.  (Mass.),  Shepley,  J.,  1873;  Kenton 
Ins.  Co.  V.  Sliea,  6  Bush  (Ky.),  174;  Fishbeck  v.  Phenix  Lis.  Co.,  54  Cal.  422. 
The  case  of  Von  Bories  is  sharply  criticised  in  19  Am.  Law  Reg.  680.  See 
also  post,  §§  507,  508. 

2  Levy  V.  Peabody  Ins.  Co.,  10  W.  Va.  560;  Fishbeck  v.  Phenix  Ins.  Co.,  54 
Cal.  422. 

s  Baer  v.  Phoenix  Ins.  Co.,  4  Bush  (Ky.),  242. 

*  Parsons  v.  Standard  Fire  Ins.  Co.  (Sup.  Ct.  Can.),  3 Legal  News,  Montreal, 
835. 

5  Parsons  v.  Victoria  Mut.  Fire  Ins.  Co.,  29  U.  C.  (C.  P.)  22. 

B  [Goldwater  v.  Liverpool  &  L.  &  G.  Ins.  Co.,  39  Hun,  176.] 

^  I  Crescent  Ins.  Co.  v.  Griffin  &  Sliook.  59  Tex.  509.  See  §  370.  Carrugi  v. 
Atlantic  Fire  Ins.  Co.,  40  Ga.  135  at  141.] 

821 


§  372  C]      insurance:  fire,  life,  accident,  etc.     [ch.  xviii. 

notice  to  the  company,  and  will  not  base  a  plea  of  waiver.^  A 
declaration  of  the  agent  to  the  assured  referring  to  subse- 
quent other  insurance  that  his  policy  is  all  right,  estops  the 
company.^  If  the  applicant  tells  the  agent  to  notify  the 
company  that  he  intends  to  obtain  other  insurance,  and 
the  agent  says  it  will  not  be  necessary  until  such  insurance 
is  obtained,  the  company  is  estopped  to  deny  liability  on  the 
ground  that  its  policies  forbid  other  insurance  without  its 
consent.^] 

[§  372  B.  Knotvled(je  and  long  Silence  or  other  midcadlng 
Action.  —  Knowledge  of  subsequent  insurance  and  conduct 
inducing  the  insured  to  believe  the  former  policy  is  still  re- 
garded as  binding  is  a  waiver.*  Silence  for  an  unreasonable 
time  after  knowledge  of  other  insurance  is  a  waiver.^  A  delay 
of  three  months  has  been  held  sufficient.^  Where  knowledge 
that  other  insurance  has  been  effected  comes  to  the  agent,  and 
the  company  by  its  long  silence  induces  the  insured  to  believe 
that  the  policy  is  still  in  force,  it  is  estopped,  although  the 
policy  declared  that  it  should  be  void  by  other  insurance  with- 
out assent  of  the  company  written  upon  it.'] 

[§  372  C.  Knowledge  of  Agent  at  Issue  of  Policy.  —  If  at 
the  time  of  insurance  the  agent  knew  of  other  insurance,  and 
with  this  knowledge  took  the  premium  and  issued  the  policy, 
the  condition  is  waived.^  The  knowledge  of  the  general  agent 
who  had  previously  effected  the  other  insurance  is  sufficient.^ 
Wiien  the  assured  stated  to  the  agent  that  he  had  other  in- 
surance, and  then  signed  an  application  made  out  by  the 
agent  stating  that  there  was  no  other  insurance,  on  which  a 

1  [Queen  Ins.  Co.  v.  Touner,  80  Ala.  424.] 

2  [Combs  V.  Shrewsbury  Ins.  Co.,  34  N.  J.  F,q.  403.] 

3  [Kitchen  v.  Hartford  Ins.  Co.,  57  Midi.  135.] 

4  [Martin  v.  Jersey  City  Ins.  Co.,  44  N.  J.  273.] 

5  [Phoenix  Ins.  Co.  v.  Spiers,  87  Ky.  285.] 

6  [Planters'  Mut.  Ins.  Co.  i\  Lyons,  38  Te.x.  253  at  272.] 

7  [Crescent  Ins.  Co.  v.  Griffin,  59  Tex.  509.] 

3  [Lycoming  Ins.  Co.  v.  Barringer,  73  111.  230  at  235  ;  North  British,  &c.  Ins. 
Co.  V.  Steiger,  124  111.  81  ;  Putnam  v.  Commonwealth  Ins.  Co.,  4  Fed.  Rep. 
753;  18  Blatch.  368  (N.  Y.),  1880;  Lockwood  y.  Middlesex  Mut.  Ass.  Co., 
47  Conn.  653. 

»  [Richmond  v.  Niagara  Fire  Ins.  Co.,  79  N.  Y.  230  at  239.] 

822 


CH.  XVIII.]       OTHER   INSURANCE    AND    OVERVALUATION.      [§  372  E 

policy  was  issued,  it  was  held  that  the  company  was  estopped 
from  setting  up  the  prior  insurance  as  a  defence. ^  But  the 
company  is  not  estopped  because  the  agent  by  due  diligence 
might  iiave  discovered  the  existence  of  other  insurance  at  the 
time  of  issue.  It  must  be  shown  that,  as  a  matter  of  fact,  he 
did  actually  know  of  its  existence.^] 

[§  372  D.  No  Waiver.  —  Mere  knowledge  of  the  agent  that 
other  insurance  is  effected,  there  being  no  premiums  subse- 
quently received,  or  other  misleading  action,  is  not  a  waiver,-^ 
Taking  additional  assurance  avoids  a  policy  conditioned 
against  it,  though  the  insured  did  not  know  of  the  condi- 
tion, and  although  he  told  the  agent  he  had  taken  other  in- 
surance but  did  not  name  the  amount,  and  the  agent  had 
previously  offered  further  insurance  to  a  less  amount  tlian  the 
additional  policy,  and  although  proofs  of  loss  were  demanded 
after  knowledge  of  other  insurance,  but  without  knowledge  of 
the  amount.*  When  the  application  for  insurance  stated  that 
otlier  insurance  on  the  same  property  would  expire  in  two 
months,  and  would  not  be  renewed,  and  the  policy  was  issued 
on  this  understanding,  but  the  former  insurance  was  renewed, 
there  could  be  no  recovery  on  the  second  policy.-^] 

[§  372  E.  Misrepresentation  as  to  Other  Insurance.  —  A 
large  overstating  of  the  amount  of  other  insurance  on  a  build- 
ing though  made  by  mistake  by  the  agent  of  the  insured  un- 
known to  the  latter,  avoids  a  policy  issued  upon  the  application 
of  the  said  agent,  conditioned  to  be  void  by  any  misrepresen- 
tation whatever,  and  providing  for  apportionment  of  the  loss 
among  the  various  insurers.  The  misrepresentation  was  mate- 
rial.^ But  where  the  company  is  not  justified  iu  relying  on 
the  representation  it  will  not  be  fatal.  In  a  list  of  existing 
insurance  upon  his  property  the  applicant  omitted  by  mistake 
the  name  of  the  E.  Company,  and  a  policy  was  issued  by  this 
E.  Company,  both  parties  believing  that  there  was  no  prior 

1  [American  Ins.  Co.  v.  Luttrell,  89  111.  314  at  317.] 

2  [Sanders  v.  Cooper,  115  N.  Y.  279.] 

8  [Zimmerman  v.  Home  Ins.  Ca,  77  Iowa,  685.] 

<  [Bonneville  v.  Western  Ass.  Co.,  68  Wis.  298.] 

8  [Deitz  V.  Mound  City  Mut.  F.  &  L.  Ins.  Co.,  38  Mo.  85  at  94] 

«  [Armour  i-.  Transatlantic  Fire  Ins.  Co.,  90  N.  Y.  450.] 

823 


§  378  E]       INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XVIII. 

insurance  in  said  company,  the  applicant  did  not  positively 
state  his  list  to  be  correct,  but  said  he  believed  it  was.  The 
court  held  that  if  the  company  were  satisfied  to  rely  on  a  mere 
statement  of  belief  honestly  made,  it  had  no  right  to  com- 
plain that  the  facts  were  not  fully  represented.  Especially 
must  this  be  so  when  the  means  of  verification  are  so  easily 
within  reach  of  the  company  as  in  this  case.^] 

[§  372  F.  Evidence.  —  Proofs  of  loss  disclosing  other  insur- 
ance operate  as  admissions  of  the  assured,  and  make  other 
proof  unnecessary .2  Parol  proof  is  inadmissible  to  show  that 
double  insurance  was  meant  by  the  terms  of  a  policy  reading 
"  void  if  any  prior  insurance,  (to."  There  is  no  ambiguity  to 
be  explained.^] 

§  373.  Overvaluation.  —  Akin  to  the  subject  of  double  or 
over  insurance  is  the  subject  of  overvaluation,  which  in  fact 
is  more  properly  over-insurance.  This  is  sometimes  prohib- 
ited in  the  policy  on  pain  of  forfeiture,  sometimes  stated  as  a 
restriction  upon  the  relative  amount  of  the  value  Avhich  the 
insurers  will  assume  the  risk  of,  and  sometimes  not  mentioned 
at  all  in  the  policy.  The  same  reasons  exist  on  the  part  of 
the  insurers  against  overvaluation  that  we  have  already  stated 
exist  against  double  insurance.  In  both  cases  the  interest  of 
the  insured  in  the  preservation  of  the  property  is  weakened, 
and  motives  supplied  to  desire  its  destruction.  And  it  is  not 
unusually  stipulated  against.  But  an  overstatement  of  the 
value  of  the  property  for  insurance  upon  which  application  is 
made  may  defeat  the  policy,  whether  there  be  any  condition 
or  stipulation  in  the  policy  to  that  effect  or  not.  It  is  a  ma- 
terial fact,  in  that  it  is  of  importance  that  the  insured  should 
be  interested  in  the  protection  of  the  property.  The  smaller 
the  amount  of  the  insurance,  therefore,  the  stronger  his  interest 
in  the  protection.  The  probable  loss,  in  case  of  the  destruc- 
tion of  the  property  by  fire,  is  the  incentive  to  vigilance  in 
the  protection  of  the  whole,  as  well  tliat  which  is  covered  by 
the  policy  as  that  which  is  not ;  for  whatever  threatens  the 

1  [Bridgewater  Iron  Co.  v.  Enterprise  Ins.  Co.,  134  Mass.  433,  438.] 

2  [N.  Y.  Central  Ins.  Co.  v.  Watson,  23  Mich.  486  at  488] 

3  [N.  Y.  Ins.  Co.  I'.  Thomas,  3  Jolms.  Cas.  (N.  Y.)  1  at  4.] 

824 


CH,  XVIII.]      OTHER   INSURANCE    AND    OVERVALUATION.  [§  373 

interest  of  the  insurers  threatens  also  the  interest  of  the  in- 
sured. But  the  law  will  not  here  interest  itself  in  trifling 
discrepancies  and  insignificant  differences,  such  as  may  be 
readily  accounted  for  by  that  natural  tendency  to  overesti- 
mate which  self-interest  always  engenders.  The  overvalua- 
tion, in  order  to  work  a  forfeiture  of  the  right  of  recovery, 
must  be  a  clear  one  ;  so  clear  that  it  is  obvious  at  a  glance, 
and  cannot  be  accounted  for  upon  the  principle  that  every 
man  is  naturally  prone  to  put  a  favorable  estimate  upon  his 
own.  It  is  not  necessary  that  the  overvaluation  be  inten- 
tional and  fraudulent  to  have  the  effect  of  vitiating  the  policy. 
The  effect  is  the  same  if  it  be  done  by  mistake,  and  overvalu- 
ation by  the  agent  is  imputable  to  the  principal. ^  It  is  usual 
to  provide  that  fraudulent  overvaluation  shall  avoid  the 
policy;  and,  in  point  of  fact,  whether  the  provision  be 
against  fraudulent  overvaluation  or  simply  overvaluation,  it 
is  of  but  little  moment.  For  no  overvaluation  but  a  gross 
and  clear  one,  and  such  as  is  or  must  be  presumed  to  be 
known  to  be  such  by  the  insured,  and  not  known  to  the  in- 
surer, and  therefore  false  and  fraudulent,  will  in  either  case 
be  held  to  vitiate  the  policy ;  and  such  a  one  will  avoid  the 
policy  whether  provided  against  or  not.^     And  in  considering 

1  Carpenter  v.  American  Ins.  Co.,  1  Story  (U.  S.  C.  Ct.),  57;  Bobbitt  v. 
Liverpool,  &c.  Ins.  Co.,  66  N.  C.  70;  Catron  v.  Tenn.  Ins.  Co.,  6  Humph.  (Tenn.) 
176;  Carpenter  v.  Prov.  Wash.  Ins.  Co.,  16  Pet.  (U.  S.)  4%;  Shaw  v.  St  Law- 
rence County  Mut.  Ins.  Co.,  11  U.  C.  (Q.  B.)  73;  Gerliauser  v.  North  British, 
&c.  Ins.  Co.,  7  Nev.  174;  Franklin  Life  Ins.  Co.  v.  Vaughan,  92  U.  S.  516  ;  Con- 
tinental Ins.  Co.  V.  Ware  (Ky.),  9  Ins.  L.  J.  519  ;  Riach  v.  Niagara,  &c.  Ins.  Co., 
21  U.  C.  (C.  P.)  464  ;  Williams  v.  Phoenix  Ins.  Co.,  61  Me.  67 ;  Newton  v.  Gore, 
&c.  Ins.  Co.,  33  U.  C  (C.  P.)  92 ;  Leach  v.  Insurance  Co.,  58  N.  H.  245  ;  Bon- 
ham  V.  Iowa  Central  Ins.  Co.,  25  Iowa,  328;  Citizens',  &c.  Ins.  Co.  v.  Sliort,  62 
Ind.  316.  In  this  case  the  court  express  the  opinion  that  the  law  as  stated  in 
the  text  is  too  favorable  to  the  insurers,  and  that  no  overvaluation  but  a 
"  knowingly  false  and  fraudulent "  one  will  vitiate  a  policy.  See  also  Sturm  v. 
Atlantic  Mut.  Ins.  Co.,  63  N.  Y.  77.     See  §  373  A. 

■^  Hersey  v.  Merrimack  County  Mut.  Ins.  Co.,  7  Post.  (N.  H.)  149  ;  Dickson 
V.  Equitable  Fire  Ins.  Co.,  18  U.  C.  (Q.  B.)  246  ;  Wilbur  v.  Bowditch  Mut.  Ins. 
Co.,  10  Cush.  (Mass.)  446  ;  Prot.  Ins.  Co.  v.  Hall,  15  B.  Mon.  (Ky.)  411  ;  Frank- 
lin Fire  Ins.  Co.  v.  Vaughan,  92  U.  S.  516.  In  this  case  a  difference  of  over  one- 
tliird  was  held  immaterial.  See  also  Lingley  v.  Queen  Ins.  Co.,  1  Hannay 
(N.  B.),  280  ;  Cann  r.  Imperinl  Fire  Ins.  Co.,  1  R.  &  C.  (Nova  Scotia)  240,  where 
the  overvaluation  was  more  than  two-fold,  yet  was  held  immaterial,  the  jury 

825 


§  373  A]    INSURANCE  :  fire,  life,  accident,  etc.     [ch.  xviti. 

the  question,  evidence  of  the  value  of  similar  property  in  the 
vicinity  is  competent,  and  in  what  degree  of  proximity  vi- 
cinity is  included,  depends  upon  whether  the  property  is 
situated  in  town  or  country.^  [But  evidence  of  offers  for 
the  property  made  after  the  execution  of  the  policy,  is  not 
admissible.^] 

[§  373  A.  Overvaluation.  — Where  the  policy  declares  that 
an  overvaluation  will  avoid  it,  any  substantud  overvaluation 
such  as  would  not  ordinarily  arise  from  mere  difference  of 
opinion,  will  be  fatal  whether  it  be  fraudulent  or  not.^  Want 
of  education  cannot  excuse  a  gross  overvaluation.*  A  provis- 
ion that  the  statements  are  warranties  and  that  overvaluation 
shall  avoid  the  policy  will  be  held  to  mean  intentionally  false 
valuation,  if  other  parts  of  the  policy  show  that  it  was  the 
intent  of  the  parties  that  only  wilful  misrepresentations  should 
avoid  the  agreement.^  When  the  policy  provided  that  an 
overvaluation  should  avoid  it,  but  the  overvaluation  was  in 
the  written  application,  which  assumed  to  state  the  value  only 
so  far  as  was  knoum  to  the  assured,  it  was  held  that,  in  the  ab- 
sence of  fraud,  the  policy  was  good.°  There  was  no  breach 
unless  the  false  statement  was  knowingly  made.  Intentional 
overvaluation  always  avoids  the  policy  obtained  upon  it.^  But 
it  has  been  broadly  held  that  an  honest  estimate  of  value 
though  excessive  will  not  be  fatal,  although  the  policy  pro- 
vides that  any  overvaluation  of   the  interest   assured  shall 


having  negatiVed  fraud.  See  also  Parsons  v.  Citizens'  Ins.  Co.,  43  U.  C.  (Q.  B.) 
261  ;  Mason  v.  Agr.  Ins.  Co.,  18  U.  C.  (C.  P.)  19.  Gross  overvaluation,  result- 
ing from  a  wilful  neglect  of  the  means  of  making  a  correct  one,  and  having  the 
effect  of  misleading  the  insurer  to  his  prejudice,  though  not  intentionally  fraud- 
ulent, is  not  innocent,  and  vitiates  tiie  policy.  Leach  o.  Repuhlic  Fire  Ins.  Co., 
58  N.  H.  245.  But  see  Sturm  v.  Atlantic  Ins.  Co.,  63  N.  Y.  77.  See  also  ante, 
§  30.     As  to  overvaluation  of  loss,  see  pout,  §§  443,  477. 

1  Haines  v.  Repuhlic  Fire  Ins.  Co.,  52  N.  H.  407 ;  Howard  v.  City  Fire  Ins. 
Co.,  4Denio  (N.  Y.),  502. 

-  [Wood  V.  Firemen's  Fire  Ins.  Co.,  126  Mass.  316  at  319.] 

3  [Boutelle  v.  Westchester  Fire  Ins.  Co.,  51  Vt.  4.] 

*  [Nassauer  v.  Insurance  Co.,  109  Pa.  St.  507.] 

6  [Wheaton  v.  North  Brit.  &  Mer.  Ins.  Co.,  76  Cal.  415.] 
«  [Miller  v.  Alliance  Ins.  Co.,  19  Blatch.  808  at  310.] 

7  [Lycoming  Fire  Ins.  Co.  r.  Kubin,  79  111.  402.] 

826 


CH.  XVIII.]       OTHER   INSURANCE   AND    OVERVALUATION.       [§  373  B 

avoid  the  policy  issued  on  such  description.^  An  over-esti- 
mate of  the  amount  of  loss  sustained,  made  honestly  and  in 
good  faith,  is  neither  fraud  nor  false  swearing  within  the 
meaning  of  a  policy.^  It  was  at  first  held  in  Texas  that  only 
an  overvaluation  in  the  application  so  gross  and  clear  that  it 
must  be  presumed  that  tiie  assured  was  not  acting  in  good 
faith,  will  avoid  the  policy ,2  and  cases  were  referred  to  in  which 
an  overvaluation  of  one-third  had  been  held  immaterial  ;^  and 
also  one  that  was  more  than  twofold  ;^  but  upon  error  the  case 
was  remanded,  the  court  remarking  that  it  was  not  neces- 
sary for  the  overvaluation  to  be  fraudulent ;  though  made  by 
mistake  it  might  be  fatal,  citing  May,  §  373,  to  that  effect.^ 
A  claim  more  than  double  the  amount  found  due  will  be  held 
fraudulent  in  the  absence  of  clear  evidence  to  the  contrary.^ 
But  an  apparent  overvaluation  of  about  twenty  per  cent  is  held 
not  fraudulent.^  Where  a  house  was  valued  at  i|1400,  and 
the  evidence  tended  to  show  that  it  was  only  worth  about 
11000,  it  was  held  that  the  difference  was  not  so  great  as  to 
make  it  matter  of  law  that  there  was  overvaluation  within  the 
meaning  of  the  warranty .^  And  valuing  goods  worth  $1200 
at  '12000  docs  not  as  matter  of  law  prove  fraudulent  intent.^*^ 
It  is  error  to  refuse  to  instruct  the  jury  on  a  question  of  breach 
of  covenant  relating  to  the  valuation  of  the  property ;  as 
where  the  company  claimed  that  the  applicant  had  put  the 
two-thirds  value  too  high  to  his  knowledge.^^] 

[§  373  B.    Overvaluation.  —  An  Overvaluation  of  part  of  the 
property  insured  will  not  avoid  the  policy  as  to  the  rest.^^  Over- 

1  [Susquehanna  Mat.  Fire  Ins.  Co.  v.  Staats,  102  Pa.  St.  529;  Pickel  v. 
Plieiiix  Ins.  Co.,  18  Ins.  L.  J.  598  (Ind.),  June,  1889.] 

-  [PlicBnix  Ins.  Co.  v.  Munday,  5  Cold.  (Tenn.)  547  at  552.] 

3  [Kiikin  f.  Home  Ins.  Co.,  1  Tex.  App.  Civ.  Cas.  §  368.] 

4  [Franklin  Ins.  Co.  r.  Vanglian,  92  U.  S.  516.] 

5  [Cann  v.  Imperial  Fire  Ins.  1  R.  &  C.  (Nova  Scotia),  240.] 

6  [Home  Ins.  Co.  v.  Eakin,  2  Tex.  Civ.  Cas.  §  66-5.] 

7  [La  Rocque  v.  Royal  Ins.  Co.,  2-3  L.  C.  Jur.  217  ] 

8  [Xortliern  Ass.  Co.  v.  Provost,  25  L.  C.  Jur.  211.] 

9  [Smith  V.  Home  Ins.  Co.,  47  Hun,  30.] 

^"^  [Behrens  v.  Germania  Fire  Ins.  Co.,  64  Iowa,  19.] 
11   [Insurance  Co.  v.  McCluckin,  40  Ohio  St.  42.] 
1-2  [Smith  V.  Home  Ins.  Co.,  47  Hun,  30,  34.] 

827 


§  374]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XVIII. 

valuation  that  is  known  or  ought  to  be  known  to  the  agent  is 
waived  when  the  company  rejects  the  claim  for  loss  on  other 
grounds.^  But  where  the  general  agent,  knowing  that  there  was 
overvaluation  but  not  knowing  it  to  be  fraudulent,  asked  for 
proofs  of  loss,  there  was  no  waiver  of  the  overvaluation. ^   And 
the  assured  cannot  escape  responsibility  for  the  statements 
which  he  himself  inserts  in  the  application  or  permits  the  agent 
to  insert,  in  respect  to  facts  about  which  he  is  just  as  well  in- 
formed as  the  agent,  by  showing  that  he  was  induced  by  the 
ao-ent  knowingly  to  state  them  falsely.     This  includes  valua- 
tion, and  the  applicant  must  be  responsible  for  any  substantial 
excess  when  he  warrants  the  value.^     In  Maine  by  statute  the 
question  is  whether  the  erroneous  statement  of  value  mate- 
rially increased  the  risk  or  contributed  to  the  loss.^     Over- 
valuation at  the  time  of  insurance  is  not  material  wlicn  it  is 
provided  that  the  insurance   paid  shall  never  exceed  three- 
fourths  of  the  value  at  the  time  of  loss.^] 

§  374.  Overvaluation.  —  But  the  rule  as  to  overvaluation  is 
not  applicable  to  the  case  of  an  open  policy  upon  a  stock  of 
goods  which  is  constantly  varying  in  amount,  nor  where  the 
insurer  is  to  be  liable  only  for  a  proportion  of  the  loss.  Thus, 
where  a  merchant  procures  insurance  upon  his  stock  of  goods, 
and  fixes  the  valuation  neither  upon  the  reduced  stock  which 
he  happens  to  have  on  hand  at  the  end  of  the  busy  season 
when  the  insurance  is  applied  for,  nor  upon  the  unusually 
large  stock  on  hand  at  the  commencement  of  the  season,  but 
upon  a  fair  average  between  the  two,  this  is  permissible,  be- 
cause it  is  within  the  intention  of  the  parties,  although  the 
incentives  to  vigilance,  and  the  temptation  to  destroy  on  the 
part  of  the  insured,  may  vary  with  the  varying  amount  of 
the  stock.  So  if  the  insurer  is  in  no  case  to  be  responsible 
beyond  a  certain  fixed  proportion,  as,  for  instance,  two-thirds 
of  the  loss,  the  insured  has  always  before  him  the  same  un- 

1  [Walsh's  Adm'r.  v.  Vermont  Mut.  Fire  Ins.  Co.,  54  Vt.  351] 

2  [Wheaton  v.  Brit.  &  Mer.  Ins.  Co.,  76  Cal.  415.] 

8  [American  Ins.  Co.  v.  Gilbert,  27  Mich.  42fl  at  4:'.!)  and  441.J 
*  [Thayer  v.  Providence,  &c.  Ins.  Co.,  70  Me.  531,  536.] 
6  [Schmidt  v.  Mut.  City,  &c.  Ins.  Co.,  55  Midi.  432.] 

828 


CH.  XVIII.]       OTHER   INSURANCE    AND    OVERVALUATION.  [§  376 

varying  proportion  of  tlie  risk,  and  the  usual  objections  to  over- 
valuation do  not  obtain.!  jf  j^o  valuation  is  stated  in  the 
contract,  prior  oral  statements  showing  overvaluation  are 
inadmissible.  The  making  of  a  contract,  without  requiring 
any  statement  of  the  value,  must  be  regarded  as  evidence 
that  the  insurer  regarded  it  as  immaterial.^  If  by  the  form  of 
the  policy  the  statement  of  value  is  a  warranty,  and  it  appears 
by  the  plaintiff's  own  showing  that  it  is  clearly  overstated, 
and  knowingly  so,  the  court  will  not  submit  the  question  to 
a  jury,^  even  though  the  liability  of  the  insurers  is  to  be  but 
two-thirds  of  the  real  value. ^ 

§  375.  Overvaluation  ;  Renewals  upon  changing  Stock.  —  It 
may  happen  that  under  repeated  renewals  of  insurance,  with- 
out any  change  in  the  application,  upon  the  same  property,  a 
depreciation  in  its  value  may  take  place,  so  that  the  represen- 
tations as  to  its  value  at  the  time  of  the  first  insurance  may 
not  be  strictly  true  at  the  date  of  the  last  insurance.  But 
such  a  variance  is  no  fraudulent  overvaluation  or  misrepre- 
sentation.^ 

§  376.  Restriction  of  Value  by  Charter  or  By-laws  or  Terms 
of  the  Policy. — The  charters  of  mutual  insurance  companies 
usually  restrict  the  amount  of  the  risk  which  they  are  per- 
mitted to  assume  to  a  certain  proportion  of  the  value  of  the 
property  insured.  In  such  cases  the  restriction  is  to  be  re- 
garded as  directory  merely,  and  not  prohibitory.  The  viola- 
tion of  the  charter  is  a  matter  for  the  insurers  to  settle  with 
tliose  who  gave  them  their  charter,  but  they  cannot  set  up 
their  own  misconduct  in  defence  against  the  claim  of  the  in- 
sured for  indemnity,  as  by  showing  that  in  insuring  to  the 

1  Lee  V.  Howard  Fire  Ins.  Co.,  11  Cush.  (Mass.)  824;  Aurora  Fire  Ins.  Co. 
I'.  Johnson,  46  Ind.  315;  Cox  ?;.  ^tna  Ins.  Co.,  29  id.  586;  Bonham  v.  Iowa 
Central  Ins.  Co.,  25  Iowa,  328. 

2  Bardwell  v.  Conway  Mut.  Ins.  Co.,  118  Mass.  465;  Insurance  Co.  of  North 
America  v.  McDowell,  50  111.  120. 

8  American  Ins.  Co.  v.  Gilbert,  27  Mich.  429. 

*  Bobbitt  V.  Liverpool,  &c.  Ins.  Co.,  66  N.  C.  70.  But  see  Bonham  v.  Iowa 
Central  Ins.  Co.,  25  Iowa,  328. 

5  Gerhauser  v.  North  Brit  &  Mer.  Ins.  Co.,  7  Nev.  174  ;  Eddy  St.  Iron  Foun- 
dry V.  Farmers'  Mut.  Ins.  Co.,  5  R.  I.  426. 

829 


§  376]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.       [CH.  XYIII. 

stipulated  amount  they  have  infringed  one  of  their  own  by- 
laws.i  An  estimate,  whether  by  the  agent  of  the  insurers  or 
by  him  and  the  insured  combined,  in  the  absence  of  all  fraud, 
collusion,  and  misrepresentation,  fixed  by  agreement,  —  an  esti- 
mate upon  which  premiums  are  paid  and  assessments  laid, 
and  the  amount  to  be  paid  by  the  company  in  case  of  loss 
determined,  —  is  the  best  evidence  of  the  value  of  the  premises 
insured,  and  cannot  be  treated  as  a  valuation  not  permitted 
by  the  charter  or  by-laws.^ 

1  Cumljerland  Valley  Mut.  Prot.  Ins.  Co.  v.  Schell,  29  Pa.  St.  31 ;  Hoxsie  v. 
Prov.  Mut.  Fire  Ins.  Co.,  6  R.  I.  517  ;  Fuller  i;.  Boston  Fire  Ins.  Co.,  4  Met. 
(Mass.)  20G.     And  see  ante,  §§  23,  63,  65. 

2  Fuller  V.  Boston  Fire  Ins.  Co.,  4  Met.  (Mass.)  206;  Wilbur  u.  New  England 
Mut.  Fire  Ins.  Co.,  31  Me.  219. 

830 


CH.  XIX.]  ASSIGNMENT   OF   THE  POLICY. 


CHAPTER   XIX. 

ASSIGNMENT    OF    THE   POLICY. 

Analysis. 

ASSIGNMENT  BEFORE  LOSS. 
Insurance  other  than  Lite. 

The  common  law  would  not  permit  the  assignment  of  a  chose 
in  action;  equity  however  upheld  the  transaction,  and 
the  assignee  could  sue  in  the  name  of  the  assignor  and 
recover  for  his  own  benefit,  subject  to  all  defences,  legal 
or  equitable,  that  could  be  made  against   the  assignor 
before  notice  of  the  transfer  to  the  obligor.     §  377.     If 
the  debtor  assents  to  the  assignment,  and  agrees  to  pay 
the  assignee,  a  ncAV  contract  arises.     The  peculiar  nature 
of  insurance  brings   an    element   into  the  problem   of 
transfer  not  existing  in  most  cases.     A  jjolicy  is  a  con- 
tract of  indemnihj  for  the  loss  of  a  valuable  interest,  and 
subject  to  avoidance  by  the  violation  of  any  one  of  numerous 
conditions. 
(1)  Now  if  the  policy  is  assigned  without  a  transfer  of  the 
interest  it  protects,  it  is  clear  that,  even  though  the  com- 
pany may  assent,   there  is  no  comjdete  transfer,   as  in 
case  of  the  assignment  of  a  note.     §  379.     The  assignor 
is  still  the  person  assured,  for  he  is  the  one  who  possesses 
the  insurable  interest.     The  contract  could  not  possibly 
be  made  with  the  assignee.     He  is  merely  the  person  to 
whom  the  money  is  to  be  paid,   if,   upon  the  contract 
■with  the  assignor  it  ever  becomes  due.    §  378.     The  "as- 
signment "  so  called  is  a  mere  designation  of  the  payee. 
He  may  have  an  interest  in  the  property  or  not,  but  he 
has  not  the  interest  that  was  insured.     He  can   sue  in 
his  own  name  if  the  company  has  agreed  to  pay   him, 
but  if  the  assignor  breaks  a  condition  before  or  after  as- 
signment, and  it  is  not  waived,  the  assignee  will  receive 
nothing.    §§  382,  378  A.     As  between  the  parties  to  the 
assignment,  however,  it  creates  an  equitable  lien  on  the 
funds,  §  380,  although  the  transfer  is  only  as  collateral, 
before  loss,  and  to  one  without  interest.     §  386. 
(2)  If  the  interest  insured,  as  well  as  the  policy,  is  trans- 
ferred to  the  assignee,  with  assent  of  the  company,  a 
new  contract  is  formed  with  the  assignee,  §§  378,  378  A, 
and  any  subsequent  breach  of  condition  on  the  part  of 
the  assignor  will  not  affect  the  assignee,  §§  378,  378  A, 
and  he  can  sue  in  his  own  name.    §  381.    See  also  §§  383- 
384.     But  as  to  t\i&  past,  the  assignee  simply  steps  into 
the  shoes  of  the  assignor. 

VOL  II.  —  9  831 


INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.        [CH.  XIX. 

It  has  even  been  held  that  an  assignment  as  collateral,  with 
assent,  to  one  waiving  a  lien  on  the  goods,  will  not  be 
affected  by  fraud  of  the  assignor.    §  378  A. 

But  this  is  clearly  wrong  on  the  above  reasoning. 

In  marine  insurance  custom  allows  the  transfer  of  a  policy 
with  the  subject-matter  without  special  assent  of  the 
company.     §  377. 

Life  Insurance. 

A  man  may  take  out  a  policy  on  his  own  life,  and  make  it 
payable  to  any  person  he  chooses  as  beneficiary,  §  112.  It 
would  be  useless  to  deny  this  privilege,  as  the  same  thing 
could  be  accomplished  by  taking  the  policy  to  himself  and 
representatives,  and  willing  the  fund  to  the  beneficiary. 
Moreover  no  one  can  object  if  the  beneficiary  sujiplies 
the  insured  with  money  to  pay  the  premiums.     Now  if 

A.  takes  out  a  policy  on  his  own  life  and  assigns  it  to  B., 
the  case  is  in  substance  no  different   from  one  in  which 

B.  is  named  as  beneficiary.  (If  the  interest  insured  is  not 
passed,  as  in  this  case  it  would  not  be,  as  the  insured 
could  not  give  his  life  to  B.,  a  subsequent  breach  of  con- 
dition by  the  assignor  would  be  fatal  to  the  assignee.  If 
a  creditor  insures  the  life  of  a  debtor,  a  transfer  of  debt 
and  policy,  with  assent,  would  undoubtedly  create  a 
new  contract.) 

There  is,  however,  a  strong  dispute  on  this  question  of 
assignment  to  one  without  interest  in  the  "life,"  some 
authorities  maintaining  that  assignment  to  one  without 
interest  is  "open  to  all  the  objections  that  can  be  raised 
against  the  original  taking  out  of  insurance  by  one  with 
no  interest."  §  398,  and  note.  This,  however,  is  not 
true.  There  is  an  immense  difference  between  allowing 
A.  to  choose  for  himself  to  secure  to  B.  a  benefit  on  his 
decease,  and  allowing  B.  of  his  own  motion  to  secure  such 
a  benefit  on  the  life  of  A.  without  A.'s  action  in  the 
matter.  The  activity  of  the  "  life  "  in  obtaining  the 
insurance  and  selecting  the  beneficiary  seems  the  true 
line  of  distinction,  and  not  tlie  contingent  benefiting  of 
one  without  interest.  At  any  rate,  to  be  consistent  the 
law  must  either  allow  free  assignment  or  limit  the  choice 
of  beneficiaries.  The  life  should  he  free  to  assign  to  any 
one  he  could  have  chosen  as  his  beneficiary. 

Of  course  the  intent  of  the  parties  must  always  be  looked 
to.  If,  for  example,  the  transfer  appears  to  be  for  the 
security  of  a  creditor,  he  should  not  be  allowed  to  hold 
more  than  compensation  for  his  debt,  premiums,  ex- 
penses, &c.     See  chap.  24. 

If  the  transfer  is  to  one  with  an  interest,  §  398,  and  is 
free  from  fraud,  §  397,  it  is  good.     §  388. 

If  the  company  waives  the  want  of  interest,  the  assignor 
cannot  object,  §  398  A  ;  but  an  heir  may  object  that 
the  assignment  is  invalid  in  form.    §  399  B. 


832 


CH.  XIX.]  ASSIGNMENT   OF   THE   POLICY. 

What  is  an  assignment  ?    §§  379,  395. 

a  transfer  that  will  be  upheld  and  will  carry  rights  to  the 
transferee  is  not  always  held  to  be  a  transfer  that  will 
avoid  the  policy  under  the  clause  against  assignment, 
§  379. 
an  intent  to  transfer  is  not  an  assignment,  §  379  n. 
a  part  transfer  as  collateral  not  fatal,  §  379  n. 
a  provision  against  assignment  as  collateral  means  without 

transferring  the  property,  §  379  n. 
assignment  of  all   property  to  creditors   does   not   carry  a 
policy,  §§  379,  391  B,  386. 
contra,  §  379  n. 
indorsement  "pay  to  A.  B."  not  a  fatal  assignment,  §  379  n. 
Consent,  382-385,  385  A.,  387. 
In  writing.     Indorsement. 

attesting  by  agent  sufficient,  §  385  A. 

paper  attached  by  wafer  sufficient  indorsement,  §  385  A. 

assent  to  assignment  of  policy  after  transfer  of  property 

sufficient,  §  385  A. 
oral  promise  to  indorse  not  enforceable  after  loss,  where 
insured  neglected  to  take  policy  for  indorsement  be- 
fore loss,  §  385  A. 
receipt  of  assessments  from  assignee  no  waiver  of  condi- 
tion as  to  written  assent,  §  385  A. 
consent  of  no  avail  if  facts  are  withheld  that  might  have 

prevented  assent,  §  385  A. 
company  cannot  arbitrarily  refuse,  contrary  to  the  spirit 
of  the  policy,  §  387. 
General. 

Assignment  in  whole  or  part,  §  380. 

assignment  as  collateral  is  fatal  if  policy  provides  against 

assignment  in  whole  or  any  interest  tinder  it,  §  380. 
The  intent  to  transfer  the  lohole  chose  must  be  manifested 
by  action  approj)riate  to  the  circumstances,  i.  e.,  de- 
livery of  the  document  securing  it,  to  the  assignee 
or  to  some  one  for  him  if  it  is  possible,  §  389. 
assignment  of  part  without  assent  invalid,  §  399. 
Disposition  of  proceeds,  creditors,  children,  wife,  heirs,  ad- 
ministrator, conflict  of  claims,  §  390. 
Assignment    by  mamed  woman,    rights  of  children,  §  391. 

See  also  §  392. 
If  the  interest  of  the  insured  is  transferred  to  C,  and  then 
the  policy  to  B.,  the  latter  cannot  recover,  even  though 
the  company  consented,  and  B.  was  a  mortgagee  ;  his 
own  interest  was  not  insured  by  the  consent,  and  the 
old  interest  back  of  the  policy  was  divorced  from  it. 
§  378  n. 
So  an  assignment  after  the  assignor's  lease  has  expired  will 

not  bind  the  company  to  pay  the  assignee,  §  378  n. 
A  defective  assignment  may  take  effect  as  a  designation  to 

pay,  §  378  n. 
Possession,  delivery,  &c.,  §  395. 

833 


§  377]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.        [CH.  XIX. 

Delivery  to  another  for  the  donee  is  sufficient.    §  378  n. 

When  the  "  life  "  may  assign,  §  391. 

Husband  and  wife,  §§  391  A,  390-394. 

Creditors,  §§  391  B,  390-394. 

Beneficiaries,  §§  390-394,  and  next  chapter. 

In  whose  name  suit  is  to  be  brought,  §§  393,  381,  378. 

one  may  have  the  right  to  sue,  but  not  to  use  proceeds, 
§  393. 
A  policy  may  be  drawn  payable  to  A.  or  his  assignees,  §  399  A. 
Assignee  causing  death,  §  399  A. 
Notice  of  transfer,  §  396  (life). 
One  may  be  held  as  a  trustee  in  respect  to  a  policy,  §§  393, 

399  A. 
Assignment   as  collateral   gives  equitable  lien  on  proceeds 

without  regard  to  assent,  §§  380,  386. 
Assignor  of  collateral  must  pay  premiums,  §  399  A. 

they  may  be  added  to  mortgage,  §  399  A. 
Assignee  in  bankruptcy  can  recover  fiom  the  bankrupt  only 
the  value  of  the  policy,  and  not  what  the  company  may 
have  paid  him,  §  399  B. 
Fraud,  §§  385,  397. 

Violation  of  conditions  by  assignor,  §§  378  A.,  379,  381,  386, 
452  D. 
measure  of  damages  he  must  pay  assignee,  §  399  B. 
Damages  for  breach  of  agreement  to  assign,  §  399  B. 
Bequest,  devise,  donatio  causa  mortis,  &c.,  §§  399  C,  392. 
Transfer  of  assured's  interest,  §§  381,  381  a. 
ASSIGNMENT  AFTER  LOSS — 

is  only  an  assignment  of  a  debt,  and 

is  always  good  in  equity,  subject  to  claims  in  set-off,  &c.,  against 
the  assignor  before  notice.     §  386.     The  assignee  stands  in  the 
shoes  of  the  assignor  as  to  breach  of  condition  also,  §  386. 
of  the  whole  amount  is  good  without  acceptance,  §  386. 
is  not  a  violation  of  the  clause  against  transfer,  although  it  reads 

"  before  or  after  loss,"  §  386. 
nor  within  condition  requiring  assent,  §  386. 
a  prohibition  of,  is  illegal,  §  886. 
specific  performance  of,  §  386. 
good  without  record  or  delivery  against  garnishment,  §  386. 

§  377.  Assignment  of  Policy  not  permitted  by  the  Com- 
mon Law. — We  have  already  considered,  in  the  chapter  on 
alienation,  the  effects  of  a  transfer  of  the  property  insured. 
We  are  now  to  consider  the  effect  of  a  transfer  of  the  policy 
of  insurance,  or,  as  it  is  usually  termed,  the  assignment  of  the 
policy.  It  is  usual  to  provide  that  if  the  policy  be  assigned 
without  the  consent  of  the  insurers  it  shall  be  vo.id.  At  com- 
mon law  a  policy  of  insurance  against  fire  is  not  assignable  in 
any  such  sense  as  to  give  the  assignee  a  right  to  sue  in  his 
834 


CH.  XIX.]  ASSIGNMENT   OF   THE   POLICY.  [§  377 

own  name.  By  an  assignment  the  assignee  acquires  merely  a 
chose  in  action^  gi^'ing  to  the  holder  at  most  an  equitable 
claim,  which  he  can  assert  and  enforce  only  in  the  name  of 
the  assignor.  With  a  very  fevF  exceptions,  as  in  the  case  of 
bills  of  exchange,  bills  of  lading,  and  policies  of  marine  insur- 
ance, the  common  law  has  steadily  denied  the  right  of  one 
man  to  make  over  his  right  of  action  against  another  to  a 
third  party,  a  stranger  to  the  contract,  as  against  public  pol- 
icy, and  tending  to  the  multiplication  of  suits.  In  the  case  of 
marine  policies,  custom  seems  to  have  established  a  rule  dif- 
ferent from  that  of  the  common  law,  and  to  have  made  the 
policies  transferable  witli  the  subject-matter  of  insurance. 
In  fact,  in  early  times,  in  marine  insurance,  policies  were 
issued  in  blank  as  to  the  assured,  and  passed  from  hand  to 
hand  without  indorsement  or  assignment,  but  merely  by  de- 
livery, like  a  promissory  note  payable  to  bearer,  along  with 
the  thing  insured.  And  to  this  day,  if  there  be  an  assignment 
of  the  policy,  coupled  with  the  transfer  of  the  subject-matter 
of  .insurance,  although  there  be  no  consent  of  the  insurers  to 
either  the  assignment  or  the  transfer,  the  assignee  thereby 
acquires  a  claim  against  the  insurers,  which  he  can  enforce  in 
a  suit  at  law  in  his  own  name.  This  distinction  is  said  to 
rest  upon  the  fact  that  there  is  less  of  mere  personal  consider- 
ation, in  regard  to  the  risk,  in  marine  insurance  than  in  fire, 
and  that  practically,  if  not  theoretically,  the  insurance  here  is 
rather  of  the  thing  than  of  the  particular  owner ;  while  in  fire 
insurance,  on  the  contrary,  it  is  rather  of  the  owner  than  of 
the  thing,  the  character  of  the  owner  as  a  man  of  prudence, 
integrity,  and  watchfulness  entering  much  more  largely  as  an 
element  into  the  estimate  of  the  risk.  Commercial  conveni- 
ence also  doubtless  has  much  to  do  with  the  distinction.^  But 
whatever  may  be  the  grounds  of  the  distinction,  it  is  certain 
that  it  exists  ;  and  while  marine  policies  have  always  been  held 
assignable  without  the  consent  of  the  insurers,  the  contrary  has 
always  been  and  still  is  the  law  with  reference  to  fire  policies.^ 

1  Crozier  v.  Phoenix  Ins.  Co.,  2  Hannay  (N.  B),  200,  Wildes,  J.    See  also  post, 
§380. 

2  ^tna   Fire  Ins.  Co.  v.  Tyler,  16  Wend.  (N.  Y.)  385;  Columbian  Ins.  Ca 

835 


§  378]  insueance:  fire,  life,  accident,  etc.      [ch.  xix. 

§  378.  Different  Modes  of  Assignment,  and  their  Effects.  — 
Though,  strictly  speaking,  no  assignment  of  the  policy  can  bo 
made,  yet  there  are  certain  transfers  of  it  which  are  often 
made,  which  have  a  validity  recognized  by  the  courts,  and 
which,  according  as  they  are  effected  by  mere  delivery  or  in 
writing,  and  with  or  without  the  transfer  of  the  property 
upon  which  they  are  issued,  and  with  or  without  the  consent 
of  the  insurers  to  the  transfer  of  the  policy  and  the  propertv, 
are  attended  by  different  consequences.  In  the  case  of  Fogg 
V.  Middlesex  Mutual  Fire  Insurance  Company  some  exceed- 
ingly valuable  observations  were  made  upon  the  general  sub- 
ject, as  well  as  upon  the  different  modes  of  assignment  and 
their  effect,  which  we  give  in  the  language  of  the  court,  per 
Shaw,  C.  J. :  — 

"  As  a  policy  of  insurance  is  not  a  negotiable  instrument, 
it  cannot  be  legally  transferred  so  as  to  enable  the  assignee 
to  maintain  a  suit  in  his  own  name  without  the  consent  of  the 
other  party.  But  in  general,  at  the  common  law,  where  one 
party  assigns  all  his  right  and  interest  in  the  contract,  and  the 
assignee  gives  notice  to  the  other  party  to  the  contract,  and 
he  agrees  to  it,  this  constitutes  a  new  contract  between  one 
of  the  original  parties  and  the  assignee  of  the  other,  the  terms 
of  which  are  regulated  and  fixed  by  those  of  the  original  con- 
tract. This  rule  applies  to  policies  as  well  as  other  con- 
tracts, and  it  is  often  convenient  and  desirable  to  apply  it ; 
and  there  are  two  cases  where  this  application  frequently 
hapj)cns. 

"  The  first  is,  when  the  insured  property  is  alienated  or 
sold  by  the  assured.  After  such  sale,  if  nothing  more  is 
done,  no  surrender  or  change  of  the  policy,  and  the  goods 
should  be  burnt,  nobody  could  recover  on  the  policy  :  not  the 
original  assured,  for  he  has  sustained  no  loss,  the  property  was 
not  his,  and  the  loss  of  it  was  not  his  loss  ;  not  the  purchaser, 
because  he  has  no  contract  with  the  company.     And  although 

V.  Lawrence,  2  Pet.  (U.  S.)  25 ;  Lynch  v.  Dalzell,  4  Brown,  P.  C.  431  ;  Simeral 
V.  Pubuque  Mut  Fire  Ins.  Co.,  18  Iowa,  319;  London  Ins.  Co.  v.  Montefiore,  9 
L  T.  N.  s.  688.  "  I  see  no  use  or  convenience  in  preserving  the  shadow  when 
the  substance  is  gone."    Buller,  J.,  Master  v.  Miller,  4  T.  R.  340. 

836 


CH.  XIX.]  ASSIGNMENT    OF    THE    POLICY.  [§  378 

in  popular  language  the  goods  are  said  to  be  insured  against 
loss  by  fire,  yet,  in  legal  effect,  the  original  assured  obtains  a 
guaranty  by  the  contract  that  he  shall  sustain  no  damage  by 
their  destruction  by  fire.  But  in  case  of  such  sale  or  alien- 
ation of  the  insured  property,  tlie  original  assured  having  no 
longer  any  interests  in  the  policy  except  to  claim  a  return 
of  premium,  if  he  will  assign  his  policy  or  his  contract  of 
insurance  to  such  i)urchaser,  and  the  company  assent  to  it, 
here  is  a  new  and  original  contract,  embracing  all  the  ele- 
ments of  a  contract  for  insurance  between  the  assignee  and 
the  insurers.  The  property  having  become  the  purchaser's, 
is  at  his  risk,  and,  if  burnt,  it  is  his  loss,  and  he  has  a  good 
original  contract,  upon  a  valid  consideration,  to  guarantee 
him  against  such  loss.  Accordingly,  provision  is  made  in  the 
charter  and  by-laws,  and  also  by  the  terms  of  the  policy,  for 
an  assignment  of  the  contract.  The  company  returns  no  part 
of  the  premium,  but  the  assignee  has  the  benefit  of  it  upon 
such  terms  as  he  and  his  assignor  may  determine  ;  the  assign- 
ment is  indorsed  on  the  policy  and  presented  to  the  president 
of  the  company,  who  ordinarily  is  authorized  to  give  the  assent 
of  the  company  to  the  assignment ;  the  old  deposit  note  is  sur- 
rendered, and  a  new  deposit  note  given  by  the  assignee.^ 

"  In  the  regulations  of  this  company  in  a  circular  of  in- 
struction to  agents,  a  form  is  given  for  such  transfer,  notify- 
ing the  sale  of  the  property,  naming  the  purchaser,  and 
assigning  to  such  purchaser,  his  executors,  &c.,  the  policy  of 
insurance,  and,  in  case  of  loss,  directing  the  amount  to  be 
paid  to  the  said  purchaser,  his  heirs,  &c.  Upon  such  assign- 
ment perfected  there  is  an  entire  change  in  the  contract,  in 
the  party  contracted  with,  in  the  insurable  interest  in  the 
property  at  risk ;  and  it  becomes  an  insurance  on  the  prop- 
erty of  the  assignee,  and  ceases  to  be  a  contract  of  insurance 
of  the  property  of  the  assignor.^ 

1  And  this  new  deposit  note  is  the  sufficient  new  consideration  for  the  new 
promise  to  the  assignee.  Deraill  v.  Hartford  Ins.  Co.,  4  Allen  (N.  B.),  341.  A 
mortgage  and  recorded  assignment  of  the  policy  as  security  leaves  the  mort- 
gagor, as  the  insured,  liable  to  assessments.  Cumraings  i".  Hildreth,  117  Mass. 
309. 

^  10  Cash   (Mass.)  337;  Mechanics',  &c.  Soc.  v.  Gore  Dist.  Ins.  Co.,  3  Ont 

837 


§  378]  INSUBANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.        [CH.  XIX. 

"  But  there  is  another  species  of  assignment,  or  transfer,  it 
may  be  called,  in  the  nature  of  an  assignment  of  a  chose  in 
action.  It  is  this :  '  In  case  of  loss,  pay  the  amount  to  A.  B.' 
It  is  a  contingent  order  or  assignment  of  the  money,  should 
the  event  happen  upon  which  money  will  become  due  on  the 
contract.  If  the  insurer  assents  to  it,  and  the  event  happens, 
such  assignee  may  maintain  an  action  in  his  own  name,  be- 
cause, upon  notice  of  the  assignment,  the  insurer  has  agreed 
to  pay  the  assignee  instead  of  the  assignor.^     But  the  original 

App.  151.  See  also  Foster  v.  Eq.  Mut.  Ins.  Co.,  2  Gray  (Mass  ),  216.  So  if  the 
policy  is  payable  to  the  mortgagee,  and  by  its  terms  he  assumes  to  pay  the  pre- 
miums or  assessments  if  the  mortgagor  does  not.  Francis  v.  Butler  Fire  Ins. 
Co.,  7  R.  I.  159.  [A  policy  to  a  mortgagee  conditioned  to  be  void  for  any 
change  in  the  title  or  possession,  was  assigned  to  one  to  whom  tiie  assured  with- 
out the  company's  knowledge  had  conveyed  the  property,  the  mortgage  being 
thereby  satisfied.  The  company's  agent,  iiaving  power  to  make  agreements 
and  issue  policies,  agreed  witli  the  purciiaser  and  assignee  that  the  assigned  pol- 
icy should  have  the  effect  of  a  new  one,  and  the  company  was  held  bound.  Am- 
azon Ins.  Co.  V.  Wall,  31  Ohio  St.  628  at  633.  A  consent  to  an  assignment  by  an 
oflScer  authorized  to  make  it  is  not  a  waiver  of  a  condition,  but  an  agreement. 
Imperial  Fire  Ins.  Co.  v.  Dunham,  117  Pa.  St.  460,  472.  But  where  the  in- 
sured, a  mortgagor,  alienated  the  property,  thereby  avoiding  the  policy,  and 
afterward  the  mortgagees  entered  for  condition  broken,  and  the  company  made 
an  indorsement,  to  the  effect  that  "  this  policy  shall  attach  and  cover  tlieir  [the 
mortgagees']  interest  as  such,"  it  was  held  that  the  mortgagees  could  not  sue 
the  company,  for  if  the  interest  referred  to  in  the  indorsement  was  the  same  or 
a  part  of  the  same  interest  previously  insured  to  the  mortgagor,  and  now  sup- 
posed to  be  transferred  from  the  mortgagor  to  the  mortgagees,  the  plaintiff 's 
case  must  fail,  because  the  breach  of  condition  and  entry  had  no  such  effect, 
and  because  the  mortgagor  had  no  interest  at  all  at  the  time  of  entry,  and  if 
on  the  other  hand  the  indorsement  is  to  be  taken  as  promising  to  insure  the 
mortgagees'  interest  generally,  which  Iiad  been  outstanding  but  uninsured  up  to 
that  date,  it  equally  fails  to  give  any  riglits  to  the  plaintiffs  because  without 
consideration.  Davis  v.  German- American  Ins.  Co.,  135  Mass.  251,  254-255.  A 
voluntary  assignment  of  a  policy  after  the  lease  of  the  insured  property  has 
expired  does  not  oblige  the  company  to  pay  the  proceeds  to  the  assignees.  One 
must  have  an  interest  or  property  at  the  time  of  insuring  and  at  the  time  the 
fire  happens.     Sadlers'  Ins.  Co.  v.  Babcock,  2  Atk.  554  at  555.] 

1  Mowry  v.  Todd,  12  Mass.  281.  [An  attempted  assignment,  though  not  prop- 
erly made  to  take  effect  as  an  assignment,  may  nevertheless  take  effect  as  a  di- 
rection to  pay  the  money  to  the  assignee  as  a  beneficiary,  where  the  assignment 
was  simultaneous  with  the  issuing  of  the  policy,  and  it  is  apparent  that  the  origi- 
nal intention  was  to  make  the  policy  so  payable.  Scott  v.  Dickson,  108  Pa.  St.  6. 
An  assignment  of  a  life  policy  delivered  to  the  company  and  accepted  and  filed 
by  it  with  the  understanding  that  the  money  was  to  be  paid  by  it  to  the  donee 
named  in  the  assignment,  is  valid.     It  is  not  necessary  that  delivery  be  made 

838 


CH.  XIX.]  ASSIGNMENT   OF   THE   POLICY.  [§  378  A 

contract  remains;  the  assignment  and  assent  to  it  form  a  new 
and  derivative  contract  out  of  the  original.  But  the  contract 
remains  as  a  contract  of  guaranty  to  the  original  assured ;  he 
must  have  an  insurable  interest  in  the  property,  and  the  prop- 
erty must  be  his  at  the  time  of  the  loss.  The  assignee  has  no 
insurable  interest  prima  facie  in  the  property  burnt,  and  does 
not  recover  as  the  party  insured,  but  as  the  assignee  of  a  party 
who  has  an  insurable  interest,  and  a  right  to  recover,  which 
right  he  has  transferred  to  the  assignee,  with  the  consent  of 
the  insurers."  ^ 

[378  A.  Violation  of  Conditions  by  Assignor.  —  By  a  Sale  of 
the  property  and  an  assignment  of  the  policy  with  the  com- 
pany's consent,  a  new  contract  arises  which  may  be  enforced 
without  regard  to  what  occurred  before  the  transfer  if  the 
assignee  is  innocent  of  fraud.^  A  past  breach  of  condition  by 
the  original  poHcy-holder  in  respect  to  incumbrances  cannot 
be  set  up,  even  though  the  breach  was  unknown  to  the  com- 
pany at  the  time  of  assent.^  If  the  insured  conveys  his  in- 
terest and  assigns  the  policy,  and  afterward  makes  repairs 
without  the  company's  consent  as  required,  his  act  does  not 
prejudice  the  assignee.*  In  South  Carolina,  where  N.  held 
goods  on  which  K.  had  a  general  lien,  and  to  protect  this  N. 
deposited  his  policy  in  the  hands  of  K.  with  the  consent  of 
the  company,  it  was  held  that  K.  had  by  the  transaction  an 
equitable  interest  in  the  policy  that  would  be  recognized  at 
law  in  a  suit  brought  in  the  name  of  N.,  and  that  the  company 
could  not  defeat  the  recovery  for  the  benefit  of  K.  by  showing 
that  N.  had  forfeited  his  right  of  recovery  by  acts  of  fraud. 
The  company  could  not  deprive  K.  of  the  security  acquired 

directly  to  the  donee.  It  is  enough  if  it  is  made  to  another  for  the  donee,  in 
sucli  manner  as  to  divest  the  possession  and  title  of  the  donor.  Hurlbut  v.  Hurl- 
but,  49  Hun,  189.] 

1  See  also  Wilson  v.  Hill,  3  Met.  (Mass.)  66;  Carpenter  v.  Prov.  Wash.  Ins. 
Co.,  16  Pet.  (U.  S.)  495;  Pratt  v.  New  York  Central  Ins.  Co,  64  Barb.  (N.  Y.) 
589:  Martin  v.  Franklin  Fire  Ins.  Co.,  9  Vroom  (N.  J.),  140;  Cummings  v. 
Clieshire  Ins.  Co.,  55  N.  H.  45. 

-  [Continental  Ins.  Co.  v.  Munns,  120  Ind.  30.] 

«  [Ellis  V.  Insurance  Co.,  .32  Fed.  Rep.  646   (Iowa),  1887  ;  Continental  Ins.  " 
Co.  V.  Munns,  19  Ins.  L.  J.  57  (Ind.),  September,  1889 ;  120  Ind.  30.] 

*  [Breckinridge  v.  America  Cent.  Ins.  Co.,  87  Mo.  62.] 

839 


§  378  AJ        INSURANCE  :    fire,   life,   accident,   etc.        [cH.  XIX. 

with  its  consent  except  for  fault  of  his  own.^  This  is  mani- 
festly wrong,  as  noted  by  Mr.  May  without  stating  the  facts. 
The  assignor  held  the  interest  assured,  and  was  therefore  the 
real  -assured  whose  acts  must  affect  the  policy.  The  assignee 
held  the  policy  as  security.  If  the  policy  was  good  his  secur- 
ity was  good;  if  the  policy  was  avoided  in  any  way  his  security 
was  gone.  The  company  did  not  guarantee  that  the  policy 
would  remain  valid.  But  an  assignee  of  a  policy  with  con- 
sent of  the  company  who  is  not  interested  in  the  property, 
does  not  become  the  insured,  and  remains  liable  to  be  defeated 
by  acts  of  the  assignor.^  And  it  has  been  held  that  even 
where  the  assignee  has  an  interest  in  the  pi'operty  the  com- 
pany does  not  always  give  up  its  right  to  have  the  conditions 
of  the  policy  fulfilled.  After  a  mortgagor  has  assigned  the 
policy  to  the  mortgagee  with  assent  of  the  company,  if  the 
mortgagor  sells  the  estate,  the  policy  may  be  avoided.^  The 
cases  holding  the  contrary  are  distinguished  by  the  court  on 
the  ground  that  they  contained  facts  amounting  to  a  new  con- 
sideration moving  from  the  assignee  to  the  company, —  such 
facts  as  that  the  assignee  gave  consideration  to  the  assured  and 
promised  to  pay  all  assessments,  and  that  the  property  should 
remain  subject  to  the  same  lien  as  before,  —  while  in  this  case 
and  in  6  Gray  the  assignee  gave  no  consideration,  and  was 
therefore  affected  by  all  subsequent  breaches  of  the  policy  by 
the  assignor.  And  the  company  can  make  any  defences 
against  an  assignee  with  consent  that  existed  against  the 
assignor  at  the  time  of  the  assignment.  The  assignee  takes 
no  new  contract  free  of  the  j^asf,  but  simply  steps  into  the 
shoos  of  the  assignor,  and  for  the  future  is  substituted  for 
him.*  If  in  violation  of  the  policy  an  incumbrance  is  put  on 
the  property,  and  afterward  the  policy  is  assigned  with  assent 
of  the  company  but  without  hnowledge  on  its  part  of  the 
incumbrance,  it  is  the  assignment  of  a  void  policy  and  the 
assignee  cannot  recover.^] 

1  [Charleston  Ins.,  &c.  Co.  v.  Neve,  2  McMul.  (S.  C.)  237,  248.] 

2  [Kanady  v.  Gore  Dist.  Mut.  Fire  Ins.  Co.,  44  U.  C.  R.  261.] 

3  [S wenson  v.  Sun  F.  Office,  68  Tex.  461;  Hale  i-.  Ins.Co.,  6  Gray,  169,  approved.] 
*  [Reed  v.  Windsor  County  Mut.  Fire  Ins.  Co.,  54  Vt.  413.] 

5  [Ellis  V.  State  Ins.  Co.,  G8  Iowa,  578.] 
840 


CH.  XIX.]  ASSIGNMENT   OF   THE    POLICY.  [§  379 

§  379.  What  is  and  what  is  not  an  Assignment  of  a  Policy. 
—  Having  recognized  that  certain  acts  may  amount  to  what 
has  come  to  be  treated  as  an  assignment  of  the  policy,  the 
courts  have  been  called  upon  to  consider  the  question  what 
constitutes  an  assignment  of  the  policy  within  the  meaning 
of  the  condition  which  prohibits  it  without  the  assent  of  the 
insurers,  and  under  such  condition  will  work  a  forfeiture. 
And  hereupon  the  cases  are  numerous.  Not  every  assign- 
ment which  gives  such  rights  as  a  court  of  law  or  equity 
would  feel  bound  to  recognize  and  protect  would  amount  to 
an  assignment  which  works  a  forfeiture.  The  rule  in  the  for- 
mer case  would  doubtless  be  one  of  liberality  in  favor  of  the 
assignee,  while  in  the  latter  it  would  be  one  of  strictness 
against  the  insurers.^  An  alienation  or  transfer  of  the  prop- 
erty is  not  of  itself  an  assignment  of  the  policy,  does  not 
carry  the  policy  with  it,  nor  is  it  necessary  to  the  validity  of 
an  assignment  of  the  policy.^  Nor  is  an  alienation  of  the 
property  after  the  loss  made  in  execution  of  a  contract  en- 
tered into  before  the  loss,  coupled  with  an  agreement  to 
assign  the  policy ,3  nor  a  mortgage  of  a  stock  of  goods  in- 
sured, coupled  with  an  agreement  to  hold  the  policy  for  the 
benefit  of  the  mortgagee,  an  assignment  of  the  policy  within 
the  meaning  of  a  condition  that  the  policy  is  to  be  void  if 
assigned  witliout  the  consent  of  the  insurers ;  ^  [nor  an  iyiten- 
tion  to  transfer  a'  policy,  however  strong,  if  the  proper  steps 
be  not  taken  to  accomplish  it  ;^]  nor  an  unexecuted  agreement 
to  assign,  whether  by  parol  ^  or  in  writing ; '  nor  is  a  pledge 

i  Lazarus  v.  Com.  Ins.  Co.,  5  Pick.  (Mass.)  76. 

2  Phillips  V.  Merrimack  Mut.  Fire  Ins.  Co.,  10  Cush.  (Mass.)  350;  Stout  v. 
City  Fire  Ins.  Co.,  12  Iowa,  371. 

3  Wheeling  Ins.  Co.  v.  Morrison,  11  Leigh  (Va.),  354;  Pierce  v.  Nashua  Mut. 
Fire  Ins.  Co.,  50  N.  H.  297. 

*  Prows  I'.  Ohio  Valley  Ins.  Co.,  2  Cincinnati  Superior  Court  Reporter,  14 ; 
[Sovereign  Fire  Ins.  Co.  v.  Peters,  12  Can.  Supr.  Ct.  33] 

&  [Bound  Brook  Mutual  Fire  Insurance  Ass.  v.  Nelson,  41  N.  J.  Eq.  485, 
488.] 

«  Cromwell  v.  Brooklyn  Fire  Ins.  Co.,  39  Barb.  (N.  Y.)  227. 

■^  Smith  V.  Monmouth  Mut.  Fire  Ins.  Co.,  50  Me.  96.  If  the  policy  be  in- 
dorsed, it  seems  that  the  assignment  should  also  be.  Crozier  v.  Phoenix  Ins. 
Co.,  2  Hannay  (N.  B.),  200. 

841 


§  379]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.        [CH.  XIX. 

of  the  policy  as  collateral  security ;  ^  nor  is  a  general  assign- 
ment of  all  personal  property  for  the  benefit  of  creditors  ;2 
nor  is  a  designation  in  the  policy  of  a  certain  person  not  in- 
terested in  the  property  —  a  stranger  —  as  payee  in  case  of 
loss,  an  assignment  within  the  meaning  of  such  a  condition  ;  ^ 
nor  is  an  indorsement  on  the  back  of  the  policy  to  that  effect 
assented  to  by  the  insurers.*  And  where  the  policy  is  merely 
made  payable  in  case  of  loss  to  the  mortgagee,  this  is  no 
assignment  of  the  policy.  Nor  does  it  convert  the  policy  into 
a  contract  of  insurance  with  the  mortgagee  ;  and  he  is  liable 
to  all  the  defences  against  the  policy  to  which  the  applicant 
would  be.  He  is  subject  to  all  the  conditions  of  the  policy, 
and  takes  the  risks  growing  out  of  the  acts  or  conduct  of  the 

1  Ellis  V.  Kreutzinger,  27  Mo.  311 ;  [Mahr  v.  Bartlett,  53  Hun,  388 ;  True  v. 
Manhattan  Fire  Ins.  Co.,  26  Fed.  Rep.  83  (Col.),  1885,  unless  the  policy  is 
specially  conditioned  against  such  assignment ;  Lynde  ;;.  Newark  Ins.  Co., 
139  Mass.  57.  A  policy  containing  the  clause  "  if  this  policy  shall  be  assigned 
before  a  loss  without  consent  of  the  company  indorsed  thereon"  it  shall  be 
void,  is  affected  only  by  an  absolute  transfer  of  the  whole  interest  in  the  policy, 
and  not  by  a  transfer  by  way  of  pledge  or  security  for  a  special  and  temporary 
purpose.  Griffey  v.  New  York  Central  Ins.  Co.,  30  Hun,  299  ;  100  N.  Y.  417.  A 
provision  in  the  policy  that  it  is  not  assignable  for  purposes  of  collateral  secu- 
rity, applies  only  to  assignments  of  the  policy,  and  not  to  cases  in  which  the 
property  insured  is  also  transferred  as  security.  Hoyt  v.  Hartford  Fire  Ins. 
Co.,  26  Hun,  416.  In  this  case  it  was  specially  provided  that  on  transfer  of  title 
to  the  property  with  consent,  the  policy  might  be  assigned.] 

2  People  V.  Beigler,  Hill  &  Denio  (N.  Y.),  133;  Lazarus  v.  Cora.  Ins.  Co.,  5 
Pick.  (Mass.)  76 ;  post,  §  386.  [But  contra.  An  assignment  by  a  debtor  of  all 
his  property  for  the  benefit  of  creditors  carries  a  policy  of  fire  insurance,  and 
if  it  is  conditioned  to  be  void  by  assignment  without  assent,  such  action  is  fatal 
to  it.     Dube  v.  Fire  Ins.  Co.,  64  N.  H.  527.] 

3  Frink  v.  Hampden  Ins.  Co.,  45  Barb.  (N.  Y.)  384;  Birdsey  v.  City  Fire  Ins. 
Co.,  26  Conn.  165.  [Tlie  indorsement  on  a  policy,  "Pay  under  the  witliin  policy 
to  A.B.  or  order,  "  signed  by  the  assured,  is  not  an  assignment  by  virtue  of  which 
any  new  party  to  the  insurance  is  added,  Minturn  v.  Manufacturers'  Ins.  Co.,  10 
Gray,  501  at  506  ;  but  only  an  order  to  pay  to  A.B.  the  amount  of  any  loss. 
When  the  assured  indorsed  on  the  policy  "  in  case  of  loss  pay  to  A.,"  to  whom 
he  was  indebted,  and  the  policy  was  left  with  A.  for  collection  with  the  under- 
standing that  he  should  deduct  the  assured's  debt,  the  transaction  was  held  not 
to  constitute  an  assignment  that  would  avoid  the  polic}',  but  only  the  creation 
of  an  agency  for  the  collection  of  the  policy  in  the  absence  of  the  assured,  the 
funds  to  be  applied  for  his  benefit.  Russ  v.  Waldo  Mut.Ins.  Co.,  52  Me.  187  at 
191.] 

*  Fogg  V.  Middlesex  Mut.  Fire  Ins.  Co.,  10  Cush.  (Mass.)  337. 

842 


CH.  XIX.]  ASSIGNMENT   OF   THE   POLICY.  [§  379 

insured,  even  though  by  the  terms  of  the  policy  loss  is  to  be 
paid  to  the  assignee,  as  his  interest  may  appear;  and  the 
assent  of  the  insurers  does  not  operate  to  produce  a  new  con- 
tract between  them  and  the  assignee,  but  merely  to  save  the 
policy  from  forfeiture.  The  insurers  are  only  bound  to  pay 
to  the  mortgagee  what  may  be  found  due  the  insured  in  case 
of  loss ;  and  if  he  have  a  policy  originally  invalid,  or  by  his 
conduct,  by  alienation  or  otherwise,  has  forfeited  the  right 
to  recover,  there  is  nothing  to  be  paid  the  mortgagee,  even 
though  the  assignment  be  consented  to  by  the  insurers.^  In 
such  cases,  whether  the  transfer  be  to  a  stranger  or  to  the 
mortgagee,  the  assignment  is  a  mere  equitable  transfer  of  the 
right  to  receive  any  sum  that  may  be  due  in  the  event  of  a 
loss.  But  while  such  mortgagee  is  not  an  assignee,  the 
promise  to  pay  to  him  in  case  of  loss,  though  not  an  assign- 
ment to  work  a  forfeiture,  is  so  far  an  assignment,  and  gives 
to  the  mortgagee  such  rights  under  the  policy,  that,  in  the 
absence  of  any  special  provision  in  the  policy  with  reference 
to  arbitration  in  case  of  loss,  the  mortgagor  and  insurer  can- 
not conclude  the  mortgagee  by  a  reference  of  the  claim  for 
loss  to  arbitration  .2  And  if  the  mortgagee  has  agreed  to  pay 
assessments   if   the  mortgagor   does  not,  the   failure  of  the 

1  Loring  i'.  Manufacturers'  Ins.  Co.,  8  Gray  (Mass.),  28  ;  Home  Mut.  Ins.  Co. 
V.  Hauslein,  Sup.  Ct.  (111.),  1  Ins.  L.  J.  818;  Grosvenor  v.  Atlantic  Fire  Ins.  Co., 
17  N.  Y.  391  ;  overruling  on  tliis  point  s.  c.  1  Bosw.  (N.  Y.  Superior  Ct.)  469, 
and  5  Duer  (N.  Y.  Superior  Ct),  517  ;  Traders'  Ins.  Co.  v.  Kobert,  9  Wend. 
(N.  Y.)  404;  Tillou  v.  Kingston  Mut.  Fire  Ins.  Co.,  1  Seld.  (N.  Y.)  405,  s.  c.  7 
Barb.  (N.  Y.)  570,  and  Viall  v.  Genesee,  &c.  Ins.  Co.,  19  Barb.  (N.  Y.)  440; 
McCluskey  v.  Providence  Ins.  Co.,  126  Mass.  306;  Baldwin  v.  Phoenix  Ins.  Co. 
(N.  H.),  10  Ins.  L.J.  84:  Fitchburg  Savings  Bank  ?;.  Amazon  Ins.  Co.,  125 
Mass.  431;  Bates  v.  Equitable  Ins.  Co.,  10  Wall.  (U.  S.)  33;  Brunswick  Sav. 
Inst.  V.  Commercial,  &c.  Ins.  Co.,  68  Me.  313  ;  Franklin  Sav.  Inst.  v.  Central 
Ins.  Co.,  119  Mass.  240 ;  post,  §  447  ;  Continental  Ins.  Co.  v.  Hulman,  92  111.  145  ; 
Martin  v.  Franklin  Fire  Ins.  Co.,  9  Vroom  (N.  J.),  140;  Griswold  v.  Am.  Cen- 
tral Ins.  Co.,  1  Mo.  App.  97 ;  s.  c.  affirmed,  9  Ins.  L.  J.  254  ;  Illinois  Ins.  Co.  v. 
Fix,  53  111.  151;  Humphrey  v.  Hartford  Fire  Ins.  Co.,  U.  S.  Dist.  Ct.,  North 
Dist.  N.  Y.,  Blatchford,  J.,  9  Reptr.  106 ;  Livingstone  v.  Western  Ins.  Co.,  16 
Gr.  Ch.  9.  reversing  s.  c.  14  id.  4-37 ;  post,  §  382;  Sias  v.  Roger  Williams  Ins.  Co., 
C.  Ct.  (N.  H.),  9  Ins.  L.J.  154. 

2  Brown  v.  Hartford  Ins.  Co.,  5  R.  I.  394  ;  Brown  i\  Roger  Williams  Ins.  Co., 
id.;  otherwise,  perhaps,  if  the  assignee  have  no  interest.  Miall  v.  Western  Ins. 
Co.,  19  U.  C.  (C.  P.)  270. 

843 


§  379]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.        [CH.  XIX. 

mortgagor  to  pay  will  not  work  a  forfeiture.^  So  where  a 
policy  with  the  insurer's  consent  has  been  assigned  to  a 
mortgagee.^  Though  there  are  respectable  authorities  that 
the  assignee  under  such  circumstances  is  no  longer  respon- 
sible for  the  defaults  of  the  assignor,  and  has  greater  rights 
than  he,^yet  these  cases  rest  upon  the  authority  of  The 
Traders'  Insurance  Company  v.  Robert,  and  the  other  New 
York  cases  following  that,  all  of  which,  as  we  have  just  seen, 
have  been  overruled.*  And  it  has  even  been  held  that  this 
would  be  the  case  where  the  insurers  were  notified  of  the  in- 
tention of  the  insured  to  assign  at  the  time  when  the  policy 
was  issued,  to  which  they  assented, "but  no  assignment  was 
actually  made  till  after  a  loss.^  But  this  case  stands  alone, 
and  rests  upon  the  same  overruled  New  York  cases,  and  can- 
not be  law.  Nor  is  a  transfer  of  an  undivided  interest  in  the 
property  insured  to  a  third  party,  as  by  taking  in  a  partner, 
coupled  with  the  written  consent  of  the  insurers  that  the 
policy  shall  remain  good  to  the  insured  and  to  the  alienee, 
and  an  entry  by  the  insurers  in  their  books  recognizing  such 

1  Francis  v.  Butler  Mut.  Fire  Ins.  Co.,  7  R.  I.  159.     And  see  ante,  §  276. 

2  State  Mut.  Fire  Ins.  Co.  v.  Roberts,  31  Pa.  St.  438;  Edes  v.  Hamilton  Mut. 
Ins.  Co.,  3  Allen  (Mass.),  302:  Buffalo  Steam-Engine  Works  v.  Sun  Mut.  Ins. 
Co.,  17  N.  Y.  401 ;  Lawrence  v.  Holyoke  Ins.  Co.,  11  Allen  (Mass.),  387  ;  Pupke 
V.  Resolute  Fire  Ins.  Co.,  17  Wis.  378;  Hoxsie  v.  Prov.  Mut.  Ins.  Co.,  6  R.  I. 
517.     And  see  post,  §  382. 

3  Pollard  V.  Somerset  Mut.  Fire  Ins.  Co.,  42  Me.  221 ;  New  England  Fire  & 
Mar.  Ins.  Co.  v.  Wetmore,  32  111.  221  ;  City  Fire  Ins.  Co.  of  Hartford  v.  Mark, 
4-5  id.  482;  Brush  r.  ^tna  Ins.  Co.,  1  Oldright  (Nova  Scotia),  458  ;  Black  v. 
National  Ins.  Co.,  24  L.  C.  Jur.  65  (Q.  B.),  where  the  point  is  very  elaborately 
considered,  and  the  doctrine,  opposed  to  the  view  stated  in  the  text,  is  main- 
tained, that  by  making  the  loss  payable  to  a  third  person,  that  person  becomes 
the  party  insured  to  the  amount  of  his  interest.  Such,  indeed,  seems  to  be  the 
French  law.     The  case  is  an  instructive  one.     See  also  ante,  §  294. 

4  See  also  State  Mut.  Fire  Ins.  Co.  v.  Roberts,  31  Pa.  St.  438.  The  case  of 
Traders'  Ins.  Co.  v.  Robert  was  twice  afterwards  before  the  court,  9  Wend.  474, 
and  17  Wend.  631,  involving  the  question  of  the  right  of  the  insured,  the  as- 
signee and  mortgagee  having  been  paid  by  foreclosure,  to  proceed  against  the 
insurers,  and  recover  liis  loss,  which  lie  was  finally  permitted  to  do.  All  the 
cases  are  bad  law,  though  having  once  held  tliat  the  mortgagee  might  recover, 
it  was  right  that,  he  having  been  paid  by  the  mortgagor,  the  latter  should  be 
allowed  to  recover  of  the  company.  Neither,  however,  should  have  been  al- 
lowed to  recover.     See  6  Bush  (Ky.),  268. 

5  Charleston  Ins.  &  Trust  Co.  v.  Neve,  2  McMuUan  (S.  C),  237. 

844 


CH.  XIX.]  ASSIGNMENT   OF   THE   POLICY.  [§  380 

alienee  as  a  member  of  the  company,  an  assignment  of  the 
policy  within  the  meaning  of  a  provision  that  the  alienee  of 
the  property  insured,  having  the  policy  assigned  and  ratified 
to  him  by  the  company,  should  be  entitled  to  all  the  rights 
and  privileges  of  the  original  insured,  so  as  to  enable  the 
alienee  to  sue  in  his  own  name.^ 

§  380.  Assignment  in  -whole  or  in  part.  — -  An  assignment  of 
a  policy  as  collateral  security  avoids  a  policy  which  stipulates 
against  an  assignment  in  whole,  or  of  any  interest  in  it,  under 
penalty  of  forfeiture.  The  suggestion  sometimes  made  that 
as  such  an  assignment  cannot  injure  the  insurers,  it  cannot  be 
supposed  that  the  insurers  meant  to  prohibit  under  such  a  pro- 
vision, is  not  sound.  It  may  injure  him  in  two  ways.  In  the 
first  place,  incumbrances  are  objectionable,  and  are  usually 
inquired  after  ;  for,  as  they  increase,  the  interest  of  the  owner 
of  the  property  in  its  preservation  diminishes.  True,  if  hon- 
est, he  is  interested  in  the  payment  of  his  debts.  But  this  is 
a  different  interest  from  that  which  a  man  feels  in  the  preser- 
vation of  the  property,  —  the  interest  in  which  insurers  are 
more  particularly  concerned,  —  which  he  can  continue  to 
enjoy,  and  which  belongs  to  him  and  not  to  his  creditors. 
Most  men  will  look  more  vigilantly  to  the  preservation  of 
property  which,  if  saved,  they  can  enjoy,  than  to  the  pres- 
ervation of  that  which,  if  destroyed,  will  merely  reduce  their 
ability  to  pay  their  debts.  If  the  privilege  of  transferring 
the  policy  as  collateral  security  for  goods  purchased,  or  money 
borrowed,  tends  to  the  increase  of  incumbrances,  the  com- 
pany has  a  motive  to  prohibit  it.  That  it  does  so  tend  is  mat- 
ter of  common  experience.  A  mortgage  covering  the  value 
of  the  property,  accompanied  by  a  transfer  of  the  policy,  is 
worth  just  as  much  more  in  consequence  of  such  transfer 
as  the  value  of  the  policy  itself.  But  in  another  and  more  im- 
portant manner  does  such  a  transfer  injure  the  insurer.  It 
may  create  an  interest  directly  hostile  to  him.  If  the  assignee 
be  a  second  or  third  incumbrancer,  his  interest  may  be  for  the 
destruction  of  the  property.  The  owner  cannot  be  insured  to 
the  entire  value,  nor  a  stranger  to  it  to  any  amount  whatever  ; 

1  See  ante,  §§  279-280. 

845 


§  381]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.        [CH.  XIX. 

since  in  neither  case  would  there  be  any  interest  to  preserve, 
and,  in  the  last  case,  no  interest  but  to  destroy.  But  this 
interest  of  a  stranger  to  destroy  may  be  the  same  as  that  of 
such  incumbrancer.  If  the  buildings  are  preserved,  the  lien 
before  his  will  take  their  value  ;  if  destroyed,  he  will  get  it ; 
and  the  circumstances  may  be  such  that  he  will  get  nothing 
else,  as  when  the  preceding  liens  cover  the  entire  value  of  the 
property.  But  suppose  the  property  be  on  account  of  indebt- 
edness without  lien.  Then  the  only  way  in  which  it  can  be 
of  any  value  is  through  the  destruction  of  the  property.^ 

§  381.  Assignment;  Transfer  of  Interest.  —  No  transfer  of 
interest  will  work  a  forfeiture  under  the  clause  contained  in  a 
policy  forbidding  a  transfer  of  "  the  interest  of  the  assured  in 
the  policy,  or  in  the  property  insured  "  thereby,  without  the 
written  consent  of  the  company,  which  does  not  so  deprive 
the  assignor  of  all  insurable  interest  as  to  prevent  his  recov- 
ery on  the  policy  for  his  benefit  if  that  clause  were  not  con- 
tained in  it.  To  take  away  the  cause  of  action  in  one  case, 
and  to  render  void  the  policy  in  the  other,  equally  require  a 
transfer  or  termination  of  the  entire  insurable  interest.  So 
long  as  the  insured  retains  such  an  interest,  that  he  may 
suffer  loss,  the  policy  protects  that  interest.^  Where  the 
transfer  of  the  entire  interest  of  the  insured  in  the  policy,  or 
in  the  property  insured,  is  forbidden,  under  penalty  of  for- 
feiture, without  the  consent  of  the  company,  if  there  be  a  sale 
of  the  property  insured,  but  without  assignment  of  the  policy 
to  the  purchaser,  in  that  case  the  vitality,  or  rather  activity, 
of  the  policy  as  the  means  of  securing  an  indemnity  becomes 
suspended  ;  not  from  any  vice  in  the  policy,  but  for  want  of 
any  subject-matter  to  which  it  may  attach.  If  a  fire  occurs 
during  the  period  of  suspension,  no  recovery  can  be  had  under 
the  policy ;  not  because  it  has  become  void,  but  because  at  the 
time  of  the  fire  the  insured  has  no  property  covered  by  it, 

1  Ferree  v.  Oxford  Fire  Ins.  Co.,  8  Pliila.  Eep.  512. 

2  Shearman  v.  Niagara  Fire  Ins.  Co.,  2  Sweeny  (N.  Y.  Superior  Ct.),  470,  474; 
Fernandez!.'.  Great  West. Ins.  Co.,  3  Rob.  (N.  Y.  Superior  Ct.)  458  ;  Van  Deuzen 
V.  Charter  Oak  Ins.  Co.,  1  id.  55;  Phelps  v.  Gebhard  Fire  Ins.  Co.,  9  Bosw.  (N.Y. 
Superior  Ct.)  405. 

846 


CH.  XIX.]  ASSIGNMENT   OP   THE   POLICY.  [§  381  a 

and  the  purchaser  has  no  policy  to  cover  his  interest.  The 
moment,  however,  the  interests  become  united  by  the  union 
of  the  ownership  of  the  property  and  the  interest  in  the  pol- 
icy in  the  same  person,  the  policy  reattaches  to  tlic  goods, 
and  becomes  valid  and  effectual  to  protect  the  property  to 
which  it  so  reattaches.^  And  where  the  assignment  of  the 
policy,  with  the  consent  of  the  insurers,  is  absolute  to  one 
who  has  become  the  entire  owner  of  the  subject  of  insurance, 
it  becomes  a  new  contract  of  insurance  between  the  under- 
writers and  the  assignee.  If  the  assignment,  taken  in  con- 
nection with  the  policy,  plainly  transfers  the  assured's  whole 
interest,  the  underwriter's  consent  to  it  is  evidently  equiva- 
lent to  tlie  agreement  to  become  directly  answerable  to  the 
assignee.  In  such  cases  tlie  proceedings  to  enforce  payment 
may  be  in  the  assignee's  name ;  and  he  becomes  to  all  intents 
and  purposes  the  substituted  party  to  the  contract.''^ 

§  381  a.  Assignment  ;  "Interest  of  the  Assured  in  the  Pol- 
icy." —  In  a  case  wliere  it  is  provided  that  the  "  interest  of  the 
assured  in  the  policy  "  should  not  be  assignable,  without  con- 
sent, and  in  case  of  the  transfer  or  termination  of  the  interest 
of  the  insured  without  consent  the  policy  should  be  void,  it  was 
held  that  the  latter  interest  spoken  of  is  the  same  as  the  first, 
and  that  an  assignment  of  the  policy  was  an  assignment  of  that 
interest,  was  itself  null  and  void,  and  avoided  tlie  policy  also.^ 
But  about  the  same  time,  and  doubtless  without  having  seen 
the  case  from  New  York,  Mr.  Justice  Story,  in  giving  the 
opinion  of  the  court  in  Carpenter  v.  Providence  Washington 
Insurance  Company,*  said  that  the  interest  last  spoken  of  was 

1  Hitchcock  V.  North  Western  Ins.  Co.,  26  N.  Y.  68;  anie,  §  101. 

2  Shearman  v.  Niagara,  &c.,  supra.  Tlie  court  rely  upon  Hooper  v.  Hudson 
River  Fire  Ins.  Co.,  17  N.  Y.  424 ;  Wolfe  v.  Security  Fire  Ins.  Co.,  39  N.  Y.  49, 
51,  both  of  which  were  cases  of  insurance  upon  stocks  of  goods  kept  for  sale, 
and  constantly  undergoing  a  change.  But  the  court  thought  the  same  rule 
ought  to  apply  to  the  insurance  of  a  house.  City  Fire  Ins.  Co.  v.  Mark,  45  111. 
482,  was  another  similar  case,  which  is  certainly  shaken  by  Illinois  Ins.  Co.  v. 
Fix,  5.3  id.  151. 

3  Smith  V.  Saratoga  County  Mut.  Fire  Ins.  Co.,  1  Hill,  497;  s.  c.  affirmed, 
3  Hill  (N.  Y.),  508. 

*  ]6  Pet.  495.  This  latter  opinion  is  clearly  the  better  law.  "  Transfer  and 
terminate  "  is  language  appropriate  to  a  change  in  the  status  of  property.     At 

VOL.  II.  — 10  847 


§  382]  INSUEANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.        [CH.  XIX. 

"  manifestly  the  interest  of  the  owner  in  the  premises  insured, 
and  not  merely  the  interest  in  the  policy." 

§  382.  Assignment  by  Consent  ;  Assignment  with  Assent ; 
Legal  Effect.  —  The  purpose  for  which  an  assent  to  the  as- 
signment is  required  is,  as  we  hare  seen,^  that  the  insurers 
may  have  an  opportunity  to  know  who  is  to  become  inter- 
ested in  the  policy,  and  so  more  or  less  in  the  destruction  or 
preservation  of  the  property  insured, —  the  character  of  the 
person  so  interested  being  oftentimes  an  important  element 
in  the  estimation  of  the  risk.  It  is  no  part  of  its  purpose  to 
enlarge  the  engagements  of  the  insurers,  nor  to  waive  the 
conditions  on  the  performance  of  which  their  liability  depends. 
It  is  not  to  give  new  privileges  to  the  insured,  which  with- 
out it  he  would  not  have,  but  it  is  solely  for  their  protection. 
The  assignment  docs  not  change  the  contract.  It  simply 
converts  one  of  the  parties  into  a  trustee  for  a  third  person, 
and  every  condition  upon  which  the  liability  to  pay  is  made 
to  depend  remains  as  before.  Were  it  not  so  it  would  not  be 
an  assignment,  but  a  new  contract.^  The  legal  effect  of  an 
assignment  to  a  stranger  with  the  consent  of  the  insurers, 
by  a  mortgage,  to  whom  the  policy,  issued  upon  the  prop- 
erty of  the  mortgagor,  is  made  payable  in  case  of  loss  of  all 
his  interest  in  the  policy,  is  not  to  assign  the  policy,  but 
merely  to  hold  the  insurers  to  the  payment  to  the  assignee  in 

all  events,  the  doubt  should  have  saved  the  plaintiff  in  the  New  York  case. 
Ante,  §  143.  In  Home  Insurance  Company  v.  Lindscy,  26  Oliio  St.  348,  where 
the  policy  provided  that  "  if  any  change  take  place  in  the  title,"  ..."  or  in 
case  any  incumbrance  shall  fall "  on  the  property  insured  ;  ..."  or  if  this  pol- 
icy shall  be  assigned  .  .  .  without  the  consent  "of  the  company  no  recovery 
could  be  had,  and  it  further  provided  that  upon  certain  conditions  consent  to 
the  assignment  would  be  given,  it  was  held  that  this  consent  to  the  assignment, 
although  the  conditions  upon  which  it  was  to  be  consented  to  were  complied 
with,  could  only  be  required  where  consent  had  been  given  to  the  change  of 
title.  But  the  punctuation,  given  correctly  above,  would  seem  to  leave  it  at 
least  doubtful  if  "consent"  in  the  third  clause  has  any  relation  to  "  change  of 
title  "  in  the  first. 

1  Ante  §§  377,  380. 

2  State  Mut.  Fire  Ins.  Co.  v.  Roberts,  31  Pa.  St.  4.38  ;  Buckley  r.  Garratt  etal, 
47  id.  204;  Chishom  v.  Prov.  Ins.  Co.,  20  U,  C.  (C.  P.)  U.  In  Canada  the  law 
upon  the  point  is  entirely  unsettled.  Black  v.  National  Ins.  Co.  (Q.  B.  Mon- 
treal), 3  Legal  News,  29. 

848 


CH.  XIX.]  ASSIGNMENT   OF  THE   POLICY.  [§  383 

case  of  loss,  whatever  the  person  originally  insured  by  the 
policy  may  be  entitled  to  receive.  It  is  only  a  contingent 
order  or  assignment  of  what  may  become  due  under  the  con- 
tract, and  not  an  absolute  transfer  by  virtue  of  which  the 
assignee  acquires  the  full  rights  of  an  assignee  of  a  chose  in 
action.  The  original  contract  with  the  mortgagor  still  sub- 
sists, and  it  is  his  interest  which  is  insured.  The  assignee 
must  claim  in  his  right,  and  not  in  his  own.  It  is  only  what 
the  mortgagor  may  have  a  right  to  receive  under  the  contract 
that  the  assignee  can  in  any  event  claim.  If,  therefore,  the 
mortgagee,  before  the  loss  happens,  violates  a  provision  of  the 
policy,  whereby  he  forfeits  the  right  to  recover,  his  assignee  is 
equally  barred  of  his  remedy .^ 

§  383.  Assignment  ;  "What  is  an  Assent;  Notice,  —  The  as- 
sent to  an  assignment  of  the  policy  by  the  secretary  of  the 
insurers  is  sufficient,  unless  prohibited  by  the  charter  or  by- 
laws. He  will  be  presumed  to  be  acting  within  the  scope  of 
his  authority  in  so  doing;  and  this  is  true,  although  by  the 
charter  policies  must  be  signed  by  the  president.^  So,  where 
the  assent  and  approval  of  the  directors  is  requisite  to  the 
validity  of  the  assignment  of  a  policy,  and  it  is  brought  to 
their  knowledge  that  the  secretary  has  assented  to  such  as- 
signment, by  an  entry  of  the  fact  in  the  company's  books  and 
an  indorsement  upon  the  policy,  this  will  be  a  sufficient  as- 
sent and  approval  on  the  part  of  the  directors,  and  a  formal 
vote  is  not  necessary .^  The  habit  of  the  president  or  secre- 
tary giving  such  assent,  known  to  the  directors,  and  not 
objected  to  by  them,  is  equivalent  to  an  express  vote.^  In- 
deed, that  any  particular  officer  of  the  company  has  been  in 
the  habit,  known  to  the  directors,  of  attending  to  any  par- 
ticular branch  of  the  business,  or  of  doing  any  particular  class 
or  kind  of  acts  in  the  management  of  the  business,  is  enough 
to  give  the  acts  validity,  as  done  with  the  assent  and  approval 

1  Hale  V.  Mechanics'  Mut.  Fire  Ins.  Co.,  6  Gray  (Mass.),  169 ;  ante,  §  379. 

2  New  England  Mar.  Ins.  Co.  v.  De  Wolf,  8  Pick.  (Mass.)  56;  Buchanan  v. 
Exchange  Fire  Ins.  Co.,  61  N.  Y.  26. 

3  Durar  v.  Hudson  County  Mut.  Ins.  Co.,  4  Zabr.  (N.  J.)  171. 
*  Phillips  V.  Merrimack  Mut.  Fire  Ins.  Co.,  10  Cush.  350. 

849 


§  384]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC,         [CH.  XIX. 

of  the  directors,  there  being  no  stipulation  or  rule  known  to 
the  party  who  sets  np  the  validity  of  the  act  that  such  assent 
must  be  in  writing ;  ^  and  an  agent  of  the  insurers  may  bind 
the  company  by  a  verbal  assurance  that  the  policy  will  re- 
main good  after  transfer  of  title  till  a  certificate  of  consent 
to  an  assignment  of  the  policy  can  be  obtained  from  the  com- 
pany, though  the  transfer  without  consent  in  writing  avoids 
the  policy.^  So,  if  the  secretary  informs  the  insured  that  he 
need  not  forward  his  policy  for  indorsement.^  And  consent 
to  an  assignment  to  a  vendee,  after  forfeiture  for  non-payment 
of  assessments  of  which  he  was  ignorant,  is  a  waiver  of  the 
forfeiture.* 

§  384.  Assent ;  Waiver.  —  A  designation  in  the  policy  of 
the  payee  has  been  held  to  be  the  equivalent  of  an  assent, 
required  to  be  by  indorsement  on  the  policy,  to  an  assign- 
ment so  as  to  prevent  a  forfeiture  on  account  of  a  subsequent 
assignment ;  ^  and  such  a  designation  written  across  the  face 
of  the  policy  is  the  equivalent  of  an  assignment,  or  rather 
renders  an  assignment  and  notice  unnecessary  in  order  to 
keep  alive  the  policy  after  forfeiture  by  alienation.*^  And 
insurance  of  partnership  property  is  an  assent  to  all  such 
changes  in  the  relation  of  the  individuals  of  the  firm  to  the 
property,  whether  by  death  or  dissolution,  as  by  law  follow 
such  events."  And  in  some  cases,  it  has  been  held  that  the 
issuing  a  policy  payable  to  a  third  person  is  tantamount  to  an 
assent  in  advance  to  the  assignment ;  ^  and  so,  also,  that  the 
indorsement  of  the  same  provision  has  the  same  effect.^ 
"Where  the  insured  held  an  intermediary  receipt,  and   gave 

1  Topping  7'.  Eickford,  4  Allen  (Mass.),  120. 

2  Illinois  Mut.  Fire  Ins.  Co.  v.  Stanton,  57  111.  354  ;  Parsons  v.  Standard  Ins. 
Co.,  8up.  Ct.  16  Can.  L.  J.  271.     See  also  ante,  §§  369,  370. 

3  StoUe  V.  Mtna.  Ins.  Co.,  10  W.  Va.  546. 

4  Hale  V.  Union  Mut.  Fire  Ins.  Co.,  32  N.  H.  295. 

5  National  Fire  Ins.  Co.  v.  Crane,  16  Md.  260. 
®  Keeler  v.  Niagara  Fire  Ins.  Co.,  16  Wis.  523. 

■?  Wilson  I'.  Genesee  County  Mut.  Ins.  Co.,  16  Barb.  (N.  Y.)  511. 

8  Brown  v.  Roger  Williams  Ins.  Co.,  5  R.  I.  394 ;  Bidwell  v.  St.  Louis  Float- 
ing Dock  Ins.  Co.,  40  Mo.  42. 

9  National  Fire  Ins.  Co.  v.  Crane,  16  Md.  260 ;  Franklin  v.  National  Ins.  Co., 
43  Mo.  401. 

850 


CH.  XIX.]  ASSIGNMENT   OF   THE   POLICY.  [§  385 

verbal  notice  before  he  renewed  his  policy  to  the  agent  of 
the  company  that  he  had  assigned  the  property  insured  for 
the  benefit  of  his  creditors,  this  was  held  sufficient,  though  the 
policy  afterwards  issued  made  it  requisite  that  such  assign- 
ment of  property  should  be  consented  to  in  writing.^  If  the 
consent  be  required  before  the  assignment,  subsequent  consent 
waives  the  forfeiture.^ 

But  an  assent  to  an  assignment  after  forfeiture  because  of 
alienation  does  not  restore  a  policy  originally  void  on  other 
grounds.  The  authority  conferred  by  the  by-laws  of  a  mu- 
tual insurance  company  upon  the  directors  to  ratify  and  con- 
firm assignments  in  cases  of  the  sale  or  alienation  of  the 
property  insured  applies  only  to  policies  which  are  made  void 
by  such  alienation,  and  not  to  such  as  were  originally  void ; 
and  the  assent,  therefore,  to  the  assignment  of  a  policy  origi- 
nally void,  after  an  alienation  and  for  the  purpose  of  ratify- 
ing it,  does  not  cure  the  original  infirmity  in  the  policy .^  It 
has  also  been  held  that  where  the  bj^-laws  require  that  the 
assignment  of  the  policy  shall  be  made  within  thirty  days,  an 
assent  afterwards  by  the  agent,  without  any  substantial  new 
consideration,  is  ineffectual  to  restore  the  policy.* 

§  385.  Assignment  ;  Consent  in  "Writing  ;  Fraud.  —  If  the  as- 
sent to  an  assigument  be  procured  by  fraud,  it  is,  like  all  other 
contracts  thus  procured,  voidable,  and  may  be  repudiated. 
But  if,  after  knowledge  of  the  fraud,  it  is  treated  by  the  in- 
surer as  a  valid  assignment,  as  by  demanding  and  receiving 
assessments  for  losses  and  expenses  subsequent  to  the  fraud 
from  the  assignee,  this  will  waive  the  fraud  ;  but  a  failure  to 
state  the  interest  of  the  assignee,  certainly  if  not  asked,  is  no 
fraud.5  If  the  assent  to  the  assignment  is,  by  the  terms  of 
the  policy,  to  be  in  writing,  it  must  be  strictly  complied  with, 

1  Parsons  v.  Standard  Fire  Ins.  Co.  (Can.  Sup.  Ct.),  16  Can.  L.  J.  271  (1880). 
See  also  Hatton  v.  Beacon  Ins.  Co.,  16  U.  C.  (Q  B.)  316. 

2  Shearman  v.  Niagara  Ins.  Co.,  46  N.  Y.  526. 

3  Eastman  v.  Carrol  County  Mut.  Fire  Ins.  Co.,  45  Me.  307  ;  ".Citizens'  Fire 
Ins.  Co.  V.  Doll,  35  Md.  89.     But  see  City  Fire  Ins.  Co.  v.  Mark,  45  111.  482. 

■*  American  Ins.  Co.  d.  Gallagher,  50  Ind.  209. 

5  Cumberland  Valley  Mut.  Prot.  Ins.  Co.  v.  Mitchell,  48  Pa.  St.  374.  And 
see  ])ost,  cliapter  on  Waiver  and  EstoppeL 

851 


§  385  A]        INSURANCE  :    fire,   life,   accident,    etc.        [cH.  XIX. 

unless  there  be  a  waiver ;  and  knowledge  that  an  assignment 
is  contemplated  by  the  assured,  the  mortgagor,  to  the  mort- 
gagee, witliout  objection,  is  no  consent.     The  only  fair  infer- 
ence from  such  facts  is  a  tacit  agreement  that  the  company 
would  consent  when  the  mortgagee  had  put  himself  in  a  posi- 
tion to  ask  it.i     If  its  validity  be  dependent  upon  depositing 
a  note  with  the  secretary  or  agent,  to  be  approved  by  the 
directors,  leaving  the  note  with  the  agent,  who  neglects  to 
notify  the  company,  is  not  a  compliance  with  the  conditions  ;  ^ 
and  if  the  charter  requires  that  the  assignment  be  recorded 
and  certified  on  the  policy,  it  has  been  held  to  be  essential  to 
its  validity  that  these  requirements  be  complied  with.^     But 
this  is  very  strict  law  ;    and  it  may  be  doubted  if,  when  the 
insured  has  done  all  in  his  power  to  comply  with  the  condi- 
tions, and  the  agent  is  negligent,  the  company  is  not  liable.* 
If  the  policy  require  notice  of  the  assignment  to  the  secretary 
in  writing,  and  the  indorsement  thereof  on  the  policy  or  other 
written  acknowledgment  by  him,  the  assignment  written  on 
the  policy,  and  underneath  it  the  name  of  the  agent,  "  for 
secretary,"  will  suffice,  if  such  has  been  the  practice  of  the 
agent,  known  to  the  company.^     And  if  the  local  agent  of 
the  company  draws  up  the  assignment,  and  the  general  agent 
assents  to  it  in  writing,  it  is  an  assent  by  the  company,  both 
to   the   assignment,   and   to   the   accompanying    transfer   of 
property.^ 

[§  385  A.  Consent  in  "Writing  ;  Indorsement.  —  An  assign- 
ment by  writing  on  the  policy  attested  by  the  agent  is  a  suffi- 
cient compliance  with  the  provision  as  to  written  consent  of 
the  company.'     An  assent  to  an  assignment  by  the  president 


1  Smith  V.  Saratoga  County  Mut.  Ins.  Co.,  3  Hill  (N.  Y.),  508. 

2  Foggi;.  Middlesex  Mut.  Ins.  Co.,  10  Cusli.  (Mass.)  337. 

*  Bayles  v.  Insurance  Co.,  3  Dutch.  (N.  J.)  16.3. 

*  See  ante,  §  370 ;  post,  §  387  ;  Batclielor  v.  People's  Ins.  Co.,  40  Conn.  50. 
The  insurer  cannot  set  up  its  own  negligence  to  do  that  which  it  alone  can  do, 
and  has  no  reasonable  excuse  for  not  doing,  as  a  defence  against  liability.  Far- 
mers' Ins.  Co.  V.  Wenger  (Pa.),  8  Ins.  L.  J.  712. 

6  Farmers'  Mut.  Fire  Ins.  Co.  v.  Taylor,  73  Pa.  St.  342. 
6  Hazzard  v.  Canada  Agr.  Ins.  Co.,  30  U.  C.  (Q.  B.)  419. 
'  [New  Orleans  Ins.  Ass.  v.  Holberg,  64  Miss.  51.] 

852 


CH.   XIX.]  ASSIGNMENT    OP   THE    POLICY.  [§  385  A 

of  the  company,  on  a  piece  of  paper  attached  by  a  wafer  to 
the  policy  is  sufficient  for  an  "  indorsement  on  the  policy."  ^ 
Where  the  property  was  assigned  March  4,  the  policy  renewed 
March  21,  and,  April  15,  was  transferred  to  the  assignee  of 
the  property  with  the  company's  consent,  it  was  claimed  that 
the  assignment  of  the  property,  hoing  jjrior  to  the  company's 
consent,  vitiated  the  policy,  and  the  subsequent  transactions 
could  not  revive  it,  being  once  dead.  The  court  held,  however, 
that  the  policy  had  not  become  void  beyond  revival,  as  it 
would  in  case  it  were  illegal  or  against  public  policy,  and 
that  the  recognition  of  it  by  the  company  gave  it  new  life.^ 
But  where  A.  purchased  some  insured  property  of  B.,  took 
an  assignment  of  the  policy,  and  went  to  the  agent  to  get  it 
indorsed  as  required.  The  agent  promised  to  do  so  if  the 
grantee  would  bring  the  policy.  This  was  not  done  until 
after  fire.  It  was  held  that  the  verbal  promise  could  not  be 
enforced.  There  is  no  waiver,  no  lulling  of  the  assignee  into 
security,  and  the  condition  of  the  policy  against  alienation 
without  indorsement  applies.^  A  condition  in  a  policy  issued 
by  a  mutual  company  established  for  the  protection  of  the 
members,  their  families  and  heirs,  that  it  shall  not  be  as- 
signed without  written  assent  of  the  company,  is  valid ;  and 
even  receipt  of  assessments  from  the  assignee  after  death  of 
the  insured  will  not  constitute  a  waiver  of  the  condition. 
The  assessments  might  properly  be  paid  by  any  one  as  a  vol- 
unteer.* A  policy  issued  to  G.  provided  that  it  should  be  void 
if  assigned  for  collateral  security.  For  that  purpose  it  must 
be  made  payable  to  the  new  party  by  indorsement  on  its  face. 
There  was  an  assent  by  the  agent  of  the  company  "  that  the 
interest  of  G.  in  the  within  policy  ...  be  assigned  to  A.,"  and 
an  assignment  by  G,  of  "  all  his  title  and  interest  in  the  policy  " 
to  A.  This  assignment  was  in  fact  for  collateral  security  ; 
but  the  agent  did  not  know  this,  or  give  A.  any  reason  to  sup- 
pose he  knew  it,  and  he  had  no  authority  to  assent  to  an  assign- 

1  [Penn  Ins.  Co.  v.  Bowman,  44  Pa.  St.  80  at  91.] 

2  [Shearman  v.  Niagara  Fire  Ins.  Co.,  46  N.  Y.  526.] 

3  [Equitable  Ins.  Co.  v.  Cooper,  60  111.  509  at  510.] 

*  [National  Mut.  Aid  Soc.  v.  Lupoid,  101  Pa.  St.  111.] 

853 


§  386]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.         [CH.  XIX. 

ment  of  that  kind.     It  was  held  that  A.  could  not  maintain 
an  action  on  the  policy.^] 

§  386.  Assignment  after  Loss;  Bankruptcy.  —  But  this  inhi- 
bition of  an  assignment  witliout  consent  applies  only  to  an 
assignment  before  the  loss.  An  assignment  after  the  loss  is 
not  the  assignment  of  the  policy,  but  the  assignment  of  a 
claim  or  debt,  a  cliose  in  action,  which  is  always  assignable 
in  equity,  —  subject,  of  course,  to  all  equities  and  claims  in  set- 
off that  would  be  enforceable  against  the  assignor.^  [And  an 
assignee  after  loss  stands  in  the  shoes  of  the  assignor  as  to 
violations  of  the  conditions  of  the  policy  by  the  assignor.^ 
An  order  on  the  company  after  loss  by  the  assured  for  the 
whole  amount  'of  the  policy  is  an  assignment,  and  is  valid 
without  an  acceptance.^  An  assignment  after  loss  does  not 
violate  the  clause  in  the  policy  forbidding  a  transfer,^ 
even  if  the  clause  reads  "  before  or  after  loss."  The 
reason  of  the  restriction  is  that  the  company  might  be 
willing  to  write  a  risk  for  one  person  of  known  habits  and 
character,  and  not  for  another  person  of  less  integrity  and 
prudence,  but  after  loss  this  reason  no  longer  exists.*^  Nor  is 
such  an  assignment  within  the  condition  requiring  consent 
of    the   company.'     Specific   performance   of   an   assignment 

1  [Lynde  r.  Newark  Ins.  Co.,  \"'d  Mass.  57.] 

2  Brichta  v.  New  York  Lafayette  Ins.  Co.,  2  Hall  (N.  Y.  Superior  Ct.),  372; 
Perry  v.  Merchants'  Ins.  Co.,  25  Ala.  355;  Mellen  v.  Hamilton  Fire  Ins.  Co.,  5 
Duer  (N.  Y.  Superior  Ct.),  101;  s.  c.  17  N.  Y.  609;  Hughes  v.  Mut.  Fire  Ins. 
Co.  of  Newcastle,  9  U.  C.  (Q.  B.)  387  ;  Wilson  v.  Hill,  3  Met.  (Mass  )  GO;  Sad- 
ler's Co.  V.  Badcock,  2  Atk.  554 ;  Courtney  v.  New  York  City  Ins.  Co.,  28  Barb. 
116  ;  Carter  r.  Humboldt  Fire  Ins.  Co.,  12  Iowa,  278  ;  Carroll  v.  Charter  Oak  Ins. 
Co.,  38  Barb.  (N.  Y.)  402;  s.  c  40  id.  202;  Green  v.  Kepublic  Ins.  Co.  (N.  Y.), 
10  Ins.  L.  J.  422  ;  Archer  v.  Merchants'  &  Manufacturers'  Ins.  Co.,  43  Mo.  434  ; 
Docge  V.  Northwestern  Ins.  Co.,  49  Wis.  501.  So  in  case  of  reinsurance.  Real 
Estate  Ins.  Co.  v.  Cashow,  41  Md.  59;  Combs  v.  Shrewsbury  Ins.  Co.  (N.  J.), 
23  Alb.  L.  J.  98;  [Rousset  v.  Insurance  Co.  of  N.  A.,  1  Binn.  429  at  435;  Gour- 
don  V.  Insurance  Co.  of  N.  A.,  3  Yeates,  .327  at  334] 

3  [Bonenfant  v.  Insurance  Co.,  76  Mich.  654.] 

*  [Hall  V.  Dorchester  Ins.  Co.,  Ill  IMass.  53  at  54.] 

6  [Mellen  v.  Hamilton  Ins.  Co.,  17  N.  Y.  609  at  615.] 

<5  [Rc-nnebaker  v.  Tomlinson,  1  Tenn.  Ch.  598  at  601 ;  Nease  v.  iEtna  Ins. 
Co.,  18  Ins.  L.  J.  541  (W.  Va.).  March,  1889.] 

7  [Imperial  Fire  Ins.  Co.  v.  Dunham,  117  Pa.  St.  4G0,  473.] 

854 


CH.  XIX.]  ASSIGNMENT    OF   THE   POLICY.  [§  387 

after  loss  will  be  decreed  in  spite  of  a  prohibition  in  the  policy. 
Such  a  prohibition  is  illegal.^  In  Michigan  the  right  of  assign- 
ment of  a  policy  after  loss  is  secured  by  statute,^  and  no  con- 
dition in  the  policy  providing  for  forfeiture  by  assignment 
without  consent  can  apply  to  prevent  assignment  after  loss. 
After  loss  an  assignment  of  the  right  of  action  is  good  with- 
out record  or  delivery  of  the  policy  as  against  a  subsequent 
garnishment.^]  And  a  prohibition  of  an  assignment  after  the 
loss  is  invalid,  and  void  as  contrary  to  law.*  An  assign- 
ment before  loss,  as  collateral,  will  indeed  give  the  assignee, 
though  he  have  no  interest  in  the  insured  property,  an  equit- 
able lien  upon  the  proceeds  as  against  the  assignor,  without 
regard  to  the  consent  of  the  insured.^  Nor  is  a  general  as- 
signment in  bankruptcy  a  violation  of  the  condition.^ 

If  the  loss,  however,  be  only  partial,  and  the  policy  still 
further  protects,  the  prudent  course  will  be  to  assign  only  the 
claim  for  loss ;  and  perhaps  out  of  abundant  caution  this 
would  be  the  better  course  in  case  of  total  loss." 

§  387.  Assignment ;  Limitation  as  to  Time  ;  Consent  arbitra- 
rily withheld.  —  Boynton  v.  Farmers'  Mutual  Insurance  Com- 
pany was  a  case  where  the  policy  provided  that  upon 
alienation  of  the  property  the  policy  should  be  void,  but  that 
the  alienee  having  the  policy  assigned  might  have  the  same 
ratified  and  confirmed  to  him  upon  application  to  the  direc- 
tors and  with  their  consent,  within  thirty  days  next  after  the 

1  [Spare  v.  Home  Mut.  Ins.  Co.,  17  Fed.  Rep.  568,  9th  Cir.  (Or.)  1883,  12 
Ins.  L.  J.  864.] 

2  [Roger  Williams  Ins.  Co.  v.  Carrington,  43  Mich.  252  at  254.] 

3  [Aultman  v.  McConnell,  34  Fed.  Rep.  724  (Iowa),  1888.] 

4  Goit  V.  Nat.  Prot.  Ins.  Co.,  25  Barh.  (N.  Y.)  189;  West  Branch  Ins.  Co.  v. 
Helfenstein,  40  Pa.  St.  289  ;  Carroll  i'.  Charter  Oak  Ins.  Co.,  38  Barb.  (N.  Y.) 
402.     Contra,  Dey  v.  Poughkeepsie  Mut.  Ins.  Co.,  23  Barb.  (N.  Y.)  623. 

5  Bibend  v.  Liverpool,  &c.  Ins.  Co.,  .>0  Cal.  78 ;  Cromwell  v.  Brooklyn  Fire 
Ins.  Co.,  44  N.  Y.  42;  Prows  v.  Ohio,  &c.  Ins.  Co.  (Sup.  Ct.  Cincinnati),  4  Ins. 
L.  J.  6-39.  [If  tlie  assured  assigns  his  interest  in  insured  goods  before  loss,  he 
cannot  sue  upon  the  policy  except  as  trustee  for  the  assignee,  if  the  policy  per- 
mits.    Powles  V.  Innes,  11  M.  &  W.  10  at  13.] 

6  Fayette  Co.  Ins.  Co.  v.  Neel  (Pa.  St.),  8  Ins.  L.  J.  265;  ante,  §  379;  Apple- 
ton  Iron  Co.  V.  British  Am.  Ass.  Co.,  46  Wis.  23 ;  Starkweather  v.  Cleveland  Ins. 
Co.,  2  Abb.  (U.  S.)  67. 

'  Kerr  v.  Hastings  Mut.  Fire  Ins.  Co.,  41  U.  C.  (Q.  B.)  217. 

855 


§  388]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.        [CH.  XIX. 

alienation,  upon  certain  terms.  After  alienation  and  assign- 
ment and  loss,  but  within  the  thirty  days,  the  assignee  pre- 
sented the  assignment  for  ratification,  and  offered  to  comply 
with  the  usual  terms,  and  it  was  held  on  a  bill  in  equity  that 
the  company  could  not  arbitrarily  and  without  cause  refuse, 
and  a  decree  was  entered  in  favor  of  the  assignee  for  the  same 
amount  as  the  grantor  could  have  recovered  if  there  had  been 
no  alienation.^  We  have  before  seen  that  where  a  contract  has 
been  made  between  the  applicant  for  insurance  and  the  agent 
of  the  insurers,  subject  to  the  approval  of  his  principal,  that 
approval  cannot  be  withheld  without  reason.^  Application  to 
an  insurance  company  for  its  consent  to  the  assignment  of  the 
policy  is  tantamount  to  notice  by  the  applicant  of  the  acqui- 
sition, contemplated  or  actual,  by  him  of  an  interest  in  the 
property  insured,  as  without  that  the  assignment  would  be 
valueless.^ 

§  388.  Life  Policy ;  Assignment.  —  The  reasons  which  lead 
to  caution  as  to  the  assignment  of  policies  in  fire  insurance^ 
do  not  exist  to  the  same  extent  in  life  insurance.  There  may 
indeed  be  cases  where  they  would  apply,  but  they  occur  so 
seldom  that  generally,  almost  universally,  the  claims  arising 
out  of  life  policies  are  recognized  as  assignable  either  abso- 
lutely or  by  way  of  security,  without  the  assent  of  the  insur- 
ers. Even  notice  is  not  always  required  ;  and,  when  required, 
is  only  necessary  to  protect  the  company  from  the  possibility 
of  being  obliged  to  pay  botli  the  assignee  and  the  legal  repre- 
sentatives. Indeed,  in  the  case  of  a  policy  for  life,  the  pay- 
ment cannot  be  made  to  the  insured  ;  and  in  fire,  also,  the 
policy  runs  to  the  legal  representatives  and  assigns.  Much  of 
the  usefulness  of  life  insurance  depends  upon  the  mobility  of 

1  43  Vt.  256.  See  also  ante,  §§  57,  135;  Durar  v.  Hudson  Co.,  &c.  Ins.  Co.,  4 
Zab.  (N.  J.)  171 ;  Wakefield  v.  Orient  Ins.  Co.  (Wis.),  10  Ins.  L.  J.  250;  West- 
lake  V.  St.  Lawrence,  &c.  Ins.  Co.,  14  Barb.  (N.  Y.)  206.  But  see  Girard  Fire 
Ins.  Co.  I'.  Hebard  (Pa.),  10  Ins.  L.  J.  425,  where  it  is  said  that  the  assignment 
without  consent  works  a  forfeiture,  and  the  policy  is  no  longer  of  avail,  whether 
the  insurers  declared  the  forfeiture  or  not,  unless  they  do  some  act  to  revive  it. 

2  Ante,  §§  57,  370.     And  see  also  Illinois  Mut.  Ins.  Co.  v.  Stanton,  57  111.  354. 

3  Hooper  v.  Hudson  River  Fire  Ins.  Co.,  3  Smith  (N.  Y.),  424. 
*  Ante,  §§  377  et  seq. 

856 


CH.  XIX.]  ASSIGNMENT   OP   THE   POLICY.  [§  389 

policies,  and  the  companies  have  for  obvious  reasons  been 
desirous  to  promote  that  end,  —  a  desire  which  the  courts 
have  been  willing  to  encourage,  so  far  as  consistent  with  legal 
principles.^  It  has  accordingly  been  held  that  where  the 
promise  is  to  "  the  assured,  his  executors,  administrators,  and 
assigns,"  to  pay  the  "legal  representatives"  of  the  assured, 
the  policy  is  nevertheless  assignable,  and  that  the  provision 
to  pay  the  legal  representatives  was  designed  to  apply  only 
to  a  case  where  the  insured  died  without  having  previously 
assigned  the  policy,  and  was  not  to  be  construed  in  any 
sense  as  limiting  the  power  of  the  party  insured  to  assign.^ 
So  an  assignment  by  a  husband  to  his  creditor,  out  of  the 
proceeds  to  pay  the  debt,  and  the  remainder  to  be  paid  to 
the  widow,  was  held  to  take  the  whole  interest  to  the  assignee 
for  himself  and  in  trust,  as  against  the  administrator.-^ 

§  389.  Life  Policy  ;  Requisites  of  a  Valid  Assignment.  —  The 
requisites  to  a  valid  assignment  of  a  life  policy  have  been  thus 
well  stated  by  Shaw,  C.  J. :  *  — 

"  According  to  the  modern  decisions,  courts  of  law  recog- 
nize the  assignment  of  a  chose  in  action,  so  far  as  to  vest  an 
equitable  interest  in  the  assignee,  and  authorize  him  to  bring 
an  action  in  the  name  of  the  assignor,  and  recover  a  judgment 
for  his  own  benefit.  But  in  order  to  constitute  such  an  as- 
signment, two  things  must  concur  :  first,  the  party  holding  the 
chose  in  action  must,  by  some  significant  act,  express  his  inten- 
tion that  the  assignee  shall  have  the  debt  or  right  in  ques- 
tion, and,  according  to  the  nature  and  circumstances  of  the 
case,  deliver  to  the  assignee,  or  to  some  person  for  his  use, 
the  security,  if  there  be  one,  bond,  deed,  note,  or  written 
agreement,  upon  which  the  debt  or  chose  in  action  arises ;  and, 

1  New  York  Life  Ins.  Co.  v.  Flack,  3  Md.  341 ;  Anthracite  Coal  Co.  v.  Sears, 
109  Mass.  383. 

2  Ibid. 

8  McCord  V.  Noyes,  3  Bradf.  139  ;  Harrison  v.  McConkey,  1  Md.  Cli.  34.  As 
between  the  assignor  and  the  insurers  the  contract  remains  unclianged,  and  the 
assignee  can  claim  no  greater  right  than  the  assignor  could.  A  breach  of  con- 
dition by  the  assignor  avoids  the  policy.  British  Eq.  Ins.  Co.  v.  Great  West.  Ins_ 
Co.,  38  L.  J.  Ch.  132 ;  s.  c.  3  Big.  Life  &  Ace.  Ins.  Cas.  264. 

*  Palmer  v.  Merrill,  6  Cash.  (Mass.)  282.     And  see  post,  §  395. 

857 


§  390]  INSUEANCE :    FIEE,   LIFE,    ACCIDENT,    ETC.       [CH.  XIX. 

secondly,  the  transfer  shall  be  of  the  whole  and  entire  debt  o'' 
obligation  in  which  the  cliose  in  action  consists,  and  as  far  as 
practicable  place  the  assignee  in  the  condition  of  the  as- 
signor, so  as  to  enable  the  assignee  to  recover  the  full  debt 
due,  and  to  give  a  good  and  valid  discharge  to  the  party 
liable.i 

"  The  transfer  of  a  chose  in  action  bears  an  analogy,  in  some 
respect,  to  the  transfer  of  personal  property  ;  there  can  be  no 
actual  manual  tradition  of  a  chose  in  action,  as  there  must  be 
of  personal  property,  to  constitute  a  lien,  but  there  must  be 
that  which  is  similar,  a  delivery  of  the  note,  certificate,  or 
other  document,  if  there  is  any,  which  constitutes  the  chose  in 
action,  to  the  assignee,  with  full  power  to  exercise  every 
species  of  dominion  over  it,  and  a  renunciation  of  any  power 
over  it  on  the  part  of  the  assignor. 

"  The  intention  is,  as  far  as  the  nature  of  the  case  will 
admit,  to  substitute  the  assignee  in  place  of  the  assignor  as 
owner.  A  man  cannot  by  his  own  act  charge  a  personal 
chattel,  a  carriage  and  horses,  for  instance,  with  a  lien  in 
favor  of  a  particular  creditor,  and  yet  retain  the  dominion 
and  possession  of  them  till  his  death  ;  a  fortiori,  where  he  re- 
tains the  memorandum  or  instrument  of  transfer  of  such  chat- 
tel in  his  own  possession  and  under  his  own  control.  It  seems 
to  us  equally  impracticable  to  charge  a  debt  due  to  him,  by 
an  order  or  memorandum  retained  in  his  own  possession,  pur- 
porting to  give  to  a  particular  creditor  an  equitable  lien  to 
the  assignment  of  such  chose  in  action,  without  a  transfer  or 
delivery  of  the  security  by  which  it  is  manifested." 

§  390.  Disposition  of  Proceeds ;  Conflicting  Claims ;  Creditor 
and  Administrator.  —  As  a  general  rule,  the  proceeds  of  a  life 
insurance  must  go  as  agreed  upon  and  directed  in  the  policy ; 
and  no  diversion  or  agreement  for  a  diversion  will  be  effectual 
without  the  consent  of  him  to  whom  the  proceeds  are  by  the 
original  policy  directed  or  agreed  to  be  paid.  When  the  pol- 
icy issues,  the  rights  of  the  beneficiaries  become  vested,  and 
on  their  receipt  alone  can  the  loss  safely  be  paid.     [The  com- 

1  Getchell  v.  Maney,  69  Me.  442 ;  Hartford  Fire  Ins.  Co.  v.  Davenport,  37 
Mich.  609. 

858 


CH.  XIX.]  ASSIGNMENT   OF   THE   POLICY.  [§  390 

pany  cannot  set  up  the  breach  of  a  statute  made  for  the  pro- 
tection of  creditors  of  the  insured.  In  consequence  of  the 
statute  tlie  plaintiff  may  hold  the  proceeds  partly  in  trust  for 
such  creditors,  but  the  company  cannot  set  up  the  equities  of 
others  to  defeat  an  action  on  the  policy.]^  And  none  but  those 
having  a  right  to  the  policy  and  its  proceeds  can  surrender  it,^ 
or  create  any  charge  upon  it.^ 

An  endowment  policy  payable  in  ten  years  to  the  insured, 
his  heirs  or  assigns,  or  in  case  of  his  decease  before  the  ex- 
piration of  ten  years  to  his  wife,  belongs  to  his  estate  if  he 
live  till  the  endowment  becomes  payable,^  or  if  he  become 
bankrupt.^  The  wife's  rights  do  not  attach  till  the  decease  of 
the  husband  within  the  time  limited.^  Having  once  attached, 
however,  she  cannot  be  deprived  of  them." 

In  Canada,  by  statute  29  Vict.  ch.  17,  the  loss  must  be 
paid  as  directed  in  the  policy,  and  cannot  be  subjected  to  the 
claims  of  creditors,  unless  so  directed.^  So  in  Louisiana.'* 
And  if  without  the  consent  of  the  wife  the  policy  be  suffered 
to  lapse,  and  a  new  one  be  taken  out  by  the  husband,  payable 
to  his  representatives,  which  he  assigns  to  pay  his  debts, 
the  wife  will  be  entitled  to  the  proceeds  of  the  original  policy, 
less  the  premiums  and  interest  due  from  her  on  the  same.^^ 
So  in  Tennessee,  if  not  otherwise  directed  by  the  code.^^    And 

1  Smith  V.  Mo.  Valley  Ins.  Co.  (U.  S.),  6  Ins.  L.  J.  394  ;  4  Dill.  C.  Ct.  (Mo.) 
353 ;  Pullis  i'.  Robinson  (Mo.),  12  Reptr.  144 ;  Diedrich  v.  Northwestern  Ass. 
Co.,  47  Wis.  662  ;  post,  §  391. 

2  Stillwell  V.  Mat.  Life  Ins.  Co.,  72  N.  Y.  385. 

3  Brooks  V.  Plioenix  Mut.  Life  Ins.  Co.,  C.  Ct.  (Vt.),  8  Ins.  L.  J.  740. 
*  Tenness  v.  Northwestern,  &c.  Ins.  Co.  (Minn.),  9  Ins.  L.  J.  191. 

5  Stevens  v.  Lane  (C.  Ct.  Mass.  1878) ;  Brigham  v.  Home  Ins.  Co.  (Mass. 
1881),  12  Reptr.  180. 

6  Evers  v.  Life  Ass.,  59  Mo.  429 ;  Fowler  v.  Butterly  (N.  Y.),  9  Ins.  L.  J. 329. 
But  see  Herrick  v.  National  Life  Ins.  Co.,  C.  Ct.  (Vt.)  5  Ins.  L.  J.  80.  See  also 
Knickerbocker  Life  Ins.  Co.  v.  Weitz,  99  Mass.  157. 

7  Brockhaus  v.  Kemna  (Wis.),  12  Reptr.  168. 

^  Brossard  v.  Massouin,  Supr.  Ct.  (Montreal),  4  Ins.  L.  J.  395. 
3  Succession  of  Hearing,  26  La.  An.  326. 

w  Pilcher  v.  New  York  Life  Ins.  Co.  (La.),  10  Ins.  L.  J.  312.     See  also  Rlcker 
V.  Charter  Oak  Ins.  Co.  (Minn.),  10  Ins.  L.  J.  143 ;  Herrick  v.  National  Life  Ins. 
Co.,  C.  Ct.  (Vt.),  5Ins.  L.  J.  80. 
'1  Harrington  v.  Traders'  Bank  (Tenn.),  9  Reptr.  358. 

859 


§  390]  INSUEANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.        [CH.  XIX. 

as  between  creditors  and  an  intended,  though  not  named, 
beneficiary,  in  possession  of  the  policy,  the  latter  will  be  per- 
mitted to  hold  the  funds,  if  the  facts  show  that  the  policy 
really  was  his,  and  the  whole  proceeding  was  for  his  benefit.^ 
Where  A.  ordered  a  new  policy  on  his  own  life  to  be  made, 
substituting  one  beneficiary  for  another,  which  was  done,  and 
the  delivery  was  made  to  him  instead  of  the  new  beneficiary,  it 
was  held  that  A.  had  no  rights  under  the  old  policy,  contrary 
to  his  claim  that  there  had  been  no  delivery  to  the  benefi- 
ciary of  the  new.2  Where  a  wife  insured  the  life  of  her  hus- 
band for  the  benefit  of  herself,  or,  in  case  of  her  decease,  of 
her  children,  and  she  died  before  her  husband,  and  also  one  of 
the  children  died  before  him,  leaving  a  child,  it  was  held  that 
a  transmissible  interest  vested  in  the  children  on  the  issuing 
of  the  policy,  and  that  the  grandchild  took  by  descent  the  inter- 
est of  its  parent.^  If  the  wife  insures  for  herself  alone,  and 
dies  before  her  husband,  the  interest  descends  to  her  heirs.* 
Where  the  policy  permits  disposition  of  the  fund  by  will, 
otherwise  to  go  to  the  widow,  and  if  no  widow,  "to  the  heirs 
and  legal  representatives,"  this  last  means  the  next  of  kin, 
and  takes  the  fund  out  of  the  decedent's  estate.^  If  there  be 
a  failure  to  direct  how  the  funds  are  to  be  disposed  of  in  case 
of  decease  of  the  beneficiary,  and  it  appears  that  the  general 
object  is  "  to  establish  a  widows'  and  orphans'  fund,"  the 
widow  is  "  entitled  to "  the  fund,  and  not  the  creditor,  the 
children  having  deceased  before  the  insured.^  Where  the  char- 
ter provided  that  the  loss  might  be  payable  to  a  "  person  desig- 

1  Worthington  v.  Curtis,  1  Ch.  D.  419;  s.  c.  5  Big.  Life  &  Ace.  Ins.  Cas.740; 
s.  c.  5  Ins.  L.  J.  470.  By  the  Iowa  Code,  §§  1182,  2372,  tiie  avails  of  policy  of 
life  insurance  are  part  of  the  estate  of  the  beneficiary,  and  subject  to  his  debts, 
but  not  to  those  of  the  "  deceased,"  —  that  is,  the  life  insured.  Murry  r.  Wells 
(Iowa),  9  Ins.  L.  J.  649  ;  Smedly  v.  Felt,  43  Iowa,  607. 

2  Crittenden  v.  Phoenix,  &c.  Ins.  Co.,  41  Mich.  442. 

3  Continental  Life  Ins.  Co.  v.  Palmer,  42  Conn.  60  ;  Robinson  v.  Duvall  (Ky.), 
9  Ins.  L.  J.  897. 

4  Hutson  V.  Mcrrifield,  51  Ind.  24. 

5  Hodges'  Appeal  (Pa.),  9  Ins.  L.  J.  709.  Contra,  in  Georgia,  Rawson  s. 
Jones,  25  Ga.  458.     See  also  Wason  v.  Colburn,  99  Mass.  342. 

6  Ballou  V.  Gile,  50  Wis.  614.  See  also  Duvall  v.  Goodson  (Ky.),  9  Ins.  L.  J. 
901 ;  Kentucky,  &c.  Ins.  Co.  v.  Yates,  id.  572. 

860 


CH.  XIX.]  ASSIGNMENT   OF   THE   POLICY.  [§  390 

nated,"  witli  a  proviso  that  the  insured  should  have  no  power 
to  deprive  wife  and  children  of  benefits,  and  the  person  desig- 
nated was  a  niece,  it  was  held  good  to  the  niece,  and  that  the 
proviso  applied  only  to  such  funds  as  would  by  law  descend  to 
legal  representatives.^  A  policy  payable  to  the  wife,  or,  in 
case  of  her  decease,  to  the  children,  there  being  no  children, 
becomes  the  absolute  property  of  the  wife,  and  she  may  even, 
after  a  divorce,  exchange  it  for  a  new  paid-up  policy.^  She 
has,  in  Massachusetts,  a  life  interest,  which  is  absolute,  if 
the  children  are  not  mentioned,  and  which  she  may  assign 
to  secure  her  husband's  debts.^  In  the  case  the  learned 
judge  (Lowell)  points  out  that  the  fact  that  the  New  York 
statute  does  not  protect  creditors  against  fraud,  while  the 
Massachusetts  and  most  of  the  other  statutes  do,  may  account 
for  the  discrepancies  between  the  decisions  in  New  York  and 
the  other  States.* 

A  case  of  some  novelty  occurred  recently  in  Massachusetts, 
where  an  insurance  company  in  that  State  insured  the  life  of 
a  citizen  of  another,  and  the  insured  assigned  the  policy  to  a 
creditor  resident  in  the  first  State.  After  death,  the  admin- 
istrator at  the  domicile  of  the  insured  brought  suit ;  but  sub- 
sequent thereto  the  assignee  of  the  policy  was  appointed 
ancillary  administrator  at  the  domicile  of  the  creditor,  and 
brought  suit ;  and  it  was  held  that  the  first  suit  was  no  bar 
to  the  second,  and  that  the  right  of  the  ancillary  administra- 
tor, representing  as  he  did  the  equitable  interest  of  the 
assignee,  and  the  legal  capacity  to  sue,  was  superior  to 
that  of  the  original  administrator.^  In  this  case  the  court 
say:  — 

"  There  was  a  right  of  possession  in  the  assignee  superior 
to  that  of  the  intestate  or  his  administrator,  and  which  he 
might  pass  over  to  the  administrator  in  Massachusetts  upon 

1  Penn  Mut.  Relief  Ass.  v.  Folmer,  87  Pa.  133. 

2  Plioenix  Mut.  Ins.  Co.  v.  Dunham,  46  Conn.  79.  See  also  Keller  v.  Gaylor, 
40  Conn.  843. 

3  Newcomb  v.  Mutual  Life  Ins.  Co.,  C.  Ct.  (Mass.),  9  Ins.  L.  J.  124. 

<  See  also  Emerick  t-.  Coakley,  35  Md.  188 ;  Archibald  v.  Mut.  Life  Ins.  Co., 
38  Wis.  542.     See  also  post,  §  392. 

5  Merrill  v.  New  England  Mut.  Life  Ins.  Co.,  103  Mass.  245. 

861 


§  390]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.         [CH,  XIX. 

such  terms  as  he  saw  fit,  consistent  with  his  limited  rights. 
His  interest  in  the  policy  is  not  a  mere  order  for  a  part  of  the 
proceeds,  but  extends  to  the  whole  policy  alike.  With  his 
concurrence  the  auxiliary  administrator  may  maintain  a  suit 
and  collect  the  proceeds  of  the  policy.  Without  it,  neither 
he  nor  the  principal  administrator  could  control  the  posses- 
sion or  collect  the  proceeds.  The  pledge  makes  it  no  longer 
a  question  of  jurisdiction,  as  affected  by  priority  of  suit,  com- 
ity between  the  States,  or  otherwise,  but  one  merely  of  the 
right  of  the  respective  parties  claiming  an  interest  in  the  pol- 
icy. The  right  of  the  plaintiff  in  this  suit  is  superior  to  that 
of  the  principal  administrator  in  Illinois,  because  he  repre- 
sents the  equitable  interest  and  right  of  immediate  possession 
and  control  of  the  pledgee,  as  well  as  the  legal  capacity  to 
sue,  which  remains  in  the  representatives  of  the  estate  of  the 
insured.  That  legal  right  to  sue  is  held  by  the  administra- 
tors of  the  insured,  wherever  appointed,  in  trust  for  the 
benefit  of  the  equitable  assignee  of  the  claim.  The  assignee 
is  entitled  to  control  any  suit  brought  for  its  recovery.  Ilis 
right  would  be  protected  by  the  courts  against  any  at- 
tempt of  the  administrator  to  collect  or  release  the  demand 
in  disregard  of  his  interests.  Upon  the  same  principle,  it 
would  be  equally  protected  against  prejudice  from  any  at- 
tempt to  anticipate  him  by  means  of  a  suit  instituted  by  such 
administrator  in  his  own  behalf,  and  without  recognition  of 
the  rights  of  the  assignee. 

"  Within  the  same  jurisdiction  the  respective  rights  of  the 
assignor  and  assignee  may  be  readily  adjusted,  and  suits  con- 
trolled. The  difficulty  arises  from  the  existence  of  suits  in 
separate  and  independent  jurisdictions.  There  is  a  class  of 
decisions,  referred  to  by  the  defendant,  particularly  affecting 
questions  of  jurisdiction  between  the  federal  and  State  courts, 
to  the  effect  that  a  subject-matter  once  brought  within  the 
jurisdiction  of  a  court  of  general  jurisdiction,  whether  by  suit 
in  personam  or  proceeding  in  rem,  or  even  by  process  of  at- 
tachment, is  in  the  custody  of  that  court,  and  cannot  be  with- 
drawn or  controlled  by  any  process  or  proceeding  of  any  other 
court;  but  that  doctrine  is  explained  and  narrowly  limited  by 
862 


CH.  XIX.]  ASSIGNMENT   OF   THE   POLICY.  [§  391 

Mr.  Justice  Miller,  in  Buck  v.  Colbath.^  It  does  not  apply 
to  this  case,  for  reasons  already  indicated,  because  the  policy, 
having  been  pledged  and  delivered  to  another  in  the  life- 
time of  the  intestate,  was  never  in  the  legal  possession  of  his 
administrator  in  Illinois,  and  therefore  was  never  properly 
brought  within  the  jurisdiction  of  the  courts  in  that  State, 
either  as  assets  subject  to  administration,  or  as  a  cause  of  ac- 
tion which  the  administrator  there  could  maintain.  He  could 
not,  by  commencing  a  suit  there,  transfer  to  those  courts 
the  determination  of  the  rights  of  the  pledgee,  so  as  to  com- 
pel him  to  seek  them  by  intervening  in  such  suit.  The 
pledgee  has  an  independent  title,  accompanied  by  possession 
of  the  policy,  and  by  bill  in  equity  in  his  own  name,  or  b\^ 
suit  in  the  name  of  the  administrator  in  Massachusetts,  could 
enforce  his  claim.  Neither  the  administrator  in  Massachu- 
setts nor  the  administrator  in  Illinois  would  be  allowed  to 
defeat  the  prosecution  of  such  a  suit." 

§  391.  Life  Policy;  Assignment  by  Married  Woman  ;  Rights 
of  Children.  —  The  power  of  a  married  woman  over  a  policy 
on  the  life  of  her  husband,  payable  to  her,  her  executors, 
administrators,  or  assigns,  to  her  sole  use,  in  case  of  his  death 
before  the  wife's,  but  payable  to  the  children  in  case  of  her 
decease  before  the  husband,  the  premiums  being  paid  by  her, 
has  been  frequently  before  the  courts;  and  in  Eadie  v.  SHm- 
mon  2  it  was  held  that  such  a  policy  was  unassignable.  This 
was  under  the  law  of  1840,^  in  which  it  was  provided  that  if 
the  wife  survived  her  husband,  the  amount  payable  should  be 
payable  to  her  for  her  own  use,  free  from  all  claims  of  her 
husband's  representatives  or  of  his  creditors,  and  giving 
authority  also  to  provide  for  the  children  in  case  of  her 
death.  "  The  act,"  said  the  court,  "  looks  to  a  special  pro- 
vision for  a  state  of  widowhood  and  for  orphan  children, 
and  it  would  be  a  violation  of  its  spirit  to  hold  that  a  wife 
could  sell  or  traffic  with  her  policy  as  though  it  were  real  and 
personal  property,  or  an  ordinary  security  for  money."  In 
this  case  the  wife  survived  her  husband.     And  this  case  was 


1  3  Wall.  .334. 

2  26  N.  Y.  9. 

»  Of  New  York. 

VOI-.  11.—  11 

863 

§  891]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.         [CH.  XIX. 

followed  in  Secor  v.  Dalton,^  —  a  case  where  the  wife  died 
before  the  husband.  And  in  Connecticut,  in  a  case  similar  to 
the  last,  and  under  a  similar  statute,  the  same  doctrine  was 
laid  down.2  And  in  answer  to  the  suggestion  that  the 
clause  in  the  policy  making  it  payable  to  the  children  was 
simply  the  indication  of  her  purpose  at  that  time  to  give  the 
sum  specified  in  the  policy  to  them  in  case  she  deceased  be- 
fore her  husband,  and  that  it  must  be  regarded  as  her  ex- 
pressed but  unexecuted  intention  to  give  this  sum  to  the 
children,  which  intention  she  could  abandon  at  her  pleasure, 
the  court  say  :  "  The  argument  is  ingenious,  but  not  sound. 
The  intention  was  not  to  give  a  sum  of  money  to  the  children, 
but  to  make  a  life  policy  in  a  certain  event  payable  to  them. 
The  intention  was  not  only  expressed  but  executed.  The 
contract  was  complete,  and  the  money  when  due  was  payable 
to  the  children  without  any  further  act  on  her  part."  By  the 
terms  of  the  policy  "  it  was  payable  to  her  only  in  case  she 
survived  her  husband;  and  in  case  her  husband  survived 
her,  ...  to  the  children."  Referring  to  Eadie  v.  Slimmon,^ 
the  court  say  :  "  The  reasoning  of  the  court  goes  so  far  as  to 
hold  that  a  policy  of  this  description,  prior  to  the  decease  of 
the  husband,  is  absolutely  and  under  all  circumstances  unas- 
signable by  the  wife.  That  such  should  be  the  law  under  a 
poHc}',  the  premiums  on  which  were  paid  by  the  husband, 
certainly    seems    reasonable    and  just ;    while,  on    the  other 

1  Cited  in  Bliss,  Life  Insurance,  528.  So  it  was  followed  in  Barrv  v.  Equi- 
table Life  Ass.  Soc,  59  N.  Y.  587.  But  in  Kobinson  v.  Mutual  Benefit  Ins.  Co. 
it  was  held  that  the  wife  might  assign  such  a  policy  as  collateral,  to  secure 
funds  with  which  to  keep  it  alive,  as  this  was  in  furtherance  of  the  purposes  of 
the  statute.  C.  Ct.  (N.  Y.),  9  Ins.  L.  J.  23.  In  Brumraer  v.  Cohen  an  endow- 
ment policy  was  held  to  be  within  the  statute.  C.  C.  P.  (N.  Y.),  9  Ins.  L.  J.  160. 
But  see  Anderson  v.  Butterly  (N.  Y.  Sup.  Ct.),  8  Ins.  L.  J.  80;  s.  c.  affirmed, 
9  Ins.  L.  J.  329,  and  note.  The  parties  in  Barry's  case,  supra,  were  in  the  State 
courts  of  Maryland,  where  the  law  permits  an  assignment,  and  also  in  the  Cir- 
cuit Court  of  the  United  States  for  Maryland.  See  Barry  v.  Mut.  Life  Ins.  Co., 
3  Ins.  L.  J.  74 ;  National  Life  Ins.  Co.  v.  Barry,  4  Big.  Life  &  Ace.  Ins.  Cas.  109; 
s.  c.  affirmed,  sub  nom.  Whitridge  v.  Barry,  42  Md.  140.  It  is  now  understood 
to  be  the  law  in  New  York,  the  statute  having  been  so  amended  that  such  apol- 
i(;y  may  be  assigned  by  the  wife. 

■^  Conn.  Mut.  Life  Ins.  Co.  v.  Burroughs,  34  Conn.  305. 

3  Supra. 

864 


CH.  XIX.]  ASSIGNMENT   OP   THE    POLICY.  [§  391 

hand,  if  the  wife  paid  the  premiums  out  of  her  separate  es- 
tate, it  is  difficult  to  suggest  a  reason  why  she  should  not 
have  the  same  power  to  assign  her  interest  in  the  policy  that 
she  lias  to  assign  any  other  cJiose  in  action  belonging  to  her. 
As,  however,  the  death  of  the  wife  occurred  in  the  case 
under  consideration  before  that  of  the  husband,  and  was  the 
precise  event  upon  which  the  policy  was  made  payable  to 
the  children,  no  decision  was  made  upon  either  of  those 
points."  And  both  courts  thought  the  assignee  ouglit  to  be 
allowed  out  of  the  proceeds  the  amount  of  the  premiums  he 
had  paid ;  as  also  in  the  case  of  Chapin  v.  Fellowes.^  And 
in  Massachusetts,  also,  under  a  substantially  similar  statute, 
Avhcre  the  wife  effected  the  insurance  and  paid  the  premiums, 
and  died  before  her  husband,  the  same  conclusion  has  been 
reached,^  and  for  the  same  reasons.^  In  Moehring  v.  Mit- 
chell, just  cited,  the  question  was  whether  the  wife  could 
dispose  of  such  a  policy  by  will,  and  it  was  held  that  she 
could  not,  even  with  the  consent  of  her  husband.  But  in 
Kerman  v.  Howard  *  it  was  held  that  a  husband  who  effects  a 
polic}^,  payable  to  his  wife  or  her  legal  representatives,  and 
pays  the  premiums  and  survives  his  wife,  may,  after  her  de- 
cease, dispose  of  the  policy  by  will  so  as  to  dispose  of  the 
proceeds  of  the  policy  among  the  children  of  his  former  wife 
as  against  the  children  of  his  last  wife  by  a  former  husband. 
The  report  does  not  show  that  there  was  any  provision  in 
the  policy  for  the  benefit  of  children  in  case  of  survivorship 
of  the  husband,  but  the  statute  was  similar  to  that  of  Massa- 
chusetts, except  in  the  last  clause.^     And  in  the  same  State  a 

1  36  Conn.  1.32. 

2  Knickerbocker  Life  Ins.  Co.  v.  Weitz,  99  Mass.  157.  And  see  also  Bur- 
roughs V.  State  Mut.  Life  Ass.  Co.  of  Worcester,  97  Mass.  359. 

^  Tlie  court  cite  Eadie  v.  Slimnion,  Conn.  Mut.  Life  Ins.  Co.  v.  Burrouglis, 
Moehrins  v.  Mitchell,  1  Barb.  (N.  Y.)  Cli.  264,  and  Swan  v.  Snow,  11  Allen 
(Mass.),  224. 

4  28  Wis.  108. 

^  The  statute  of  Wisconsin  is  as  follows  :  "  An}'  policy  of  insurance  made  by 
any  insurance  company  on  the  life  of  any  person  expressed  to  be  for  the  benefit 
of  a  married  woman,  whether  the  same  be  effected  bj'  such  married  woman,  or 
by  her  husband,  or  by  any  other  person  on  her  behalf,  shall  inure  to  her  sole 
and  separate  use  and  benefit,  and  that  of  her  children,  if  any,  independently 

865 


§  391]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.         [CH.  XIX. 

father  may  assign  a  policy  procured  upon  his  own  life,  at  his 
own  expense,  in  favor  of  a  minor.  Such  a  case  seems  not  to 
be  witliin  the  words  of  the  statute.^  So  may  a  wife  assign  a 
policy  on  her  husband's  life  for  her  benefit,^  And  in  a  very 
late  case  the  same  court  reaffirms  the  doctrine  that  where  one 
procures  a  policy  on  his  own  life  for  the  benefit  of  another, 
and  pays  the  premiums  thereon,  lie  may  dispose  of  it  by  will  or 
otherwise,  to  the  exclusion  of  the  beneficiary  named  in  the 
policy,  suggesting,  however,  that  the  beneficiary  may  have 
an  interest  subject  to  such  rights  of  the  insurer.^  Still  the 
doctrine  stated  heretofore,*  that  with  the  execution  and 
delivery  of  the  contract  the  beneficiary's  interest  becomes 
vested  and  passes  beyond  the  control  of  the  insured,  must  be 
considered  as  supported  by  the  great  weight  of  authority.^ 
In  Illinois,  though  a  policy  applied  for  and  issued  to  the 
wife,  payable  to  her  and  her  assigns,  is  not  assignable,  yet  as 
it  is  under  the  statute  of  that  State  concerning  the  property 
of  married  women  her  sole  and  separate  property,  she  may, 
by  an  assignment,  pledge  the  whole  or  any  part  of  the  pro- 
ceeds, and  the  assignment  will  be  enforced  against  her  in 
equity.^  And  in  Missouri,  if  a  husband  takes  out  a  policy 
for  the  benefit  of  his  wife  and  pays  the  premium,  and  both 
afterwards  join  in  an  assignment  of  the  policy  to  secure  a 
loan,  the    assignment    will    be    upheld,   especially  if  it  also 

of  her  husband,  and  of  his  creditors  and  representatives,  and  also  indepen- 
dently of  any  other  person  effecting  the  same  in  her  behalf,  iiis  creditors  and 
representatives  ;  and  in  case  of  the  death  of  the  husband  of  such  married  woman, 
xHch  pnlici/  and  the  hcwjit  thereof  shall  not  go  to  his  executors  or  administrators, 
hut  shall  belong  to  such  married  ivoman,  and  shall  be  for  her  sole  use  and  benefit 
and  that  of  her  children,"  —  the  part  in  Italics  being  additional  to  that  of  Massa- 
chusetts. 

1  Clark  r.  Durand,  12  Wis.  223. 

2  Archibald  v.  Mut.  Life  Ins.  Co.,  38  Wis.  542. 

8  Foster  v.  Gile,  50  Wis.  603.  See  also  Gambs  v.  Covenant  Ins.  Co.,  50  Mo. 
44;  Landrum  v.  Knowles,  22  N.J.  (Eq.)  594;  PuUis  v.  Robinson  (Mo.),  12 
Reptr.  144. 

*  Ante,  §  390. 

5  Ricker  V.  Charter  Oak  Ins.  Co.  (Minn),  10  Ins.  L.  J.  143;  Gosling  v.  Cold- 
well  (Tenn.),  Wis.  Leg.  News,  Feb.  17,  1879;  Trager  v.  Louisiana,  &c.  Ins.  Co., 
9  Ins.  L.  J.  817  ;  Goodrich  v.  Treat  (Col.).  7  Ins.  L.  J.  269. 

6  Pomerov  r.  Manhattan  Life  Ins.  Co.,  40  III.  398. 

86G 


CII.  XIX.]  ASSIGNMENT   OF   THE   POLICY.  [§  391 

appear  that  the  amount  of  annual  premiums  exceeds  the 
sum  permitted  by  the  statute,  as  in  that  case  the  policy  is 
not  within  the  statute.^  In  Baker  v.  Young  ^  there  was 
no  objection  on  account  of  excessive  payment  of  premiums, 
and  the  court  held  that  such  a  policy  was  assignable 
under  the  statute.^  They  thought  that  the  clause  provid- 
ing that  the  policy  should  inure  to  the  benefit  of  the  wife 
and  children  referred  simply  to  the  manner  of  the  descent 
and  distribution,  to  wit,  that  after  the  wife  has  received  and 
reduced  the  money  to  possession  and  dies,  it  shall  go  to 
the  children  and  not  to  tlie  husband's  representatives, — 
an  interpretation  made  the  more  apparent  by  the  conclud- 
ing paragraph  of  the  section  providing  for  the  appointment 

1  Charter  Oak  Life  Ins.  Co.  i\  Brant,  47  Mo.  419.  If  in  such  case  the  hus- 
band, being  solvent  when  the  policy  issues,  and  afterwards  becoming  insolvent, 
continues  to  pay  the  premiums,  the  proceeds  will  go  to  the  widow  and  creditors 
in  proportion  to  the  premiums  paid  while  solvent  and  insolvent.  PuUis  v.  Rob- 
inson (Mo.),  12  Reptr.  144.  It  seems  that  the  restriction  in  the  statute  does  not 
apply  to  solvent  persons.  Ibid.  See  also  Pence  o.  Makepeace,  65  Ind.  347. 
As  to  the  distribution  of  the  funds  when  the  husband  is  insolvent  the  cases  do 
not  agree,  and  it  is  difficult  to  extract  any  rule  from  them.  In  Mississippi,  where 
a  debtor  in  insolvent  circumstances  voluntarily  assigned  a  life  policy  payable  to 
himself,  to  his  wife  and  children,  the  assignment  was  held  to  be  void  as  against 
then  existing  creditors.  Catchings  v.  Manlove,  39  Miss.  655.  But  the  title  to  a 
policy  payable  to  the  wife  is  in  her,  though  the  assignee  of  a  bankrupt  might  re- 
cover from  her  the  amount  of  payments  of  the  insolvent  husband.  In  re  Bear, 
11  Nat.  Bankr.  Reg.  46.  But  in  another  case  in  a  United  States  court  it  was 
held  that  where  premiums  have  been  paid  by  an  insolvent  husband,  the  addi- 
tional value  created  by  the  premiums  during  insolvency  will  belong  to  the 
estate  in  bankruptcy.  In  re  Yaeger,  Dist.  Ct.  (Mo.),  5  Ins.  L.J.  238.  In  Illinois, 
the  assignment  of  a  policy  on  his  own  life  by  an  insolvent  husband  to  his  wife, 
is  good  against  the  creditors  except  as  to  so  much  as  has  been  paid  for  premiums 
within  the  time  limited  by  the  statute.  Cole  v.  Marple  (111.),  23  Alb.  L.  J.  98. 
In  Missouri  a  still  different  rule  prevails,  namely,  that  the  money  shall  be  appor- 
tioned so  that  the  widow  shall  have  so  much  of  tlie  fund  as  was  produced  by  the 
payment  of  the  premiums  by  her  husband  while  solvent,  and  the  creditors  so 
much  as  was  produced  by  the  payment  of  premiums  while  insolvent.  Puilis  v. 
Robinson,  12  Reptr.  144.  And  where  there  is  no  statute  to  control,  the  courts, 
in  the  interest  of  a  prudent  and  commendable  provision  for  his  family,  have 
gone  a  great  way  towards  the  protection  of  the  families  of  insolvent  husliands 
as  against  their  creditors.  Goodrich  v.  Treat  (Col.),  7  Ins.  L.  J.  269  ;  Stokes  v. 
Coffey,  8  Bush  (Ky.),533;  Succession  of  Hearing,  26  La.  An.  326  ;  Winchestei 
V.  Stebbins,  16  Gray  (Mass.),  52. 

^  47  Mo.  453. 

2  The  statute  differs  in  no  material  respect  from  that  of  Massachusetts. 

867 


§391]  insurance:  fire,  life,  accident,  etc.      [ch.  xjx. 

of  a  trustee  to  manage  the  interests  of  the  married  woman 
in  the  policy  and  its  proceeds,  while  nothing  is  said  concei-ning 
the  interests  of  the  children.  The  object  of  the  statute  was 
to  protect  the  wife,  but  not  to  restrain  lier,  and  to  leave  it 
open  to  her  choice  to  make  a  voluntary  disposition  of  it ; 
and,  if  she  was  mentioned  in  the  policy  as  the  beneficiary, 
but  not  otherwise,  she  might  assign  it  as  a  security  for,  or  in 
discharge  of,  the  debt  of  her  husband.^ 

The  assignment  and  assent  forms  a  new  and  derivative 
contract  with  the  assignee  ;  but  the  original  contract,  never- 
theless, remains  for  the  protection  of  the  original  insured, 
and  also  for  the  protection  of  the  insurers,  and  both  contracts 
fail  if  the  first  fails,  since  the  last  is  derived  from  and  depen- 
dent on  the  first.2  In  Tennessee,^  the  statute  provides  that 
any  husband  may  effect  a  life  insurance  on  his  own  life,  and 
the  same  shall  in  all  cases  inure  to  the  benefit  of  his  Avidow 
and  heirs.  But  the  court  held  that  an  ordinary  policy,  not 
by  its  terms  made  payable  to  the  widow  and  heirs,  was  not 
within  the  meaning  of  the  statute  ;  and  that  as  the  insured, 
who  had  a  policy  on  his  life  for  seven  years,  had  during  its 
currency  and  while  he  lived  the  right  to  dispose  of  his  own 
as  he  pleased,  an  assignment  for  the  security  of  a  creditor  was 
valid.  The  statute  of  Tennessee,  it  is  to  be  observed,  pro- 
vided that  the  insurance  should  inure  to  the  benefit  of  the 
widow  and  heirs,  and  not  be  subject  to  the  luisband's  debts, 
but  did  not  add,  as  is  substantially  the  case  in  the  statutes  of 
most  of  the  other  States,  "  independently  of  the  claims  of  the 
husband  or  of  any  other  person  effecting  the  policy."  And 
the  court  intimated  that,  if  the  policy  had  been  made  payable 
to  the  widow  and  heirs,  the  proceeds  could  not  have  been 
diverted  from  that  disposition.*  A  policy  on  the  life  of  the 
husband  for  the  benefit  of  the  wife  does  not  go  to  a  bank- 

1  Conn.  Mut.  Ins.  Co.  v.  Kyan  (St.  Louis  Ct.  of  App.),  10  Ins.  L.  J.  72. 

2  Baker  v.  Young,  supm.  See  also  Wilson  /■.  Hill,  3  Met.  (Mass.)  66;  Car- 
penter V.  Prov.  Wash.  Ins.  Co.,  16  Pet.  (U.  S.)  495;  Cuniniings  v.  Cliesliire  Ins. 
Co.,  55  N.  H.  457. 

3  Rison  V.  Wilkerson,  3  Sneed,  565. 

*  See  also  Williams  r.  Corson  (Tenn  ),  5  Big.  Life  &  Ace.  Ins.  Cas.  524; 
Gould  V.  Emerson,  99  Mass.  154. 

868 


CH.  XIX.]  ASSIGNMENT   OP   THE   POLICY.  [§  391  A 

rupt's  creditors,  but  is  the  property  of  the  wife,  and  is  not 
assignable  by  the  husband,  at  law  or  in  equity .^  [Where  the 
life  of  S.  is  insured  in  favor  of  A.,  B.,C.,who  pay  the  pre- 
miums, S.  cannot  by  assignment  give  any  right  under  the 
policy,  the  contract  is  not  with  him.^  But  a  life-subject  to 
whom  the  policy  is  payable  if  he  survives  a  certain  day  has 
an  assignable  interest  in  the  policy.^] 

[§  391  A,  Husband  and  Wife.  —  A  parol  assignment  of  a 
policy  by  a  husband  to  his  wife,  with  delivery  creates  an  equit- 
able right,  and  is  good  against  creditors  unless  intended  to 
defraud  them.*  A  husband's  handing  a  non-transferable  ac- 
cident ticket  to  his  wife,  saying  she  should  "  take  care  of  it, 
and  if  he  got  killed  before  he  got  back  she  would  be  13,000 
better  off,"  docs  not  constitute  a  gift  as  against  the  husband's 
creditors.'''  In  Nova  Scotia  an  assignment  by  a  man  directly 
to  his  wife  is  invalid.^  If  to  secure  the  husband's  debts  a  wife 
joins  in  assigning  a  policy  taken  out  by  her  husband  on  his 
life  for  her  benefit,  she  at  most  becomes  merely  a  surety,  and 
an  extension  of  time  without  her  consent  discharges  her.''' 
The  wife  may  indorse  her  name  in  blank  on  the  policy  to 
enable  her  husband  to  use  it  as  collateral  security  for  a  loan, 
and  equity  will  hold  the  assignment  valid  in  favor  of  the 
person  making  the  loan,  but  if  the  husband  not  only  fills  up 
the  assignment  for  a  loan  as  contemplated  by  his  wife  but 
also  for  a  pre-existing  debt,  the  wife  is  not  bound  as  to  the 
latter.^  In  New  York  a  wife  may  now  by  statute  assign  her 
interest  in  a  policy  for  her  benefit  on  her  husband's  life  with 
his  written  consent ;  ^  but  before  the  passage  of  these  laws  such 


1  In  re  Bear,  11  Nat.  Bankr.  Reg.  46;  Galloway  v.  Craig,  23  C.  C.  S.  12,  re- 
versing 8.  c.  22  id.  1211 ;  Parkes  v.  Bott,  8  L.  J.  n.  s.  Ch.  14. 

2  [Ferdon  v.  Canfield,  101  N.  Y.  14.3.] 

3  [Pierce  v.  Charter  Oak  Ins.  Co.,  138  Mass.  151.] 
*  [Chapman  v.  Mcllwrath,  77  Mo.  38.] 

5  [Williams' Appl.  106  Pa.  St.  116,  119.] 

«  [Bliss  V.  JFAna.  Life  Ins.  Co.,  19  N.  S.-R.  36.3.] 

7  [AUis  V.  Ware,  28  Minn.  166.] 

8  [Conn.  Milt.  Life  Ins.  Co.  v.  Westervelt,  52  Conn.  586.] 

9  [Laws  of  1873,  ch.  821 ;  Laws  of  1879,  ch.  248.  See  Anderson  v.  Goldsmidt^ 
103  N.  Y.  617.] 

869 


§  391  B]  INSUEANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.        [CH.  XIX. 

an  assignment  was  voidable  at  her  option.^  Where  the  wife 
to  whom  a  policy  on  her  husband's  life  was  payable,  was  by 
fraud  and  coercion  induced  to  assign  it  as  collateral  to  B.,  a 
subsequent  creditor  of  her  husband,  who  did  not  know  of  the 
fraud  and  coercion  and  who  paid  premiums  on  the  policy,  it 
was  held  that  B.  was  not  an  innocent  purchaser  for  value,  and 
as  against  the  wife  was  only  entitled  to  his  premiums.^] 

[§  391  B.  Creditors.  —  If  the  insurance  company  does  not 
object  to  an  assignment  of  the  policy,  a  creditor  of  the  insured 
cannot.  The  provision  is  only  for  the  benefit  of  the  insurer.^ 
In  Maryland  under  the  Act  of  1878,  ch.  200,  a  father  may 
make  a  voluntary  assignment  of  a  life  policy  to  his  wife  or 
children  or  both,  free  and  clear  of  his  creditors.*  An  assign- 
ment of  a  policy  to  a  debtor,  the  surplus  after  liquidating  his 
debt  to  be  used  as  a  trust  fund  for  C,  is  void  as  to  creditors 
at  the  time,  who  continued  to  be  so  up  to  his  death.^  If  a 
trustee  assigns  a  policy  to  a  creditor  and  afterwards  assigns 
his  trust  to  a  third  person  without  mentioning  in  his  specific 
detail  of  matters  assigned  this  policy,  it  has  been  held  that 
the  second  trustee  has  no  right  to  the  policy  as  against  the 
creditor.^  When  one  who  is  insolvent  at  the  time  of  insur- 
ance  assigns  the  policy  in  trust  for  his  wife,  the  transfer  is 
fraudulent  and  void  as  to  creditors.^  But  the  mere  existence 
of  debts  is  not  enough,  the  actual  fact  of  insolvency  must  be 
shown.^  A  mutual  policy  in  a  company  whose  constitution 
provides  for  the  changing  of  the  beneficiary,  who  may  be  any 
"  legatee  or  devisee,"  may  be  assigned  to  a  creditor  to  cover 
his  debt.^     If  a  wife  indorses  her  name  in  blank  on  a  policy, 

1  [Frank  v.  Mut.  Life  Ins.  Co.,  102  N.  Y.  266.  See  further  on  tliis  subject 
under  the  laws  of  N.  Y.,  Living  v..  Domett,  26  Hun,  150;  Leonard  v.  Clinton, 
id.  288,  290;  Bloomingdale  v.  Lisberger,  24  Hun,  355;  Smillie  y.  Quinn,  25 
Hun,  332.] 

2  [McCutcheon's  Appl,  99  Pa.  St.  133.] 

3  [Leinkauf  v.  Caiman,  110  N.  Y.  50.] 
*  [Earnshaw  v.  Stewart,  64  Md.  513.] 

6  [In  re  Magawley's  Trust,  5  De  G.  &  S.  1.] 

6  [Johnson  v.  Swire,  3  Giff.  194.] 

'  [Appeal  of  Elliott's  Ex'rs,  50  Pa.  St.  75.] 

8  [Skarf  V.  Soulby,  1  Mac.  &  Gor.  364.] 

9  [  Martin  v.  Stubbings,  126  111.  387.] 

870 


CH.  XIX.]  ASSIGNMENT    OF   THE   POLICY.  [§  392 

and  the  husband  fills  it  out  and  gets  a  loan  on  it  with  which 
he  pays  part  of  the  premium,  and  the  remainder  not  being 
paid  in  time  the  policy  is  declared  void,  and  a  new  one  issued 
to  the  wife,  applying  the  sum  paid  on  the  old  premium  to  the 
new  one,  the  creditor  has  a  lien  on  the  insurance  money .^  An 
assignment  of  a  life  policy  is  not  affected  by  a  prior  general 
assignment  in  favor  of  creditors,  where  it  appears  that  the 
policy  remained  in  the  hands  of  the  assignor,  and  never  came 
to  tlie  possession  of  nor  was  ever  claimed  by  the  assignee  for 
creditors.^] 

§  392.  Life  Policy  ;  Devise  of  Proceeds  ;  Rights  of  Children. 
—  So  where  the  policy  was  for  the  sole  benefit  of  children,  it 
was  held  that  the  father  could  not  devise  the  proceeds  to  his 
executors  in  trust  for  other  purposes.^  The  children  in  such 
case  became  vested  immediately  upon  the  delivery  of  the 
policy  with  the  entire  beneficial  interest,  and  it  is  then  beyond 
the  control  of  the  insured.  So  where  the  policy  is  issued  to 
the  wife,  payable  to  her,  or,  in  case  of  her  death  before  her 
husband,  to  her  children.  The  husband  cannot,  after  her 
death,  surrender  the  policy  and  take  out  a  new  one  for  his 
own  benefit.*  So  if  at  the  suggestion  of  the  wife,  who  pays 
all  the  subsequent  premiums,  her  husband  applies  for  and 
takes  out  a  policy  on  his  life  for  her  benefit,  herself  paying 
the  first  premium,  the  policy  acknowledging  the  receipt  of  the 
several  premiums  as  from  the  wife,  this  is  an  insurance  by 
the  wife,  the  husband  acting  as  agent,  and  the  creditors  of 
the  husband  have  no  claim  to  the  proceeds.^     All  the  above- 

1  [Norwood  V.  Guerdon,  60  111.  253.] 

2  [Hurlbut  V.  Hurlbut,  49  Hun,  189.] 

3  Ruppert  V.  Union  Mut.  Ins.  Co.,  7  Robt.  (N.  Y.  Superior  Ct.)  155.  The 
charter  provided  that  policies  might  be  issued  for  the  benefit  of  a  minor,  and 
should  inure  to  his  benefit  independently  of  the  one  wliose  life  may  be  tlius 
insured.  If  the  statute  authorizes  a  devise  to  wife  or  children,  in  the  absence  of 
both,  the  proceeds  go  to  the  estate  of  the  insured.  Hathaway  v.  Sherman,  61 
Me.  466. 

*  Chapin  v.  Fellowes,  36  Com.  132;  Fraternal  Mut.  Life  Ins.  Co.  v.  Apple- 
gate,  7  Ohio  St.  292  ;  Gould  v.  Emerson,  99  Mass.  154;  Bailey  v.  New  England, 
&c.  Ins.  Co.,  114  Mass.  177 ;  Succession  of  Kugler,  23  La.  An.  455. 

*  Jacob  V.  Continental  Ins.  Co.,  Superior  Ct.,  Cleveland  (Ohio),  2  Big.  Life  & 
Ace.  Ins.  Cas.  155.     See  also  ante,  §  390. 

871 


§  393]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.         [CH.  XIX. 

cited  cases  proceed  upon  the  ground  that  when  the  policy  is 
issued  the  rights  are  vested,  and  cannot  be  devested  without 
the  consent  of  those  to  whom  they  are  secured. 

§  393.  Right  to  sue  and  Right  to  appropriate  Proceeds  not 
identical.  —  The  right  to  sue  under  a  policy  of  insurance, 
whether  in  the  party  who  insures,  or  the  representatives  of 
the  life  insured,  or  the  beneficiary,  is  variously  maintained 
in  the  different  States,  according  to  the  provisions  of  their 
several  statutes,  and  the  greater  or  less  strictness  of  adher- 
ence, by  the  several  courts,  to  the  rules  of  the  common  law.^ 
The  general  rule  is  that  the  action  must  be  brought  in  the 
name  of  the  person  or  his  legal  representative  to  whom  the 
insurance  is  made. 

The  right  to  sue,  however,  under  these  statutes,  enacted  in 
the  interest  of  the  family  support,  is  not  to  be  confounded 
with  the  right  to  appropriate  and  use  the  proceeds.  The  as- 
signee may  well  have  the  right  to  sue  in  his  own  name  and 
recover  the  amount  payable  by  the  policy,  but  he  recovers  to 
hold  in  trust  for  the  beneficiaries.  "  The  rights  of  the  child," 
say  the  court,  in  Burroughs  v.  State  Mutual  Life  Insurance 
Company ,2  "  cannot  be  set  up  to  defeat  this  action.  No  trus- 
tee has  ever  been  appointed  to  hold  and  manage  the  interest 
of  the  wife.  The  policies  are  in  terms  payable  to  the  assured 
and  his  assigns.  The  assignment  to  the  plaintiff,  assented  to 
by  the  insurers,  transferred  to  him  the  legal  title  in  the 
policies,  and  the  right  to  sue  thereon.  If  the  assured  had 
afterwards  died,  leaving  no  wife  or  child  surviving,  the  assign- 

1  [An  action  at  common  law  on  an  assigned  policy  must  be  brought  in  the 
name  of  the  assignor.  Hobbs  v.  Memphis  Ins.  Co.,  I  Sneed  (Tenn.),  444  at 
452.  The  assignee  cannot  maintain  an  action  tiiereon  in  his  own  name :  Bayles 
V.  Insurance  Co.,  27  N.  J.  L.  103  at  165,  except  by  statute  permission.  Gourdon 
V.  Ins.  Co.  of  N.  A.,  S  Yeates,  327  at  334.  In  Te.xas  a  policy  may  be  assigned 
under  articles  266  and  267  of  the  Rev.  Stats,  so  as  to  give  tlie  assignee  a  right 
of  action  in  his  own  name,  but  subject  to  all  claims  against  the  previous  owner 
arising  before  notice  of  the  assignment  to  the  defendant.  East  Tex.  Fire  Ins. 
Co.  V.  Coffee,  61  Tex.  287.  This  embodies  the  rule  that  obtains  in  equity.  In 
Missouri,  a  legal  assignee  of  the  policy  showing  that  he  is  the  equitable  owner 
of  tlie  interest  of  the  assured  in  the  premises  may  recover.  Breckinridge  v. 
Amer.  Cent.  Ins.  Co.,  87  Mo.  62.] 

2  97  Miiss.  359. 

872 


CH.  XIX.]  ASSIGNMENT   OP   THE    POLICY.  [§  395 

ment  would  have  entitled  the  assignee  to  receive  the  whole 
amount  of  tiie  policies  to  his  own  use.  The  plaintiff,  having 
the  legal  title,  may  maintain  this  action  at  law,  and,  if  he 
recovers  judgment,  will  hold  the  proceeds,  so  far  as  they 
inure  to  tlie  benefit  of  the  child  of  the  assured,  in  trust  for 
him.  The  equitable  rights  of  the  child  under  the  statute, 
and  the  extent  to  which  they  may  be  subject  to  a  claim  of 
the  assignee  for  reimbursement  of  the  sums  paid  by  him  for 
premiums  and  assessments,  or  otherwise  cannot  now  be  de- 
termined, but  may  be  ascertained  upon  a  bill  of  interpleader 
filed  by  the  insurance  company,  or  in  a  suit  by  the  child 
against  this  plaintiff  after  he  shall  have  recovered  judgment 
in  this  action."  ^ 

§  394.  If  a  husband  insures  his  life  for  the  benefit  of  his 
wife,  without  her  authority,  the  policy  being  made  payable  to 
her,  her  subsequent  acceptance  of  the  policy  is  such  a  rati- 
fication of  the  act  of  her  husband  as  to  bring  her  within  the 
statute  which  authorizes  a  wife  to  cause  her  husband's  life  to 
be  insured,  and  to  constitute  a  valid  contract  between  her 
and  the  insurance  company .^ 

§  395.  Assignment,  What  constitutes  ;  Possession  ;  Deliv- 
ery. —  A  mere  declaration  contained  in  a  letter,  that  a  life 
insurance  was  made  for  the  person  addressed,  without  a 
delivery  of  the  policy,  is  no  assignment.^  Possession  of  the 
policy  is  only  prima  facie  evidence  of  a  right  to  claim  the 
proceeds,  and  is  open  to  the  objection  that  delivery  was  un- 
authorized, that  there  is  an  assignment  outstanding  in  the 
hands  of  another,  or  to  any  other  evidence  explanatory  of  the 
possession  and  showing  its  purpose.* 

Mere  possession,  however,  is  evidence  of  title  in  the  policy 
and  the  right  to  its  proceeds.  In  the  absence  of  a  formal 
transfer  in  writing,  which  is  not  necessary,  there  are  many 

1  The  general  subject  of  the  riglit  to  sue,  and  wlio  may  claim  the  loss,  will 
be  considered  hereafter,  when  we  come  to  treat  of  the  loss  and  its  incidents, 
post,  §  445  et  seq. 

2  Thompson  v.  Am.  Fire,  Life,  &  Sav.  Ins.  Co.,  46  N.  Y.  675. 

3  In  tlie  matter  of  Webb,  49  Oal.  541. 

*  Wood  V.  Plioenix  Mut.  Life  Ins.  Co.  of  Hartford,  22  La.  An.  617  ;  Pence  v. 
Makepeace,  65  Ind.  347. 

873 


§  395]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.        [CH.  XIX. 

other  facts  and  circumstances  which  courts  will  recognize  as 
equivalent  to  an  assignment.     Delivery  is  not  essential. 

While  delivery  of  the  instrument  of  assignment  seems  to 
be  necessary  as  against  the  assignee  in  bankruptcy,^  or  at 
least  a  delivery  and  deposit  of  the  policy  before  the  bank- 
ruptcy, for  that  purpose,  with  notice  to  the  company,  which 
may  be  after  the  act  of  bankruptcy  if  before  the  adjudication, 
and  if  the  depositary  is  not  aware  of  the  act  of  bankruptcy  ,2 
it  does  not  seem  to  be  necessary  in  a  case  where  a  person 
insures  his  life  and  assigns  his  policy,  and  the  assignee  gives 
notice  to  the  insurers  and  subsequently  pays  all  the  pre- 
miums. In  one  case,  though  the  assignee  had  negligently 
permitted  the  policy  to  remain  in  the  hands  of  the  assignor, 
it  was  held  he  was  entitled  to  it,  in  the  absence  of  any 
fraudulent  purpose  on  his  part,  even  against  one  who  had 
innocently  advanced  money  to  the  assignor  after  the  assign- 
ment.^ So  a  letter  written  by  the  insured,  giving  notice  of 
a  wish  to  transfer  his  interest  to  a  third  person,  the  letter 
being  shown  to  the  company  and  its  contents  noted  on  their 
books,  was  held  to  be  a  good  assignment  in  equity  against  a 
subsequent  assignee  who  had  got  possession  of  the  policies.* 
Reputed  ownership,  and  the  fact  that  the  policy  is  left  within 
"  the  order  and  disposition  "  of  the  bankrupt,  seem  to  require 
something  more  to  perfect  an  assignment  of  a  policy  as 
against  an  assignee  in  bankruptcy  than  as  against  an  ordi- 
nary assignee.^  But  a  mere  direction  from  the  solicitor  of 
the  assignee,  though  entered  by  the  company  on  its  books, 
to  send  letters  touching  the  policy  to  that  solicitor,  is  no  no- 
tice to  take  the  policy  out  of  the  order  and  disposition  of  the 
bankrupt  as  against  his  assignee.^     Yet  wliere  it  was  provided 

1  Palmer  v.  Merrill,  6  Cusli.  (Mass.)  282;  atite,  §  389. 

2  In  re  Styan,  1  Phillips,  Cli.  105. 

3  Neale  v.  Molineux,  2  C.  &  K.  672.  If  negligence  instead  of  fraud  bad  been 
pleaded,  the  result  might  have  been  difTerent.    See  Dearie  v.  Hall,  3  Russ.  Ch.  1. 

*  Chowne  et  al.  v.  Baylis,  31  Bcav.  3-51. 

5  See  Green  v.  Ingham,  L.  R.  2  C.  P.  525 :  s.  c.  5  Big.  Life  &  Ace.  Ins.  Cas. 
662  ;  Alletson  v.  Chichester,  L.  R.  10  C.  P.  319 ;  s.  c.  5  Big.  Life  &  Ace.  Ins. 
Cas.  688. 

6  West  ('.  Reid,  2  Hare,  Ch.  249. 

874 


CH.  XIX.]  ASSIGNMENT   OF   THE   POLICY.  [§  395 

that  if  the  policy  should  be  assigned  bona  fide,  the  assignee 
should  have  the  benefit  of  it  so  far  as  his  interest  extended, 
although  the  insured  should  commit  suicide,  it  was  held  that 
a  deposit  of  the  policy  as  security  for  a  debt,  accompanied  by 
a  letter  promising  to  assign  it  upon  request,  though  there 
was  no  notice  to  the  insurers,  was  a  ho7ia  fide  assignment 
within  the  meaning  of  the  policy. ^  Indeed,  in  such  case,  a 
mere  deposit  gives  the  depositary  a  "  bona  fide  interest "  in 
the  policy  "  as  a  security  for  money."  ^  So  a  deposit  with  a 
letter  authorizing  the  depositary  to  hold  as  security  for  any 
indebtedness  that  may  exist  between  the  insured  and  the  as- 
signee, is  an  "  assignment"  which  a  court  of  equity  will  recog- 
nize and  enforce.^  So  when  the  policy,  if  "  legally  assigned," 
is  to  be  good  to  the  assignee,  a  (deposit  as  security  for  any 
balance  of  accounts  which  may  be  found  due  as  between  the 
assured  and  the  assignee  is  good.  As  in  strictness  a  policy 
cannot  be  legally  assigned,  the  words  here  must  be  taken  in 
the  popular  sense  as  equivalent  to  "  lawfully,"  that  is,  effec- 
tually and  properly  assigned,  so  that  the  courts  can  recognize 
and  enforce  the  act.*  A  life  policy  may  also  be  the  subject 
of  a  donatio  mortis  causa:' 

Delivery  by  placing  the  policy  in  the  safe  of  a  firm,  of 
which  the  assignor  is  a  member,  or  of  any  third  person  in 
trust  for  the  beneficiary,  is  sufficient.^  And  the  retention  of 
possession  by  the  assignor,  a  husband,  in  behalf  of  the  as- 
signee, a  wife,  by  agreement,  after  a  bona  fide  equitable  assign- 
ment by  delivery,  will  be  regarded  as  the  possession  of  the 
assignor.'^  So  is  handing  it  to  the  agent  of  the  insurers, 
with  a  request  to  keep  it  for  the  designated  assignor,  a  good 
delivery.^     A  policy  payable,  a   given  sura  on  suffering  per- 

1  Cook  V.  Black,  1  Hare.  Ch.  390. 

2  Moore  v.  Woolsey,  4  E.  &  B.  243. 

^  Jones  V.  Consolidated  Ins.  Co.,  26  Beav.  256. 

*  Dufaur  v.  Prov.  Life  Ass.  Co.,  25  Beav.  599,  603. 

5  Witt  V.  Amis,  1  B.  &  S.  (Q.  B.)  109. 

6  Estate  of  Trough,  8  Phila.  214 ;  Lemon  v.  Phoenix,  &c.  Ins.  Co.,  38  Conn.  294. 
T  Estate  of  Malone  (Pa.),  9  Ins.  L.  J.  767 ;  Fowler  v.  Butterly  (N.  Y.),  9  Ins. 

L.  J.  329. 

*  Marcus  v.  St.  Louis,  &c.  Ins.  Co.,  68  N.  Y.  625,  overruling  s.  c.  7  Hun 
(N.  Y.).  5. 

875 


§  396]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.         [CH.  XIX. 

sonal  injury,  and  a  certain  other  sum  at  tlie  death  of  insured, 
will  be  equitably  assigned  to  the  wife,  as  to  the  last  sum,  if 
the  husband  in  writing  requests  her  to  take  the  policy,  and 
"  keep  it  up,"  saying  that  it  shall  be  hers  if  she  does  so  keep 
it  up  by  paying  the  dues.^  And  whether  the  delivery  is 
with  intention  to  give  the  assignor  full  power  and  control 
is  for  the  jury  to  determine,  on  all  the  circumstances.^  In 
Scotland,  it  seems  that  the  delivery  of  the  policy,  coupled 
with  a  promise  to  assign,  is  no  assignment.^ 

§  396.  Notice  of  Assignment ,  Life.  —  Notice  of  the  assign- 
ment is  not  necessary  to  its  validity  as  between  the  assignees 
and  the  insurers,  unless  required  by  the  terms  of  the  policy ; 
and  a  notice  at  the  bottom  of  the  policy  that,  "if  assigned, 
notice  must  be  given  to  the  company,"  docs  not  affect  the  case 
as  between  the  insurers  and  the  assignee,  whatever  might  be 
its  effect  as  between  him  and  his  creditor.  In  this  respect, 
assignments  of  life  policies  bear  a  more  near  analogy  to  mar- 
ine than  to  fire  policies.  AVhen  the  contract  is  to  pay  to  per- 
sonal representatives  or  assigns,  the  right  of  the  assignee 
becomes  perfect  by  force  of  the  assignment  alone,  and  by  the 
transfer  he  becomes  instantly  invested  with  the  legal  interest 
in  the  policy,  of  which  by  the  same  act  the  assignor  becomes 
devested.  The  insurer  does  not  need  notice  for  his  protection. 
He  cannot  be  required  to  pay  unless  the  policy  is  produced,  or 
its  non-production  satisfactorily  accounted  for ;  nor  can  he  be 
required  to  pay  without  proof  that  the  person  demanding 
payment  is  by  law  the  rightful  assignee  of  the  policy,  and 
entitled  to  recover  the  money.  He  is  sufficiently  protected 
against  all  risks,  except  such  as  may  arise  from  his  own  care- 
lessness, against  which  the  law  gives  him  no  protection.* 
But  for  his  own  protection,  where  it  is  not  required,  it  may  be 
prudent  for  the  assignee  to  give  notice,  in  order  to  avoid  the 


1  Swift  V.  Railway,  &c  Ins.  Co.,  06  111.  309. 

2  Marcus  v.  St.  Louis,  &c.  Ins.  Co.,  68  N.  Y.  625 ,  Pence  v.  Makepeace,  65 
Ind.  347. 

3  United  Kingdom  Ins.  Co.  v.  Dixon,  16  Ct.  of  Sess.  Cas.,  1st  Series,  1277  ; 
s.  c.  3  Big.  Life  &  Ace.  Ins.  Cas.  424. 

*  Mut.  Prot.  Ins.  Co.  v.  Hamilton,  5  Sneed  (Tenn  ),  269. 

876 


CH.  XIX.]  ASSIGNMENT   OP    THE   POLICY.  [§  396 

claims  of  subsequent  assignees,  as  also  claims  for  set-off  for 
advances  to  the  assignor  before  notice.^  When  notice  is  re- 
quired, notice  after  death  is  sufficient,  and  probably  at  any- 
time before  payment  to  the  representatives  of  the  assignee.^ 
Still,  in  many  cases,  notice  of  the  assignment  is  required,  and 
the  assent  of  the  company  thereto,  as  a  guard  against  the  dan- 
gers of  speculative,  not  to  say  gambling,  insurance.  When 
these  are  required,  on  penalty  of  forfeiture,  the  assignment  is 
ineffectual  without  them  as  against  the  insurers.^  And  so  it 
was  held  in  Stevens  v.  Warren,^  which  was  a  case  where  the 
assured  in  his  lifetime  assigned  his  policy  to  one  who  had  no 
insurable  interest  in  the  life  of  the  assured,  without  the  as- 
sent of  the  insurers,  which  by  the  terms  of  the  policy  was  re- 
quisite. It  is  easy  to  see  that  unless  this  check  were  provided, 
a  dangerous  species  of  gambling  and  speculation  might  be  en- 
couraged. Verbal  notice  will  be  sufficient,  unless  it  be  required 
to  be  in  writing,^  and  to  an  agent,^  unless  he  be  a  trustee,  or 
in  some  way  interested."  No  form  of  words  is  necessary. 
Any  expression  in  words  appropriate  to  convey  the  fact,  and 
used  for  that  purpose,  will  amount  to  notice.  It  is  enough  for 
the  assignee  to  say  that  he  is  the  holder.^  But  the  words 
should  be  used  under  such  circumstances  as  to  naturally  call 
the  attention  of  the  insurers  to  the  fact  that  notice  is  intended. 
A  mere  incidental  mention,  therefore,  to  a  clerk,  by  the  agent 
of  the  holder,  who  had  been  sent  to  inquire  if  the  premiums 
had  been  paid,  might  not  be  enough ;  ^  and  information  ac- 
quired in  casual  conversation,  sucli  as  would  not  be  ordi- 
narily treated  as  having  any  special  purpose,  would  not  be 


1  Succession  of  Risley,  11  Rob.  (La.)  298  ;  Stocks  v.  Dobson,  4  De  G.,  M.  & 
G.  11 ;  In  re  Russell's  Policy  Trusts,  L.  R.  15  Eq.  26. 

2  New  York  Life  Ins.  Co.  v.  Flack,  3  Md.  .341. 

^  The  policy  does  not,  however,  become  void  by  such  an  assignment,  unless 
such  is  tiie  agreed  result.     Marcus  v.  St.  Louis,  &c.  Ins.  Co.,  G8  N.  Y.  625. 

4  101  Mass.  5G5. 

5  North  Brit.  Ins.  Co.  v.  Hallett,  7  Jur.  n.  s.  1263 ;  Gale  v.  Lewis,  9  Q.B.  730. 

6  Ibid.     See  also  ante,  §  367. 

■J  Browne  v.  Savage,  4  Drew.  635. 

8  Ex  parte  Stright,  2  Dea.  &  Chit.  314. 

8  Edwards  v.  Scott,  2  Scott  (N.  If.),  266. 

877 


§  398]  INSUEANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.        [CH.  XIX, 

notice,^  at  least,  as  against  the  claim  of  a  subsequent 
assignee.^ 

§  397.  Assignment ;  Fraud.  —  If  the  assignment  be  procured 
by  undue  influence,  which  amounts  to  moral  duress,  as  bv  ex- 
citing the  fears  of  a  wife  by  threats  that  her  husband  shall  be 
incarcerated  if  she  does  not  make  the  assignment,^  of  course 
it  is  void,  as  is  also  the  case  if  it  be  procured  by  fraud ;  ^  as 
where,  upon  private  information  of  the  dangerous  sickness  of 
the  insured,  the  policy  is  purchased  of  the  assignee  of  the  in- 
sured at  what  it  would  be  worth  if  there  was  no  such  sickness, 
the  assignee  being  in  ignorance  of  the  fact ;  ^  and  so  where 
possession  is  obtained  of  a  policy  payable  to  a  third  person,  by 
false  pretences  on  the  part  of  the  person  who  effected  the  in- 
surance, which  upon  his  request  is  cancelled,  and  thereupon 
another  policy  is  issued,  payable  to  a  different  person  from 
the  payee  in  the  cancelled  policy.^  This  case  was  a  bill  in 
equity  by  the  payee  of  the  first  policy  against  the  company 
and  the  payee  of  the  second  policy  (who,  however,  did  not 
appear,  though  notified  of  the  suit),  to  compel  the  pay- 
ment of  the  proceeds  of  the  second  to  her.  And  an  assent 
to  an  assignment  procured  by  misstatement  will  vitiate  the 
assent." 

§  398.  Assignment  of  Life  Policy  to  a  Party  -without  Interest 
void.  —  All  the  objections  tliat  exist  against  issuing  a  policy 
to  one  upon  the  life  of  another,  in  whose  life  the  former  has 
no  insurable  interest,  exist  against  his  holding  such  policy  by 
mere  purchase  and  assignment  from  another.  In  either  case, 
the  holder  of  such  policy  is  interested  in  the  death,  rather  than 

1  Edwards  u.  Martin,  1  L  R.  Eq.  121. 

2  North  Brit.  Ins.  Co.  v.  Hallett,  7  Jur.  n.  s.  126-3. 

*  Eadie  v.  Slimmon,  2G  N.  Y.  9. 

*  Ante,  §  385. 

5  Jones  et  al.  v.  Keene,  2  Mood.  &  Rob.  348  and  note. 

6  Lemon  v.  Phceni.x  Mut.  Life  Ins.  Co.,  38  Conn.  204.  In  such  case  the  origi- 
nal insured  may  recover  of  the  party  procuring  the  cancellation  tlie  full  amount 
of  the  cancelled  policy,  less  the  premium  paid  by  him  on  the  first.  Gray  v. 
Murray,  3  Johns.  (N.  Y.)  167.  And  see  ante,  §  385  ;  Tabor  r.  Michigan,  &c.  Ins. 
Co.,  10  Ins.  L.  J.  97. 

7  Johnstone  v.  Niagara,  &c.  Ins.  Co.,  13  U.  C.  (C.  P.)  331 ;  Merrill  v.  Farm- 
ers' Ins.  Co.,  48  Me.  285. 

878 


CH.  XIX.]  ASSIGNMENT   OF   THE   POLICY.  [§  398 

in  the  life,  of  the  insured. ^  The  policy  of  the  law  forbids 
such  speculations  based  on  the  continuance  of  human  life.  It 
will  not  uphold  a  practice  which  incites  danger  to  life,  and  it 
substantially  declares  that  no  one  shall  have  any  claim  under 
a  policy  upon  the  life  of  another,  in  whose  life  he  had  no  in- 
surable interest  at  the  time  he  acquired  the  policy,  whether 
the  policy  be  issued  to  him  directly  from  the  insurer,  or 
whether  he  acquires  the  policy  by  purchase  and  assignment 
from  another.  If  he  may  purchase  a  policy  on  the  life  of  an- 
other in  whose  life  he  has  no  interest,  as  a  mere  speculation, 
the  door  is  open  to  the  same  practice  of  gambling,  and  the 
same  temptation  is  held  out  to  the  purchaser  of  the  policy  to 
bring  about  the  event  insured  against,  as  if  the  policy  had 

1  [An  assignee  of  a  life  policy  is  entitled  to  the  proceeds  only  to  the  extent 
of  his  insurable  interest.  Roller  i\  Moore's  Admr.,  19  Ins.  L.  J.  39  (Va.),  Nov. 
1889.  A  life  policy  cannot  be  assigned  during  the  "  life  "  to  one  without  insur- 
able interest  in  it.  Such  an  assignment  is  open  to  all  the  objections  that  exist 
against  an  original  insurance  by  such  person  of  a  life  in  tlie  continuance  of 
which  he  is  not  interested.  Ala.  Gold  Life  Ins.  Co.  v.  Mobile  Mut.  Ins.  Co.,  81 
Ala.  329;  Bayse  v.  Adams,  81  Ky.  .368,  375.  The  assignee  must  have  such  ties 
of  blood,  or  marriage,  or  business  relations  with  the  insured  as  will  justify  a 
reasonable  expectation  of  advantage  or  benefit  from  the  continuance  of  his  life. 
And  if  an  assignee  without  insurable  interest  receives  the  insurance  money  from 
the  company,  the  administrator  of  the  insured  or  the  beneficiaries  maj'  recover 
the  funds  from  the  assignee.  Warnock  v.  Davis,  104  U.  S.  775,  779,  citing 
Cammack  i-.  Lewis,  15  Wall.  643 ;  Price  v.  Knights  of  Honor,  68  Tex.  361; 
Sternes  v.  Warner,  101  Mass.  364,  cited  ;  Ruth  v.  Katterman,  112  Pa.  St.  257; 
Downey  v.  Hoffer,  110  Pa.  St.  109.  The  same  is  true  in  case  of  a  policy  made 
in  favor  of  one  not  a  near  relative  nor  a  creditor.  Roller  v.  Moore's  Adm  ,  19 
Ins.  L.  J.  39,41  (Va.),  Nov.,  1889  ;  Armstrong  v.  Mut.  Life  Ins,  Co.,  20  Blatch. 
493  ;  11  Fed.  Rep.  573;  11  Ins.  L.  J.  441.  In  this  case  the  assignee  murdered 
the  assured,  — a  strong  illustration  of  the  force  that  lurks  in  the  objection  made 
by  the  law  to  such  assignments.  It  is  against  the  policy  of  the  law  for  one  who 
has  no  interest  in  the  life  of  another  to  take  out  a  policy  on  that  life,  and  the 
same  reason  will  prevent  a  beneficiary  during  the  continuance  of  the  life  from 
selling  or  transferring  the  policy  to  one  without  interest  in  the  "  life."  Such  a 
transaction  is  void,  and  althougli,  after  death  of  the  insured,  the  assignee  return 
the  policy  to  the  beneficiary  with  the  word  "  cancelled  "  written  across  the  as- 
signment, the  policy  is  dead  in  the  hands  of  the  beneficiary  or  his  assignee.  Life 
Ins.  Co.  V.  McCrura,  36  Ivans.  146.  If  an  assignment  bj'  the  beneficiary  is  void, 
still  the  representatives  of  the  "  life  "  have  no  claim  on  the  funds  and  cannot 
sue  the  assignee  for  them.  They  belong  to  the  beneficiary.  Hoffman  v.  Hoke, 
122  Pa.  St.  377.  The  burden  is  on  the  administrator  to  show  that  the  assignee 
wiio  has  received  the  insurance  and  from  whom  he  claims  it  was  not  a  near  rela- 
tive nor  a  creditor.     Lenig  v.  Eisenhart,  127  Pa.  St.  59.] 

VOL.  II.  — 12  8T9 


§  398  A]        INSUEANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.        [CH.  XIX. 

been  issued  directly.  It  is,  in  fact,  an  attempt  to  do  indirectly 
what  the  law  will  not  permit  to  be  done  directly .^  If  the  in- 
terest be  merely  nominal,  as  when  a  policy  for  ^3,000  is  taken 
out,  and  assigned  to  secure  a  debt  for  $70,  with  an  agreement 
to  pay  the  wife  of  the  insured  a  portion  of  the  proceeds,  and 
the  assignee  receives  the  proceeds  of  the  policy,  the  adminis- 
trator may  recover  the  whole,  less  the  debt  and  premiums 
paid  for  the  assignor.^  [An  assignment  of  a  life  policy  as 
security  for  advances  made  and  to  be  made  by  the  assignee 
is  good  to  the  extent  of  the  advances.^] 

[§  898  A.  If  the  company  waives  the  want  of  insurable  in- 
terest in  an  assignee,  an  assignor  or  prior  assignee  cannot 
claim  any  advantage  from  the  want  of  such  interest.*  In- 
deed, the  doctrine  that  the  assignment  of  a  ])olicy  to  one  with- 
out interest  in  the  life  is  as  objectionable  as  the  taking  out  of 
a  policy  without  insurable  interest,  docs  not  seem  good  sense. 
If  this  is  so,  it  is  difficult  to  understand  how  the  designation 

1  Franklin  Life  Ins.  Co.  v.  Ilazzard,  41  Ind.  116,  citing  and  approving  Stev- 
ens V.  Warren,  101  Mass.  554,  ante,  §  110,  and  doubting  St.  John  v.  Am.  Mut. 
Life  Ins.  Co.,  IB  N.  Y.  31 ;  Valton  v.  Nat.  Loan  Fund  Life  Ass.  Co.,  20  N.  Y.  32 ; 
and  Asliley  i'.  Ashley,  3  Sim.  149,  apparently  to  the  contrary.  In  this  case,  the 
insured  sold  his  policy  to  one  who  was  not  his  creditor,  and  who  had  no  insur- 
able interest,  and  the  company  assented  to  the  sale  and  assignment.  See  also 
Franklin  Ins.  Co.  v.  Sefton,  53  Ind.  380,  affirming  Hazzard's  case,  and  explaining 
Hutson  V.  Merrifield,  51  Ind.  24 ;  Guardian,  &c.  Ins.  Co.  v.  Hogan,  80  111.  85 ; 
Missouri,  &c.  Ins.  Co.  i\  Sturges,  18  Kans.  93;  Ferguson  v.  Massachusetts,  &c. 
Ins.  Co.,  Sup.  Ct.  (N.  Y.),  11  Reptr.  752;  Varina  v.  N.  Y.  Life  Ins.  Co.  (Q.  B. 
Montreal),  3  Leg.  News,  322  ;  Swick  v.  Home  Ins.  Co.,  2  Dill.  C.  Ct.  1G6 ;  Lewis 
t^.  Phcenix  Ins.  Co.,  39  Conn.  100  ;  Singleton  r.  St.  Louis,  &c.  Ins.  Co.,  66  Mo.  63; 
Mutual  Benevolent  Ass.  v.  Hoyt  (Mich.),  10  Ins.  L.  J.  627.  Contra,  Clark  v.  Al- 
len, 11  R.  I.  439.  But  the  court  will  not  look  narrowly  at  the  transaction  to  find 
grounds  for  setting  it  aside.  If,  for  instance,  the  insured  assigns  all  his  interest 
in  a  policy  absolutely  to  a  creditor,  the  court  will,  if  possible,  uphold  the  trans- 
action as  a  permissible  one,  by  way  of  security,  with  a  trusteeship  in  the  as- 
signee for  any  balance  in  favor  of  the  assignor,  rather  than  as  an  illegal  one, 
giving  to  the  assignee  an  interest  in  the  death  of  the  assignor.  Page  v.  Born- 
stine.  Sup.  Ct.  (U.  S.)  Wasli.  L.  R.  March  2,  1881.  See  also  Cunningham  v. 
Smith,  70  Pa.  St.  450,  which  upholds  an  absolute  assignment  to  a  person  inter- 
ested contingently  as  to  the  amount.  Provident  Life  Ins.  Co.  v.  Baum,  29  Ind. 
2.36. 

-  Cammack  v.  Lewis,  15  Wall.  (U.  S.)  643. 

3  [Oilman  v.  Curtis,  66  Cal.  116.] 

*  [Conn.  Mut.  Life  Ins.  Co.  v.  Fisher,  30  Fed.  Rep.  662  (Mo.),  1887.] 
880 


CH.  XIX. ]  ASSIGNMENT    OF    THE    POLICY.  .     [§  398  A 

of  a  beneficiary  outside  of  those  having  an  insurable  interest 
in  the  life,  can  be  upheld.  There  seems  to  be  a  clear  distinc- 
tion between  cases  in  which  the  policy  is  procured  by  the  in- 
sured bona  fide  of  his  own  motion,  and  cases  in  which  it  is 
procured  by  another.  It  is  a  very  different  thing  to  allow  a 
man  to  create  voluntarily  an  interest  in  his  termination,  and 
to  allow  some  one  else  to  do  so  at  their  will.  The  true  line 
is  the  activity  and  responsibility  of  the  assured,  and  not  the 
interest  of  the  person  entitled  to  the  funds.  It  is  well  estab- 
lished that  a  man  may  take  out  a  policy  on  his  own  life,  pay- 
able to  any  person  he  pleases ;  and  it  is  drawing  a  distinction 
without  a  difference  to  hold  that  he  cannot  take  out  a  policy 
and  afterward  transfer  its  benefits.  An  assignment  by  the 
beneficiary,  or  by  an  assignee,  unless  with  the  consent  of  the 
"  life,"  is,  however,  a  very  different  matter,  and  involves  what 
seems  to  be  the  real  evil  that  the  law  is  blunderingly  seeking 
to  exclude,  viz.,  the  obtaining  hy  B.  of  insurance  on  the  life  of 
A.,  in  contradistinction  to  its  obtainmentby  A.  for  B.'s  benefit. 
Authority  is  not  lacking.  In  Ohio  it  is  held  that  in  the  ab- 
sence of  statutory  provision,  or  stipulation  to  the  contrary,  one 
may  assign  a  policy  he  has  taken  out  on  his  own  life  to  whom- 
soever he  will.  The  assignee  or  donee  need  not  have  an  in- 
surable interest  in  his  life.^  A  policy  issued  to  a  bona  fide 
beneficiary  may  be  assigned  to  one  having  no  interest  in  the 
life,  and  a  by-law  providing  that  no  policy  shall  issue  unless 
the  beneficiary  has  an  insurable  interest,  is  not  violated  by 
such  assignment.2  An  assignment  of  a  life  policy  to  a  cred- 
itor in  consideration  of  a  discharge  of  the  debt  and  payment 
of  a  sum  of  money  by  him  is  good.  True,  he  has  no  interest 
in  the  life  insured,  and  could  not  make  a  contract  of  insurance 
on  that  life  directly  with  the  insurers,  but  the  policy  is  sup- 
ported by  the  interest  of  the  assignor,  and  is  in  form  payable 
to  her.  If  the  assignment  is  good  between  the  parties,  it  is 
payable  to  her  in  trust  for  the  assignee  ;  if  void,  for  her  own 
use.     The  assignment   passed  the  equitable  interest  in  the 

1  [Eckel  V.  Renner,  41   Ohio  St.  232  ;  Bursinger  v.  Bank  of   Watertown,  67 
Wis.  75.] 

2  [McFarland  v.  Creath,  35  Mo.  App.  112.] 

881 


§  399  A]        INSURANCE  :    fire,   life,   accident,   etc.        [CH.  XIX. 

policy.^  A  life  policy  is  assignable,  like  any  other  cliose  in 
action  when  the  transaction  is  not  a  mere  cover  for  a 
wager  contract.^] 

§  399.  Assignment  of  Part  Tvithout  Assent  invalid.  —  So  also 
an  assignment  of  part  of  the  proceeds  of  a  policy,  as,  for  in- 
stance, by  the  insured,  a  debtor,  to  secure  his  creditor,  carries 
with  it  no  obligation  on  the  part  of  the  insurer  to  pay  the 
assignee  that  part  unless  the  insurer  expressly  assent,  —  upon 
the  familiar  principle  that  a  debtor  cannot  be  presumed  to 
consent  that  what  he  has  agreed  to  pay  in  solido  and  at  once 
to  one  person,  he  may  be  obliged  to  pay  in  parts  to  different 
individuals.  He  will  not  be  presumed  to  give  several  parties 
several  rights  of  action  against  him  when  only  one  right  ex- 
isted, unless  he  plainly  assent  thereto.  Mere  notice  will  not 
do.  And  at  law  the  creditor  cannot  recover  in  an  action 
against  the  administrator  of  the  insured.^  In  a  cause  in 
equity,  however,  in  Illinois,  where  the  policy  was  payable  to 
the  wife,  and  she  had  assigned  a  part  of  it  to  secure  a  debt  of 
her  husband,  and  after  his  death  refused  to  recognize  the  as- 
signment, and  claimed  the  whole  amount,  —  on  a  bill  of  inter- 
pleader, filed  by  the  insurers,  it  was  held  that  the  assignment 
must  be  enforced  in  favor  of  the  creditor,  and  the  balance  of 
the  proceeds  paid  to  the  widow.* 

[§  399  A.  A  policy  payable  to  the  assured  or  his  assir/ns,  at 
a  future  day  named,  or  to  his  representatives  if  he  should  die 
before  that,  is  assignable,  and  carries  to  the  assignee  the  right 
to  the  sum  payable  in  case  of  death  before  the  day  named.^ 
If  the  assignee  causes  the  death  of  the  life-subject  by  felonious 
means  his  recovery  on  the  policy  is  defeated.^  I  presume  the 
word  "  felonious  "  is  very  necessary,  for  he  might  worry  the  life 
out  of  the  insured  or  use  other  unfelonious  means  of  exter- 
mination and  still  recover.     An  assignment  of  a  policy  to  a 

1  [Mutual  Life  Ins.  Co.  v.  Allen,  138  Mass.  24,  27,  29.] 

2  [Fitzpntrick  r.  Hartford  Life  &  Ann.  Ins.  Co.,  56  Conn.  116;  Bushnell  v. 
Bushnell,  92  Infl.  503,  602.] 

3  Palmer  v.  Merrill,  6  Cush.  (Mass.)  282. 

*  Pomeroy  i'.  Manhattan  Life  Ins.  Co.,  40  111.  398. 

*  [N.  Y.  Mat.  Life  Ins.  Co.  v.  Armstrong,  117  U.  S.  591.] 
6  [Ibid.] 

882 


CH.  XIX.]  ASSIGNMENT    OF   THE   POLICY.  [§  399  B 

morto:a2:ee  carries  the  whole  interest  if  needed  to  reach  the 
amount  of  the  mortgage.^  Where  one  covenanted  to  settle 
after-acquired  property,  on  part  of  which  there  was  a  policy 
conditioned  against  assignment,  the  settler  was  held  to  be  a 
trustee  as  to  the  policy.  It  was  non-assignable  at  law,  but  he 
could  deal  with  tiie  beneficial  interest  in  it  according  to  his 
covenant.^  When  a  policy  is  assigned  as  collateral  security 
the  assured  must  pay  the  premiums.^] 

[§  399  B.  When  a  bankrupt  assigned  a  policy  to  ^,but  the 
company,  considering  it  invalid,  paid  the  bankrupt  one  half 
the  insurance  as  a  gratuity,  and  the  policy  was  cancelled,  it 
M-as  held,  in  an  action  by  the  assignee  of  the  bankrupt  against 
A  for  trover,  that  the  value  of  the  policy  only  and  not  the 
gratuity  could  be  recovered.^  If  A  agrees  to  assign  a  life  policy 
to  B.,  he  must  assign  it  free  from  all  incumbrances  except  the 
annual  premiums.^  When  a  person  assigns  a  policy,  agreeing 
to  pay  the  premiums,  and  that  if  he  does  not  the  assignees 
may  pay  them  and  add  them  to  the  mortgage  debt,  no  action 
can  be  brought  to  recover  such  premiums  from  the  assignor, 
for  the  agreement  is  that  they  are  to  be  added  to  the  mortgage 
debt.^  The  real  injury  sustained,  not  the  amount  of  the  prem- 
iums, is  the  measure  of  damages.'  The  assignor  of  a  policy 
that  was  conditioned  against  going  out  of  Europe,  covenanted 
not  to  do  anything  to  avoid  the  policy.  He  did  violate  the 
said  condition,  however,  and  the  measure  of  damages  on  the 
covenant  was  held  to  be  the  present  value  of  the  policy  plus 
the  premiums  which  the  defendant  was  to  pay,  but  which,  on 
his  failure,  had  been  paid  by  the  assignee.^  The  measure  of 
damages  for  breach  of  agreement  to  assign  a  policy  to  the 
vendee  of  the  subject-matter,  whereby  the  policy  becomes  void, 
is  not  the  injury  to  the  house  by  the  fire,  but  the  cost  of  pro- 

1  [Mund  V.  Insurance  Co.,  15  Phil.  291.] 

2  [In  re  Turcan,  40  Cli.  D.  5.] 

8  [Grant  v.  Ala.  Gold  Life  Ins.  Co.,  76  Ga.  575.] 

4  [Wills  V.  Wells,  8  Taunt.  264  at  2G7.] 

6  [Gatayes  v.  Flatlier,  34  Beav.  387.] 

6  [Browne  v.  Price,  4  C.  B.  k.  s.  598  at  613.] 

^  [National  Ass.,  &c.  i'.  Best,  2  H.  &  N.  605  at  615.] 

8  [Hawkins  v.  Coulthurst,  2  B.  &  S.  343.] 

883 


§  399  C]         INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.        [CH.  XIX. 

curing  insurance  for  the  unexpired  term.  The  plaintiff  can- 
not hold  the  vendor  as  insurer ;  his  agreement  was  to  assign 
the  policy,  not  to  insure  himself,  and  the  damage  is  the  value 
of  the  thing  he  agreed  to  transfer  and  did  not.  The  plaintiff 
upon  breach  of  the  contract  should  procure  other  insurance. 
She  cannot  elect  to  remain  uninsured  and  hold  the  vendor  as 
a  policy  maker.^  If  the  company  sets  up  an  assignment  and 
payment  to  the  assignee,  the  burden  is  on  the  assured  to  resist 
this  prima  facie  defence  by  evidence  that  the  assignment  was 
fraudulently  obtained,  and  that  before  payment  the  company 
had  notice,  and  a  letter  from  a  stranger  to  the  company  is  not 
sufficient.2  The  heir-at-law  of  a  member  may  raise  the  point 
that  an  assignment  by  the  member  is  invalid  because  not 
approved  by  the  secretary .^J 

[§  399  C.  Bequest,  &c.  —  Where  policies  are  held  by  a  wife 
on  her  husband's  life,  slie  surviving  him,  and  willing,  after  some 
special  bequests,  all  the  residue  of  her  property  of  whatever 
kind  which  she  ounied  or  was  possessed  of  prior  to  the  death  of 
her  husband,  to  four  persons  named,  the  policies  pass  to  these 
persons  under  this  clause.*  The  bequest  of  the  testator  of 
"  any  money  that  he  might  die  possessed  of,  or  which  might  be 
due  and  owing  to  him  at  the  time  of  his  decease,"  include 
moneys  receivable  under  a  policy  of  insurance  on  his  own  life.^ 
A  policy  may  pass  as  a  donatio  mortis  causa.^] 

1  [Dodd  V.  Jones,  137  Mass.  322.] 

2  Insurance  Co.  v.  Rotli,  118  Pa.  St.  329.] 

s  [Harman  v.  Lewis,  24  Fed.  Rep.  97  (Mo.),  1885.] 

4  [Halsey  v.  Patterson,  37  N.  J.  Eq.  445.] 

5  [Petty  V.  Willson,  4  L.  R.  Cli.  Ap.  574.] 

6  [Amis  V.  Witt,  33  Beav.  619.] 
884 


CH,  XX.j  BENEFICIARIES. 


CHAPTER  XX. 

BENEFICIARIES. 

Analysis. 

§  399  D,  Beneficiaries. 

endorsement  "loss  payable  to  B."  is  equivalent  to  an 

assignment  with  assent. 
if  A.  agrees  to  insure  for  B.'s  benefit,  equity  will  protect 
B.  to  the  extent  of  his  interest,  and  after  notice  the 
company  will  pay  A.  at  its  peril. 
two  or  more  named  as  beneficiaries  take  equally, 
one  of  several  may  assign  to  extent  of  his  interest, 
right  of  action, 
§§  399  E-399  K.     Designation. 

in  the  absence  of  provision  to  the  contrary,  any  person 
may  be  named  as  beneficiary  whether  inter- 
ested in  the  life  or  not,  §  399  E. 
although  the  charter  describes  the  company  to  be 
for  the  benelit  of  widows  and  orphans,  §  399  E. 
a  policy  for  the  benefit  of  one  not  a  relative  nor  inter- 
ested in  the  life  is  not  ngsiinst  public  policy,  §  399  E. 
contra,  §  399  E.;  and  see  Mich,  case,  §  399  F. 
and  if  it  were,  only  the  insurer  could  object,  §  399  E. 
sometimes  express  permission  is  given  to  designate  any 

person  whatever,  §  399  E. 
if  the  charter  and  by-laws  limit  the  right  of  designation, 
or  express  the  method  of  doing  it,  the  provi- 
sion must  be  conformed  to,  §  399  F. 
in  some  cases,  however,  only  the  company  can 
object,  §  399  F. 
subsequent  marriage  revokes  designation  (?),  §  399  H. 
if  the  insured  makes  no  successful  designation,  the  fund 
goes  to  fulfil  the  first  purpose  named  in  the 
charter  (widow),   §§  399  F,  390. 
if  no  specific  purpose  is  so  named,  the  fund  be- 
longs to  the  company,  §  399  F. 
courts  are  liberal  in  upholding  a  designation,  §§  390, 

399  I,  399  0. 
administrators  of  assignee  and  of  creditor,  §  390. 
child,  §§  399  F.,  390,  dying  in  life  of  father,  §  399  N. 
under  the  words  "my  wife  Mary  and  chil- 
dren," a  child  by  a  former  wife  takes, 
§  399  G. 
but  not  Mary's  child  by  another,  §  399  G. 
"  child  "  will  not  include  grandchild,  §  399  G. 
co7itra,  §  399  G. 

885 


INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC,  [CH.  XX. 

except  to  keep  funds  from  escheating  to  company, 

§  399  G. 
may  mean  adopted  child,  §  399  G. 

dependants,  §  399  E. 

family,  §  399  N,  may  include  housekeeper,  §  399  F. 

•'friends,"  invalid  designation,  §  399  H. 

grandchild,  §§  399  E,  399  G. 

heirs,  §  399  H. 

mother,  §  399  H. 

uncle,  §  399  H. 

widow,  §§  399  F,  399  H. 

wife,  §§  399  M,  390, 391,  dying  in  life  of  husband,  §  399  N. 
Form  of  designation. 

by  indorsement  required  bv  charter,  §  399  F. 

by  will,  §§  399  J,  399  F,  399  0. 

by  entry  on  records,  §§  399  F,  399  I. 

the  substance  will  be  looked  to,  §  399  I. 

and  a  parol  designation  may  be  sustained,  §  399  I. 

but  not  to  show  that  the  declarant  meant  to  keep  the 
benefit  for  himself,  §  399  I. 

a  transfer  to  the  wife  recorded  is  the  same  as  an  original 
designation,  399  I. 

direction  on  back  of  policy  sufficient,  §  399  I. 

error  in  naming  not  material  if  not  misleading,  §  399  K. 
Possession  of  policy  and  receipt  of  a  relative  may  be  a  defence 

to  company  against  beneficiary  if  so  provided,  §  399  K. 
§§  399  L-399  M.  The  Interest  of  the  beneficiary  is  a  vested  one  the  moment  the 
policy  is  issued,  unless  the  agreement  contains  a  pro- 
vision inconsistent  with  such  a  construction,  and 
neither  the  person  procuring  the  insurance  nor  the 
company,  nor  both,  can  by  deed,  will,  or  other  act 
divest  that  interest  (§§  390,  391,  392,  399  L,  399  P, 
399  Q  ;  contra,  slight  authority,  §  391),  except  by 
breach  of  condition  without  collusion,  §  399  L,  nor 
change  it  without  consent  of  the  beneficiaiy,  at  least 
so  long  as  he  lives,  g  399  L ;  and  some  cases  hold  the 
interest  is  his  not  only  irrevocably  for  his  life,  but 
in  such  sense  as  to  pass  to  his  heirs  or  repi'esenta- 
tives,  though  he  die  before  the  assured,  §  390. 

admissions  of  the  assured  are  not  those  of  the  benefi- 
ciary, §  399  L. 

only  the  beneficiary  can  surrender  the  policy,  or  put  a 
charge  on  it,  §§  390,  399  P. 

usually  the  beneficiary  holds  against  creditors  of  the  as- 
sured, §  390. 

the  company  cannot  set  up  the  rights  of  creditors,  §  390. 

where  the  contract  expressly  permits  change  of  benefi- 
ciary, there  is  no  vested  interest  until  the  death  of 
the  assured,  §  399  M. 
§  399  N.  Death  of  beneficiary  before  the  assured  (see  also  §  391 )  — 

revokes  appointment,  and  a  new  one  may  be  made,  un- 
less the  contract  gives  the  benefit  to  the  heirs  or 

886 


CH.  XX.]  BENEFICIARIES. 

§  399  N  (continued).  representatives  of  the  first  beneficiary,  or  otherwise 

provides  for  the  contingency. 

often    the    share   of   the    deceased    goes    to   the   other 
beneficiaries. 

the  terms  of  the  contract  govern,  and  must  be  care- 
fully considered. 

if  the  beneficiary  is  dead  at  the  issue  of  the  policy,  the 
appointment  is  a  nullity. 
§  399  0.  Change  of  beneficiary  (see  also  §  390)  — 

may  be  made  if  there  is  an  express  provision  for 
it,  or  the  original  contract  is  of  character  not  to  be 
irrevocable,  or  subset^uent  permission  is  given  by 
the  beneficiary,  or  he  dies  before  the  assured, 
and  there  is  no  provision  inconsistent  with  a  new 
designation,  §  399  0,  though  sume  cases  hold  the 
interest  passes  to  the  beneficiaries'  representatives 
without  any  special  provision  to  that  eflfect  when  he 
dies  befoie  the  assured,  §  390  ;  but  this  does  not 
seem  reasonable.  If  I  give  to  A.  to  take  efl"ect  at 
my  death,  and  A.  dies  first,  the  terms  of  the  gift 
can  never  take  effect  ;  one  ceases  before  the  other 
arises.  It  may  be  well  enough  to  hold  me  bound 
by  what  I  have  done,  but  not  beyond  what  I  have 
done.  At  the  death  of  A.  the  reason  of  my  gift,  so 
far  as  I  have  expressed  it,  ceases.  The  appointment 
should  be  prima  facie  irrevocable  while  A.  lives, 
and  prima  facie  VQwokad  by  his  death  before  me. 

retaining  possession  of  the  policy  is  evidence  that  the 
trust  was  revocable,  §  399  0,  unless  the  assured 
is  one  of  the  contingent  beneficiaries  ;  then  his 
keeping  it  is  natural,  §  399  Q. 
the  method  prescribed  by  the  charter  or  the  policy  must 
be  followed,  but  the  courts  will  not  let  third  per- 
sons take  advantage  of  slight  informalities  (Iowa 
contra),  and  equity  will  relieve  where  the  assured 
has  done  all  lie  could,  and  will  even  complete  the 
change  after  his  death,  §  399  0. 
the  company  may  waive  defects,  and  their  own  neglect 

to  complete  the  formalities  will  not  protect  them. 
if  the  reason  for  naming  the  first  beneficiary  has  ceased, 
as  where  a  girl  breaks  her  engagement,  equity  will 
cany  the  fund  where  it  was  intended   to  go,  and 
natural  affection  and  the  law  of  inheritance  would 
place  it,  although  the  transfer  was  not  made,  the 
certificate  demanded  by  the  company  being  lost. 
the  rule  requiring  surrender  of  the  certificate  does  not 
apply  when  it  is  lost. 
§  399  P.  Surrender  of  the  policy  without  assent  of  the  beneficiary,  and 

even  non-payment  of  the  premiums  after  such 
surrender,  cannot  affect  the  beneficiary  where  he 
has  a  vested  interest,  and  he  can  follow  a  policy 
substituted  for  the  old  one. 

887 


§  399  D]      insurance:  fire,  life,  accident,  etc.       [ch,  xx. 

§  399  Q.  Husband  and  Wife  ;  see  also  §§  390,  391,  391  A,  394. 

assignment  of  policy  by  wife  ;  see  also  §§  390,  391. 
N.  Y.  laws,  §  399  Q. 

receiving  part  of  fund  from  assignee  a  ratification,  §  399  Q. 
ratification  by  wife  of  policy  taken  in  lier  name  by  hus- 
band without  authority,  §  394. 
Georgia,  §  399  Q. 
Tennessee,  §  391. 

[§  399  D.  Beneficiaries.^  —  To  comprehend  the  law  of  insur- 
ance we  must  keep  in  mind  not  only  the  insurer,  the  insured, 
and  the  holder  of  the  policy,  but  also  the  beneficiary  who  may 
be  still  a  fourth  person.  In  determining  the  rights  of  one  in 
whose  favor  another  has  caused  insurance  to  be  made  as  a 
voluntary  benefit,  we  must  take  into  account  the  language  of 
the  policy,  the  provisions  of  charter  and  statute,  the  relations 
of  the  parties  at  the  time  of  insurance  and  of  loss,  and  transac- 
tions between  them  regarding  the  matter,  the  rights  of  credi- 
tors, and  the  place  of  the  contract.  An  indorsement  on  a 
policy  that  the  loss  if  any  should  be  paid  to  B.  is  an  admission 
by  the  company  that  B.  has  an  interest  in  the  contract,  and 
is  to  receive  a  benefit  from  it.^  It  is  an  assignment  at  the 
inception  of  the  policy  with  consent  of  the  com})any.  If  a 
mortgagor  or  vendee  agrees  to  insure  for  the  benefit  of  the 
mortgagee  or  vendor,  the  covenantee  will  in  equity  be  entitled 
to  the  money  to  the  extent  of  his  interest,  and  the  insurance 
company  after  notice  will  pay  to  the  insured  at  their  peril.^  If 
a  benefit  is  given  to  several,  no  proportion  being  specified,  tliey 
take  equally,  although  named  as  heirs.*  For  example,  a  bene- 
fit to  "  wife  and  children  "  goes  to  them  equally,  not  one- 
lialf  to  the  wife.^  One  of  several  beneficiaries  or  contingent 
beneficiaries  may  assign  the  policy  to  the  extent  of  his  or  her 
interest.*^  The  words  "  heirs  or  representatives  "  in  a  policy 
give  a  right  of  action  to  a  daughter  suing  as  sole  heir.''     An 

1  [On  tliis  subject  see  17  Abb.  N.  C.  p.  21,  note] 

2  [Franklin  v.  National  Ins.  Co.,  43  Mo.  491  at  496.] 

3  [Grange  Mill  To.  v.  Western  Ass.  Co.,  118  111.  396] 

4  [Wilburn  v.  Wilburn,  83  Ind.  55.] 

5  [Felix  V.  Grand  Lodge,  A.  0.  U.  W.,  31  Kans.  81.] 

6  [Conn.  Mut.  Life  Ins.  Co.  v.  Baldwin,  15  R.  I.  106.] 

7  [Loos  V.  John  Hancock  Mut.  &c.  Co.,  41  Mo.  538,  542.] 


CH.  XX.]  BENEFICIARIES.  [§  399  E 

action  of  debt  lies  by  the  beneficiaries  named  in  the  death 
certificate  of  a  mutual  assurance.^  If  one  having  an  interest 
in  mortgaged  property  procure  insurance  in  his  own  name, 
loss  payable  to  the  mortgagee,  the  latter  may  sue  in  his  own 
name  ;  ^  on  the  general  principle  that  B.  may  sue  on  a  promise 
made  for  his  benefit  to  A.  But  in  New  Brunswick  a  benefi- 
ciary to  whom  the  company  have  agreed  to  pay  the  insurance 
may  not  sue  in  her  own  name.^] 

[§  399  E.  Designation  of  a  Beneficiary.  —  Where  a  company  is 
organized  to  aid  widows,  orphans,  and  dependants  of  deceased 
members,  a  member  who  pays  the  premiums  himself  may,  in 
the  absence  of  any  provision  to  the  contrary  in  the  charter  or 
by-laws,  name  any  one  he  pleases  as  beneficiary,  although  the 
person  has  no  insurable  interest  in  his  life.^  A  grandfather 
may  insure  his  life  and  appoint  his  grandson  to  receive  the 
money.  No  pecuniary  interest  is  necessary  in  the  beneficiary. 
Such  a  case  is  distinguished  from  one  in  which  a  person  with- 
out iusurable  interest  in  the  life  of  another  procures  insurance 
upon  it  and  pays  the  premiums  for  his  own  speculative  ben- 
efit.^ So  a  policy  may  be  taken  out  on  one's  own  life,  and  de- 
vised or  otherwise  made  payable  to  a  stranger  not  interested 
in  the  life  of  the  insured.^  A  policy  of  life  insurance  for  the. 
benefit  of  one  not  a  relative  is  not  against  public  policy,  and 
if  it  were,  no  one  but  the  insurer  could  raise  the  question.  It 
could  not  avail  his  heirs. '^  But  in  Ohio  mutual  companies 
must  not  issue  certificates  providing  for  the  payment  of  money 
to  any  others  than  the  family  or  heirs  of  the  member  ;  a  con- 
tract to  pay  to  assigns,  or  to  one  not  a  relation,  is  against 
public  policy.  It  leads  to  gambling  in  the  lives  of  venerable 
paupers.^     Sometimes  a  by-law  gives  each  member  a  right  to 

1  [Abe  Lincoln  Mut.  Life  &  A.  Soc.  v.  Miller,  23  Brad.  341.] 

2  [Bertliold  v.  Clay  Fire  &  Mut.  Ins.  Co ,  2  Mo.  App.  311  at  316.] 
8  [Abbinett  v.  Northwestern  Mut.  Life  Ins.  Co.,  21  N.  B.  R.  21G.] 
4  [Milner  v.  Bowman,  18  Ins.  L.  J.  708,  Ind.  June  22,  1889.] 

6  [Elkhart  Mut.  Aid  &c.,  Ass.  v.  Houghton,  103  Ind.  28G,  291-292  ] 

6  [Bloomington  Mut.  Ben.  Ass.  v.  Blue,  120  111.  121  ;  Martin  v.  Stubbings, 
12G  111.  387.] 

•^  [Johnson  v.  Van  Epps,  110  111.  551.] 

*  [State  V.  Standard  Life  Ass.,  38  Ohio  St.  281,  298;  State  v.  People's  Ass., 
42  Ohio  St.  579.] 

889 


§  399  F]       INSURANCE  :  fire,  life,  accident,  etc.       [CH.  XX. 

designate  on  the  books  of  the  lodge  any'  person  he  chooses  as 
beneficiary.  And  where  there  is  no  prohibitive  or  restrictive 
language  in  the  charter  any  designation  is  good,  although 
the  charter  describes  the  company  as  for  the  benefit  of  widows 
and  orphans.!  ^  benefit  to  go  to  the  member's  "  family  or  as 
he  may  direct "  passes  to  any  beneficiary  named,  though  not 
an  heir  or  relative  or  member  of  the  insured's  family .^J 

[§  399  F.  Charter  and  By-laws.  —  A  beneficiary  can  only 
be  appointed  in  accordance  with  the  charter  and  by-laws.^ 
No  one  can  be  named  as  beneficiary  who  is  outside  the  classes 
specified  in  the  charter.*  Neither  a  member  nor  the  company 
nor  the  two  combined  can  divert  the  corporate  funds  from 
these  classes.^  If  the  charter  of  the  association  provides  how 
and  to  whom  the  money  shall  be  paid,  the  insured  cannot 
change  the  beneficiary.^  Where  a  company  was  organized  to 
secure  insurance  "  to  the  family  or  heirs  of  any  member  on 
his  death,"  a  policy  payable  to  one  who  was  neither  an  heir 
nor  a  relation,  and  whose  interest  was  not  promoted  by  the 
continuance  of  the  "life,"  was  held  void  as  against  public 
policy.^  The  term  "  family,"  however,  will  include  a  young 
woman  keeping  house  for  an  old  man  many  years,  and  treat- 
ing each  other  as  father  and  daughter.^  When  the  by-laws  of 
an  insurance  company  provide  that  the  insured  shall  not  by 
will  or  otherwise  so  dispose  of  the  policy  as  to  deprive  his 
widow  or  his  dependent  children  of  its  benefits,  and  further 
that  the  proceeds  should  be  paid  to  the  widow  for  the  bene- 
fit of  herself  and  dependent  children,  with  a  permission  to  ap- 
point an  executor  to  disburse  the  proceeds,  the  bequest  by 
the  insured  of  <flOOO  out  of  a  84000  policy  to  the  widow, 
where  she  had  $2000  worth  of   other  property,  and  the  re- 


1  [Maneely  v.  Knights  of  B.,  115  Pa.  St.  .305] 

2  [Mitchell  V.  Grand  Lodge  K.  of  L.,  70  Iowa,  ,360] 

3  [In  re  WiUiam  Phillips'  Insurance,  23  Ch.  D.  235.] 

4  [Mat.  Ben.  Ass.  v.  Rolfe,  76  Mich.  140.] 

5  [American  Legion  of  Honor  v.  Smith,  45  N.  J.  Eq.  466  ;  Duvall  v.  Goodson, 
79  Ky.  224.] 

6  [Presbyterian  Mat.  Ass.  Fund  v.  Allen,  lOG  Ind.  593.] 
■?  [Mut.  Ben.  Ass.  v.  Hoyt,  4G  Mich.  473.] 

8  [Carmichael  v.  Northwestern  Mut.  Ben.  Ass.,  51  Mich.  494.] 

890 


CH.  XX.]  BENEFICIARIES.  [§  399  F 

mainder  of  the  policy  proceeds  to  an  only  child  who  had 
no  other  property,  was  sustainable  as  a  reasonable  exercise 
of  his  discretion  within  the  limits  of  the  by-law. ^  If  tlie  by- 
laws provide  for  the  naming  of  beneficiaries  by  indorsement 
on  the  back  of  the  policy  signed  and  witnessed,  the  signing  is 
essential.^  Where  the  money  was  to  be  paid  to  such  person 
as  the  member  might  direct  by  will  or  entry  on  the  records  of 
the  lodge  or  on  the  face  of  the  certificate,  and  the  member  did 
designate  his  sister  in  the  latter  way,  but  without  her  knowl- 
edge or  possession  of  the  certificate,  and  after  his  death  there 
was  found  in  his  pocket  a  writing  without  date  addressed  to 
his  wife,  stating  that  he  wanted  her  to  have  all  his  effects,  it 
was  held  that  the  sister  must  have  the  insurance.^  Where 
the  statute  authorizes  the  naming  of  legatees  or  devisees,  but 
does  not  forbid  the  appointment  of  beneficiaries  otherwise  than 
by  will,  although  the  company  might  object  if  the  designation 
were  not  made  by  will,  the  widow  or  other  expectant  could 
not.*  If  a  member  of  an  association  "  to  provide  for  the 
widow,  orphan,  heir,  assignee,  or  legatee  of  a  deceased  mem- 
ber," designates  his  wife  who  dies,  and  he,  after  marrying 
again  dies  without  further  designation,  the  widow  takes  the 
insurance,  because  in  that  way  the  first  purpose  of  the  cliarter 
is  fulfilled.^  If  the  charter  is  to  provide  for  the  "  family  or 
appointee  "  and  a  member  dies  without  appointing  a  bene- 
ficiary, the  wife  and  children  take  the  fund.^  Otherwise,  if 
the  charter  does  not  specify  a  definite  purpose  for  tlie  fund, 
where  the  constitution  of  a  mutual  society  provides  that  the 
insured  shall  designate  in  writing  a  nominee  to  whom  the 
money  shall  be  paid  at  his  death  ;  if  no  nominee  is  designated 
the  company  is  not  liable  to  any  one.  If,  however,  tlie  com- 
pany is  willing  to  pay  the  money  it  should  go  as  part  of  the 
estate  to  the  executor."] 

1  [Roberts  v.  Roberts.  64  N.  C.  695.] 

2  [Elliott  V.  Whedbee,  94  N.  C.  115.] 

3  [Highland  v.  Highland,  109  111.  366.] 
*  [Martin  v.  Stubbings,  126  111.  .387.] 

5  [Relief  Ass.  v.  McAuley,  2  Mackey  (D.  C),  70.] 

6  [Fenn  ;'.  Lewis,  81  Mo.  259.] 

■?  [Order  of  Mut.  Companions  v.  Griest,  76  Cal.  494.] 

891 


§  399  H]      INSURANCE  :  fire,  life,  accident,  etc.       [CH.  XX. 

[§  399  G.  "  Childy  —  In  case  of  a  policy  to  "  ray  wife  Mary 
and  children,"  a  child  by  a  former  wife  is  a  beneficiary. ^  To 
"  be  paid  to  his  wife,  M.  K.,  and  children,"  means  to  his  chil- 
dren by  this  wife  or  others,  not  M.  K.'s  children.^  Where 
"children"  are  named,  parol  evidence  is  not  admissible  to 
show  that  a  grandchild  was  meant  to  be  included.^  But 
where  the  charter  provides  that  upon  the  death  of  a  member 
intestate  without  widow  or  child,  the  fund  shall  vest  in  the 
company,  the  word  "  child  "embraces  grandchild.'*  And  a  child 
of  a  deceased  child-beneficiary,  takes  under  the  policy.^ 
Where  a  child  by  adoption  is  the  only  child,  and  circum- 
stances show  that  the  parties  intended  him  to  have  the  bene- 
fits of  the  policy,  he  will  take  as  beneficiary  under  the  term 
"  children."  *^] 

[§  399  H.  Mother,  Uncle,  Heirs,  Friends  ;  Subsequent  Mar- 
riage.—  Although  the  constitution  of  a  beneficiary  association 
states  that  its  object  is  to  provide  for  "  the  widow  and  or- 
phan," an  application  designating  the  mother  of  the  assured 
as  the  beneficiary,  accepted  by  the  company,  is  binding  under 
the  statute  of  1882,  c.  195,  §  2,  which  enlarged  Public  Stat- 
utes c.  115,  §  8,  so  as  to  permit  benefit  associations  to  assist 
widows,  orphans,  "  or  other  relatives  of  deceased  members." 
And  although  the  member  subsequently  married,  the  designa- 
tion was  not  revoked.^  But  in  New  York  it  has  been  held 
that  wdiere  by  the  constitution  and  by-laws  of  a  mutual  society 
the  insurance  money  is  to  go  to  the  widow  unless  some  other 
written  designation  is  made  by  the  insured  to  his  lodge,  if  a 
member  being  unmarried  designates  his  uncle  and  afterward 
marries,  the  marriage  annuls  the  designation  and  the  widow 
takes  the  funds.^  A  life  policy  payable  to  heirs  or  assigns 
and  never  assigned  is  payable  to  the  heirs,  and  they  may 

1  [McDermott  v.  Centennial  Mat.  Life  Ass.,  24  Mo.  App.  73.] 

2  [Knelilery.  Centennial  Mut.  Life  Ins.  Co.,  66  Iowa,  325.] 

3  [Russell  V.  Russell,  64  Ala.  500] 
*  [Duvall  V.  Goodson,  70  Ky.  224.] 

5  [Hull  V.  Hull,  62  How.  Pr.  100.] 

6  [Martin  v.  JEtna  Life  Ins.  Co.,  73  Me.  25] 

'  [Massachusetts  Catliolic  Order  of  Foresters  v.  Callahan,  146  Mass.  891.] 
8  [Sanger  y.  Kothsdiild,  50  Hun,  157,  16ir] 
892 


CH.  XX.]  BENEFICIARIES.  [§  399  J 

claim  the  proceeds  as  against  creditors.^  The  designation  of 
"  friends  "  as  the  beneficiaries  is  invalid  ;  but  the  contract  will 
be  enforced  in  favor  of  the  "  heirs  "  to  whom  the  money  was 
to  go  on  failure  of  "  friends."  ^] 

[§  399  I.  Form  of  Designation.  —  Where  a  husband  took  out 
a  policy  on  his  life  to  himself  and  his  representatives,  but  it 
was  shown  that  he  intended  it  for  the  benefit  of  his  wife,  and 
was  given  to  her  after  marriage,  and  the  husband  frequently 
declared  his  intention  to  assign  it  to  her,  but  never  did  so  for- 
mally, it  was  held  that  the  policy  was  the  wife's  and  not  an 
asset  of  the  estate.  Form  must  be  disregarded  to  give  effect 
to  the  intent  of  the  parties.^  But  J..,  having  an  insurable  in- 
terest in  -6.'s  house,  insured  it  in  5.'s  name,  and  as  B.'s,  agent 
received  the  money  after  a  loss.  It  was  held  that  A.  could 
not  prove  by  parol  that  he  intended  to  have  the  benefit  of  the 
policy  himself.'^  When  at  the  time  a  policy  was  issued  a 
transfer  of  it  to  the  assured's  wife  was  also  made  and  recorded 
at  the  issuing  office,  it  is  the  same  as  though  her  name  had 
been  inserted  as  beneficiary  in  tlie  policy.^  A  direction  to  pay 
to  A.,  written  on  the  back  of  a  policy  payable  to  the  writer,  is 
sufficient.^] 

[§  399  J.  Designation  hy  Will.  —  A  general  designation  by 
will  is  sufficient,  at  least  by  estoppel,  if  received  and  retained 
by  the  proper  officers  of  the  lodge  as  such  designation  without 
objection  to  its  formJ  When  the  policy  does  not  designate  a 
particular  beneficiary,  but  provides  that  it  shall  be  paid  sub- 
ject to  the  will  of  the  insured,  and  by  will  he  gives  his  entire 
estate  to  B.,  subject  to  testator's  debts,  the  insurance  goes  to 
the  executor,  and  he  may  sue  for  it  in  his  own  name.^  Where 
the  insured  has  a  mere  power  of  appointment  the  benefit  does 
not  pass  under  a  will    disposing  of  all  his  estate,  unless  it 

1  [MuUins  V.  Thompson,  51  Tex.  7] 

2  [Rinrlge  v.  N.  E.  Mut.  Aid  Soc,  146  Mass.  286.] 
8  [Estate  of  Madeira,  16  Phil.  399.] 

*  [Looney  v.  Looney,  116  Mass.  283  at  286.] 
^  [Succession  of  Richardson,  14  La.  Ann.  1.] 
6  [Eppinger  v.  Canepa,  20  Fla.  262.] 

''  [Kepler  v.  Supreme  Lodge,  45  Hun,  274] 

*  [Winterhalter  v.  Workmen's  Guarantee  Fund  Ass.,  75  Cal.  245.] 

893 


§  399  L]        INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.  [CH.  XX. 

specifically  makes  the  appointment. ^  Whether  a  solvent 
testator  can  by  will  dispose  of  the  proceeds  of  a  policy  on  his 
life  payable  to  his  legal  representatives,  quaere?''\ 

[§  399  K.  Error  in  Name  ;  Possession  of  Policy.  —  When 
a  policy  provided  that  the  loss,  if  any,  should  be  payable  to  the 
North  Western  Life  Insurance  Company,  it  is  immaterial  that 
the  company's  name  is  the  North  Western  Mutual,  k-c?  Where 
it  was  provided  in  the  policy  that "  the  production  by  the  com- 
pany of  this  policy  and  a  receipt  for  the  sum  assured,  signed 
by  any  person  furnishing  proof  satisfactory  to  the  company 

that  he  or  she  is  the  beneficiary,  or ,  or  relative  by  blood 

of  the  assured,  shall  be  conclusive  evidence  that  such  sura 
has  been  paid  and  received  by  the  person  or  persons  lawfully 
entitled  to  the  same,  and  that  all  claims  and  demands  upon 
said  company  under  this  policy  have  been  fully  satisfied,"  it 
was  held  that  payment  to  the  daughter  of  the  insured,  who 
produced  the  policy  and  premium  book  and  her  receipt,  were 
a  complete  defence  to  the  company  against  the  beneficiary.*] 

[§  399  L.  The  Beneficiary  takes  a  Vested  Interest  the  mo- 
ment the  Policy  is  issued,  unless  the  agreement  by  charter  or 
otherwise  contains  a  provision  inconsistent  with  such  a  con- 
struction.^ A  life  policy  and  the  money  that  may  become 
due  on  it  belong  the  moment  it  is  issued  to  the  beneficiary 
named  in  it,  and  the  person  procuring  the  insurance  has  no 
power  by  deed,  assignment,  or  will,  surrender  of  the  policy  and 
issue  of  a  new  one,  or  by  other  act,  to  transfer  the  interest  to 
any  one  else.^     His  right  cannot  be  affected  by  any  acts  of 

1  [Duvall  V.  Goodson,  79  Ky.  224.] 

2  [Blonin  r.  Phaneuf,  81  Me.  176.] 

3  [North  Western  Mut.  Life  Ins.  Co.  v.  Germania  Fire  Ins.  Co.,  40  Wis.  446  at 
451.] 

*  [Metropolitan  Life  Ins.  Co.  i-.  Shaffer,  50  N.  J.  72.] 

5  [See  §§  390,  391.] 

6  [Central  Bank  of  Washington  v.  Hume,  128  U.  S.  195 ;  Pingrey  v.  National 
Life  Ins.  Co.,  144  Mass.  374;  Bayse  v.  Adams,  81  Ky.  368  ;  Weisert  v.  Muelil, 
id.  336  ;  Wilmaser  v.  Continental  Life  Ins.  Co.,  66  Iowa,  417  ;  Allis  v.  Ware,  28 
Minn.  166 ;  City  Savings  Bank  v.  Whittle,  63  N.  H.  587.  So  far  as  it  concedes 
a  right  of  revocation  in  the  party  insuring;  Conig  Land  v.  Smith,  79  N.  C.  303, 
is  overruled.  Hooker  v.  Sugg,  102  N.  C.  115,  120  ;  Conn.  Mut.  Life  Ins.  Co.  v. 
Baldwin,  15  R.  I.  106;  Wilburn  v.  Wilburn,  83  Ind.  55.] 

894 


CH.  XX.]  BENEFICIARIES.  [§  399  N 

the  assured  subsequent  to  the  execution  of  the  policy ,i  except 
it  be  a  breacb  of  condition ;  unless  by  charter  or  otherwise  it 
is  a  part  of  the  original  agreement  that  the  beneficiary  may  be 
changed,  or  the  beneficiary  and  the  person  procuring  tlie  in- 
surance enter  into  an  agi'eement  as  to  what  control  each  shall 
exercise  over  the  policy.  Then  the  indefeasible  interest  other- 
wise vesting  in  the  beneficiary  may  not  arise.^  If  A.  takes  out 
a  policy  for  his  children,  the  interest  vests  in  them,  and  if  A. 
afterwards  surrenders  the  policy  on  receiving  the  cash  value 
of  it,  he  is  liable  to  the  cliildren  for  the  amount.^  Xo  ad- 
missions of  the  assured  subsequent  to  the  policy  are  admissi- 
ble against  the  beneficiary.'*] 

[§  399  M.  When  there  is  no  Vested  Interest  until  Death  of 
Assured.^  —  In  those  companies,  however,  that  expressly  per- 
mit a  change  of  beneficiary  without  consent  of  the  former 
appointee,  the  person  first  designated  acquires  no  vested  inter- 
est during  the  life  of  the  insured,  but  only  an  expectancy.^ 
As  where  the  policy  provides  for  change.'^  The  wife  has  no 
vested  interest  which  she  can  assign  or  devise  until  the  death 
of  her  husband.  If  she  dies  first,  her  interest  terminates  and 
does  not  go  to  her  heirs  or  representatives.^] 

[§  399  N.  Death  of  Beneficiary.  —  If  the  beneficiary  die, 
another  may  be  named, ^  unless  the  charter  or  contract  fixed 
the  benefit  in  the  heirs  or  representatives  of  the  first  benefi- 
ciary. The  death  of  the  beneficiary  before  the  assured  is  a 
revocation  of  the  appointment.  So  where  the  insured  named 
his  wife  S.to  receive  the  money,  and  S.  dying,  he  married  P.,  it 
was  held  that  P.  was  entitled  to  the  money,  under  the  general 

1  [Kline  v.  National  Ben.  Ass.,  Ill  Ind.  462.] 

2  [Spla\Yn  r.  Cliew,  60  Tex.  532  ;  Kicker  r.  Charter  Oak  Ins.  Co.,  27  Minn.  193.] 

3  [Waldrom  i-.  Waldrom,  76  Ala.  285.] 

*  [Supreme  Lodge  &c.  v.  Schmidt,  98  Ind.  374.] 

6  [See  §  391.] 

6  [Martin  v.  Stubbings,  126111.  387;  Union  Mnt.  Life  Ins.  Co.  v.  Stevens,  19 
Fed.  Rep.  671  (111.),  1883;  Supreme  Conclave,  Roy.  Adelphia  v.  Cappella,  41 
Fed.  Rep.  1  (Mich.),  1890  ;  Mut.  Ass.  v.  Montgomery,  70  Mich.  587.] 

^  [Holland  v.  Taylor,  111  Ind.  121;  Masonic  Mut.  Ben.  Soc.  v.  Burkhart,  110 
Ind. 189  ] 

8  [Mutual  Ben.  Ass.  v.  Rolfe,  76  Mich.  146.] 

9  [Van  Bibber's  Adra.  v.  Van  Bibber,  82  Ky.  347.] 

VOL.  II.  —  13  895 


§  399  N]      INSURANCE  :  fire,  life,  accident,  etc.       [ch.  XX. 

provisions  of  the  by-laws  respecting  cases  of  failure  to  desig- 
nate a  beneficiary.^  If  the  beneficiary  dies  in  the  lifetime  of 
the  assured  the  policy  may  devolve  on  the  latter.^  As  where 
a  policy  is  for  the  benefit  of  the  children  of  the  insured  and 
some  of  them  die  during  the  "  life,"  a  share  of  their  interest 
passes  to  the  insured,  and  at  his  death  vests  in  his  representa- 
tives unless  he  made  some  other  proper  designation.^  Where 
a  policy  is  issued  on  the  life  of  C.  in  favor  of  his  wife  and 
children,  share  and  share  alike,  or  their  legal  representatives, 
if  one  of  the  children  die  in  the  life  of  C,  a  portion  of  the  child's 
interest  goes  to  the  father  C,  and  maybe  verbally  pledged  by 
him  as  security  for  a  debt."^  A  wife  beneficiary  died  in  the 
lifetime  of  her  husband  A.,  the  insured,  leaving  five  children. 
On  the  death  of  A.  his  administrator  has  a  right  to  one-sixth 
of  the  insurance  money .^  When  A.  insured  his  life  for  the 
sole  and  separate  use  of  his  wife,  and  in  case  of  her  death  for 
her  children,^  and  she  and  her  children  die  in  the  life  of  A.,  the 
beneficial  interest  is  then  in  A.,  and  a  son  of  his  by  a  former 
wife  may  inherit  the  funds.  Where  S.  insures  his  life  in  a 
sum  payable  to  himself  and  his  assigns  for  the  benefit  of  his 
wife,  and  she  dies  leaving  S.  and  two  children,  one-third  of  the 
policy  goes  to  S.,  and  two-thirds  to  the  children,  as  heirs  of 
the  wife,  subject  to  the  right  of  her  administrator  to  collect 
the  whole  ;  and  H.,  to  whom  S.  assigned  the  policy  for  debt,  has 
no  claim  upon  it  except  to  the  extent  of  the  one-third  that 
has  come  to  S.  and  the  premiums  paid  by  H.'^  In  North 
Carolina,  where  A.  insures  his  life  for  the  benefit  of  his  "  wife 
and  children,"  if  his  wife  dies  before  him  her  share  will  go  to 
her  administrator,  and  the  surplus  above  her  debts  to  the  ad- 
ministrator of  A.,  and  be  liable  for  his  debts.  If  the  wife  is 
dead  at  the  issuing  of  the  policy  her  name  in  the  policy  is  a 

1  [Given  t-.  Wisconsin  O.  F.  M.  L.  Ins.  Co.,  71  Wis.  547,  551] 

2  [Wicksteed  v.  Munro,  10  Ont.  R.  283,  R.  S.  0.  Ch.  129,  §  14.] 

3  [Shields  v.  Sharp,  35  Mo.  App.  178 ;  Conn.  Mut.  Life  Ins.  Co.  v.  Baldwin, 
15  R.  I.  106] 

1  [Macaulay  v.  Central  Nat.  Bank,  27  S.  C.  215.] 

5  [U.  B.  Mut.  Aid  Soc.  v.  Miller,  107  Pa.  St.  162.] 

6  Libby  V.  Libby,  37  Me.  359.]       , 

7  [Harley  v.  Heist,  86  Ind.  196.] 

896 


CH.  XX.]  BENEFICIARIES.  [§  399  N 

nullity.  If  one  of  the  two  children  die  before  A.  the  insur- 
ance money  will  be  divided  between  the  survivin<^  child  and 
the  administrator  of  the  dead  child. ^  If  a  father  takes  out  a 
policy  on  his  life  in  favor  of  his  daughter,  the  contract  of  the 
company  is  with  the  latter,  and  upon  her  death  the  legal 
title  to  the  insurance  passed  to  her  legal  representative  who 
is  entitled  to  demand  possession  of  the  policy,  and  the  father 
must  deliver  it  to  him.^  The  personal  representatives  of  any 
beneficiaries  who  die  before  or  after  the  insured  take  their 
share  of  the  insurance.^  Where,  if  the  wife  dies  before  the 
husband  the  fund  is  to  go  to  their  three  children,  the  personal 
representatives  of  a  child  dying  after  the  mother  but  before 
the  father  take  its  share,  and  not  the  grandchildren.^  Where 
J.  insures  his  life,  payable  to  himself  if  he  lives  thirty  years, 
if  not  then  to  his  father,  W.,  and  the  latter  dies  first,  his  ad- 
ministrator may  recover  the  insurance  on  J.'s  death  within 
thirty  yeai'S.^  If  payment  is  to  be  made  to  "  wife  or  legal 
representatives  of  the  assured,"  the  administrator  or  executor 
of  the  assured  takes  in  case  the  wife  dies  before  him.^  Where 
the  beneficiary  was  named  as  Mrs.  H.  M.  Case,  or  law-heirs, 
and  the  lady  manifestly  intended  was  Mrs.  A^  M.  Case,  who 
died,  and  the  insured  afterward  married  Emma  Case,  the  in- 
surance lapsed  as  to  the  Mrs.,  and  the  heir  Inez  II.  Case  took 
the  fund.*"  Where  the  beneficiary  named  is  the  "  family  "  of 
tlie  insured,  consisting  at  the  time  of  insurance  of  wife  and 
daughter,  and  the  daughter  marries,  and  she  and  her  husband 
and  children  reside  with  her  father  until  her  death,  on  the 
subsequent  demise  of  the  father  the  wife  takes  the  whole  in- 
surance as  being  the  whole  "  family."  ^  If  the  money  is  to  go 
to  the  wife  and  five  children  equally  and  one  child  dies  after 
the  insured,  the  whole  goes  to  the  widow  and  four  remaining 

1  [Hooker  v.  Sugg,  102  N.  C.  115.] 

2  [Glanz  I'.  Gloeckler,  104  III.  573.     See  also  10  Brad.  484.] 
8  [Drake  v.  Stone,  58  Ala.  133.] 

«  [United  States  Trust  Co.  r.  Mutual  Ben.  Life  Ins.  Co.,  115  N.  Y.  152.] 
6  [Mumford  v.  Mumford,  19  N.  S.  B.  210.] 
6  [Johnson  V.  Van  Epps,  110  111.  551.] 

•  [Day  V.  Case.  43  Hun,  179.] 

*  [Brooklyn  Masonic  Relief  Ass.  v.  Hanson,  53  Hun,  149.] 

897 


§  399  0]         INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.  [CH.  XX 

children.^  Where  a  policy  runs  to  the  wife  S.  and  "  their 
children,"  and  she  dies,  and  the  insured  marries  again,  a  sur- 
viving child  of  S.  takes  the  whole  fund,  and  not  the  children 
of  the  second  marriage.^] 

[§  399  0.  Change  of  Beneficiary.  — If  there  is  express  pro- 
vision for  change,  or  the  original  contract  is  of  a  character 
that  shows  it  was  not  irrevocable,  or  subsequent  permission 
is  obtained  from  the  beneficiarv,  or  the  beneficiary  dies  before 
the  assured  and  there  is  no  provision  inconsistent  with  a  new 
appointment,  a  new  designation  may  be  made  in  the  mode 
prescribed  if  there  is  one,  but  the  courts  lean  to  upholding  a 
designation  if  clear  though  defective  in  form.  Where  the 
policy  stipulates  that  it  is  a  contract  with  the  insured  and 
not  with  beneficiaries,  and  provides  for  change  of  designation, 
even  this  may  be  dojie  after  the  certificate  has  been  handed 
to  the  beneficiary  first  named,  with  the  remark  by  the  insured 
that  he  gave  her  (his  wife)  the  insurance.^ 

In  New  York  the  superior  court  reinarked  that  whatever 
may  be  said  of  the  case  where  the  policy  is  handed  over  to 
the  beneficiary,  one  who  insures  his  life  in  trust  for  his  chil- 
dren, but  retains  possession  of  the  policy  and  pays  the  pre- 
miums, shows  that  he  does  not  intend  to  make  the  trust 
irrevocable,  and  may  surrender  the  policy  and  take  out  a  new 
one  for  some  other  beneficiary.  It  is  a  mere  gratuity,  and  there 
are  many  reasons  why  it  sliould  be  regarded  as  revocable.* 
The  insured  may  change  the  beneficiary  on  the  books  of  the 
company,  if  the  prior  beneficiary  paid  nothing.^  If  the  benefi- 
ciary dies  before  the  assured  he  may  change  the  designation.^ 
If  a  policy  is  payable  to  the  wife  or  legal  representatives  of 
the  assured  and  the  wife  dies,  the  insured  will  have  the  same 
power  over  it  as  if  originally  payable  to  himself.'''     Where  the 

1  [Covenant  Mut.  Ben.  Ass.  v.  Hoffman,  110  111.  603.] 

2  [Lockwood  V.  Bishop,  18  Ins.  L.  J.  491  (N.  Y.),  special  term,  1876.] 

3  [Catholic  Knights  of  American.  Morrison,  18  Ins.  L.  J.  479  (R.  I.),  Feb.  89.] 

4  [Garner  v.  Germania  Ins.  Co.,  13  Daly,  255,  261-262.] 

5  [Lament  v.  Hotel  Men's  Mut.  Ben.  Ass.,  30  Fed.  Rep.  817  (III.),  1887.] 

6  [Olmstead  v.  Keyes,  85  N.  Y.  593  (wife) ;  Bickerton  v.  Jaques,  12  Abb.  N. 
C.  25  (sister).] 

7  [Johnson  v.  Van  Epps,  110  III.  551.] 


CH.  XX.]  BENEFICIARIES.  [§  399  0 

organic  law  or  the  by-laws  provide  a  spccilic  method  for 
changing  the  beneficiary,  as  by  issue  of  a  new  certificate  on  a 
written  order  to  the  secretary,  it  must  be  done  in  that  way, 
and  cannot  be  accomplished  by  the  will  of  the  member.^  If 
the  policy  is  payable  to  A.,  unless  a  different  payee  is  desig- 
nated by  an  order  acknowledged  before  a  justice  of  the  peace, 
designation  by  an  ordinary  will  is  not  sufficient  to  change  the 
payee.2  In  a  Kansas  case,  where  a  written  request  was  sent 
to  the  company  by  order  of  the  insured  while  on  his  death- 
bed, and  the  company  thereupon  issued  a  new  certificate  in 
accordance  with  the  request,  the  change  was  held  good,  al- 
though some  of  the  formalities  required  by  the  constitution 
of  the  Lodge  had  not  been  complied  with.  The  Olmstead 
case  was  commented  upon  as  differing,  in  the  fact  that  the 
company  had  issued  no  new  certificate  in  that  case ;  and  the 
rule  was  laid  down  that  a  by-law  merely  directory  and  for 
the  benefit  of  the  association  could  not  be  taken  advantage  of, 
by  outside  parties  claiming  the  insurance,^  —  against  the  bene- 
ficiary appointed  by  means  recognized  by  the  company,  I 
think,  should  be  added.  In  Iowa,  however,  it  is  held  that  the 
company  or  the  beneficiary  who  would  take  if  the  informal 
designation  had  not  been  made,  may  raise  the  objection.^  In 
the  Federal  courts  it  is  more  sensibly  held  that  the  rule  that 
the  method  of  designation  laid  down  in  the  policy  and  by-laws 
must  be  followed,  is  subject  to  three  exceptions.  (1)  The 
society  may  waive  the  rules.  (2)  If  it  is  beyond  the  power 
of  the  assured  to  comply  with  the  rules  equity  will  relieve  ; 
and  (3)  If  the  assured  has  pursued  the  rules  and  done  all  in 
his  power  to  change  the  beneficiary,  but  dies  before  the  new 
certificate  is  issued,  equity  will  treat  the  certificate  as  issued.^ 
If  the  policy  is  issued  on  the  "  express  condition  that  the 
assured  may  with  the  assent  of  the  company  assign  or  change 

'  [Olmstead  v.  Benefit  Society,  37  Kans.  93 ;  Stephenson  v.  Stephenson,  6-t 
Iowa,  534  ;  Holland  v.  Tajlor,  111  Ind.  121 ;  Americaa  Legion  of  Honor  v.  Smith, 
45  N.  J.  Eq.  46(J.] 

2  [Mellows  V.  Mellows,  61  X.  H.  137.] 

**  [Titsworth  v.  Titsworth,  40  Kans.  571,  576.] 

*  [Wendt  V.  Iowa  Legion  of  Honor,  72  Iowa,  682.] 

*  [Supreme  Conclave,  &c.  v.  Cappella,  41  Fed.  Eep.  1  (Mich.),  1890.] 

899 


§  399  P]        INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.  [CH.  XX. 

the  beneficiary,"  or  if  the  constitution  of  the  company  so  pro- 
vides, the  designation  is  not  irrevocable,  and  where  the  insured 
has  made  a  valid  promise  and  an  effort  to  change  the  desig- 
nation but  died  before  it  is  accompUshed,  equity  will  con- 
sider that  to  be  done  which  ought  to  be  done,  and  hold  the 
right  transferred.!  Where  the  charter  of  the  company  recog- 
nizes the  right  of  a  member  to  designate  the  beneficiary  by 
will,  a  by-law  providing  that  "  no  change  of  designation  shall 
be  made  or  recognized  until  submitted  to  and  approved  by  the 
board  of  directors,"  will  not  be  sustained  to  defeat  a  changed 
designation  by  will  not  so  approved.^  Where  C.  made  D.  (to 
whom  he  was  engaged)  his  beneficiary,  and  she  afterward 
broke  the  engagement  and  married  another,  and  C.  clearly  in- 
dicated his  intent  to  pass  the  insurance  to  his  son  and  a 
stranger  G.,  but  did  not  succeed  in  getting  a  new  certificate 
because  the  old  one  was  lost,  and  the  insurer  demanded  its 
surrender,  equity,  on  the  death  of  C,  gave  the  fund  to  the  son. 
The  reasons  for  making  D.  the  beneficiary  had  ceased  to  ex- 
ist, and  the  fund  should  go  where  natural  affection  and  the 
law  of  inheritance  would  place  it.^  And  the  rule  requiring 
the  surrender  of  the  old  certificate  in  order  to  change  the 
beneficiary  cannot  apply  when  the  certificate  is  lost.*] 

[§  399  P.  Surrender  of  Policy  ;  Non-Payment  of  Premiums. 
—  While  the  beneficiary  lives  no  surrender  of  the  policy 
without  his  assent,^  or  non-payment  of  premiums  after  such 
surrender,  will  defeat  his  right.  A  surrender  of  the  pol- 
icy by  the  husband  for  the  wife  is  ineffectual  if  without 
her  authority .<^  If  a  husband  takes  out  a  policy  on  his 
life  for  the  benefit  of  his  wife  and  child,  they  acquire  a 
vested  interest  in  it  at  the  moment  of  its  delivery  to  the  in- 
sured, although  no  knowledge  of  it  comes  to  them  until  after 
his  death,  and  he  cannot  defeat  their  rights  by  a  surrender 

1  [Nally  V.  Nally,  74  Ga.  670 ;  Martin  v.  Stubbings,  126  111.  387.] 

2  [Raub  V.  Masonic  Mut.  l^elief  Ass.,  3  Mackey  (D.  C),  68.] 

3  [Grand  Lodge  v.  Child,  70  Mich.  163,  170, 171.] 
*  [Grand  Lodge  v.  Child,  70  Mich.  163  ] 

5  [Manhattan  Life  Ins.  Co.  v.  Smith,  44  Ohio  St.  156;  Garner  v.  Germania 
Life  Ins.  Co.,  110  N.  Y.  266.] 

6  [Matter  of  Booth,  11  Abb.  N.  C.  145.] 

900 


CH.  XX.]  BENEFICIARIES.  [§  399  Q 

without  their  assent ;  and  although  the  policy  may  be  forfeited 
for  non-payment  of  premiums,  yet  non-payment  of  premiums 
after  such  an  attempted  wrongful  surrender  without  notice  to 
the  beneficiaries  will  not  forfeit  the  policy .^  If  husband,  by 
agreement  with  insurance  agent,  allows  policy  to  lapse  and 
takes  out  a  new  one,  the  wife  can  hold  the  substituted  policy .^ 
If  a  husband  exchanges  the  policy  for  a  paid-up  policy,  and 
afterwards  surrenders  this  on  receiving  a  certificate  of  its 
value,  the  wife,  knowing  nothing  of  the  whole  matter  until 
after  his  death,  may  adopt  his  exchange  and  repudiate  his 
surrender,  and  compel  the  company  to  pay  her,  although  the 
certificate  had  been  paid  to  an  assignee.^  Failure  to  pay  pre- 
miums after  surrender  of  a  policy  with  a  forged  release  of  the 
beneficiary  is  no  defence  against  the  beneficiary.*  But  if  the 
beneficiary  dies  in  the  lifetime  of  the  insured,  the  latter  may 
surrender  the  policy  and  take  out  a  different  one  without 
consent  of  the  representatives  of  the  deceased  beneficiary.^ 
When  a  policy  was  payable  to  B's  wife  or  her  representatives, 
and  she  paid  the  premiums,  she  died  in  B.'s  life,  and  he 
contrived  with  the  company  to  let  the  policy  lapse  by  non- 
payment of  premiums,  and  took  out  a  new  policy  to  himself 
and  his  representatives,  the  old  policy  being  really  a  part 
consideration  for  the  new  one.  On  B.'s  death,  it  was  held  that 
the  funds  should  be  divided  between  the  administrators  of  B. 
and  of  the  wife  in  proportion  to  the  amount  of  premiums  paid 
by  their  respective  intestates.^] 

[§  399  Q.  Husband  and  Wife.  —  A  policy  on  A.'s  life  payable 
to  his  wife  is  her  property  and  may  be  assigned  by  her  if  the 
law  of  her  domicil  allows  her  to  sell  and  convey  her  property.'^ 

1  [Wliitehead  v.  N.  York  Life  Ins.  Co.,  83  Hun,  425 ;  102  N.  Y.  143,  156 ; 
Whitehead  v.  N.  Y.  Life  Ins.  Co.,  63  How.  Pr.  394;  People  v.  Globe  Mut.  Life 
Ins.  Co.,  65  How.  Pr.  239] 

2  [Barry  v.  Brune,  71  N.  Y.  261 ;  Brockhaus  v.  Kemna,  7  Fed.  Rep.  609 
(Wis.),  1881 ;  10  Biss.  338  ;  10  Ins.  L.  J.  632.] 

3  [People  I'.  Globe  Mut.  Life  Ins.  Co.,  15  Abb.  N.  C.  75.  Compare  Newcomb 
V.  Alniy,  96  N.  Y.  308.] 

4  [Schneider  v.  United  States  Life  Ins.  Co.,  52  Hun,  130.] 
s  [Bickerton  v.  Jaques,  28  Hun,  119] 

8  [National  Life  Ins.  Co.  v.  Haley,  78  Me.  268.] 

'  [Damron  v.  Penn  Mut.  Life  Ins.  Co.,  99  Ind.  478.] 

901 


§  399  Q]        INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.         [CH.  XX. 

Where  a  man  takes  out  a  policy  that  will  give  him  a  fund  if 
he  lives  till  a  time  stated,  and  if  he  dies  will  secure  a  fund  to 
his  wife,  she  has  a  vested  interest  which  she  can  transfer  by 
assignment,!  although  the  husband  retained  possession  of  the 
policy.  He  naturally  would  do  this  in  case  of  such  a  policy 
on  account  of  his  own  interest  in  it.  But  if  the  whole  bene- 
iicial  interest  in  the  poHcy  is  in  the  wife,  it  has  been  held  in 
New  York,  that  she  could  not  assign  it  by  reason  of  statute  pro- 
tection.2  j^j^^  by  the  New  York  Laws  of  1879  a  wife's  in- 
terest in  a  policy  on  her  husband's  life  is  assignable  by  her 
with  the  written  consent  of  her  husband.^  And  the  assignee 
need  not  have  an  insurable  interest.*  Since  the  act  of  1873, 
however,  the  wife  may  assign  a  policy  in  which  the  chil- 
dren are  not  interested.^  Where  a  wife  is  to  be  the  bene- 
liciary  if  she  survives  her  husband,  but  if  not  her  children  are 
to  have  the  money,  her  assignee  stands  in  no  better  position 
than  she  does,  and  if  after  assignment  the  wife  dies  in  the 
lifetime  of  her  husband  the  children  may  recover  the  fund.^ 
Where  the  wife  after  the  death  of  her  husband  received  from 
the  assignee  a  part  of  the  proceeds,  it  was  held  a  ratification.^ 
If  the  wife  transfers  the  policy  during  coverture  to  secure  a 
debt  of  her  husband,  the  assignment  is  void,  and  if  after  his 
death  she  ratifies  the  transfer  with  consideration,  it  is  still 
void.^] 

1  [Fowler  v.  Butterly,  44  N.  Y.  Super.  148,  159.] 

2  [De  Jonge  v.  Goldsmith,  46  N.  Y.  Super.  131  ;  Brumraer  v.  Colin,  58  How. 
Pr.  239  ;  62  id.  171,  Laws  of  1840  Ch.  277  ;  Mutual  Life  Ins.  Co.  v.  Ferry,  62  id. 
325  (assignment  though  made  in  another  State  is  void)  ;  Eadie  v.  Slimmon,  26 
N.  Y.  9 ;  Barry  v.  Brune,  71  N.  Y.  261 ;  Wilson  v.  Lawrence,  76  N.  Y.  585.] 

3  [Whitehead  v.  N.  Y.  Life  Ins.  Co.,  63  How.  Pr.  394.] 

*  [St.  John  V.  American  Mut.  Life  Ins.  Co.,  13  N.  Y.  31.] 
6  [Brick  v.  Campbell,  54  N.  Y.  Super.  305] 

6  [Brown's  App.,  125  Pa.  St.  303.] 

7  [Robinson  v.  Mutual  Ben.  Ins.  Co.,  16  Blatch.  194  (N.  Y.),  1879.] 

8  [Smith  t'.  Head,  75  Ga.  755.] 

902 


CH,  XXI.]       OP   THE   RISK,   ITS   DURATION   AND    EXTENT. 


CHAPTER  XXI. 

OF   THE    RISK,   ITS    DURATION    AND    EXTENT. 

Analysis. 

§  400.  When  the  Risk  Begins. 

Time  is  of  the  essence  of  the  contract.  The  risk  attaches 
from  the  date  of  the  policy  if  delivered,  unless  a 
contrary  intent  appears.  The  consummation  of  the 
contract  may,  however,  be  prior  to  the  delivery  of 
the  policy  (see  chap.  iv.).  All  the  circumstances  and 
provisions  are  to  be  taken  into  account  to  determine 
the  intent  of  the  parties  on  principles  of  justice. 
Day  of  date  included. 
A  risk  cannot  attach  before  the  organization  of  the  com- 
pany is  completed  so  far  as  to  authorize  it  to  take 
the  risk. 
§  401.  When  it  terminates. 

Time  in  remote  part  of  the  world  must  be  reduced  to 

the  time  at  place  of  contract. 
Fire  breaking  out  before  expiration  of  policy  but  actual 

loss  afterward,  recovery  ? 
Injury  within   time   causing  death   after   expiration   of 
the  policy,  or  after  ninety  days  from  accident,  no 
recovery. 
Last  day  named  included. 

If  no  duration  is  specified,  a  reasonable  time  is  under- 
stood. 
While  drying  hops,  suspension  during  burning  of  forests 
"for  ten  days  prior  to  shipment,"  terminates  in  ten 
days  or  on  shipment. 
"  Until  landed." 
§§  401  a-401  C.     Place  is   often  material,  §  401  a.     It  may  always  be  made  so 
by  explicit   language,  §  401  C,  and   the  description  of 
goods   as   at  a  certain   place  is  frequently  held   a  con- 
tinuing  warranty,  §  401  B;    but  the  nature  and  use  of 
the   property   is   to   be   considered,   and    the   insurance 
will  not    fail  because   goods  are  away  for  repairs,  or  a 
team  is  in  pasture  or  field    instead   of  barn,  §  401    C. 
Insurance   of    goods    on    shipboard    covers  them  while 
on   the   steam   launch,    §  401  C.     Property  in  ordinary 
use  away  from  place  of  deposit  is  protected.    See  also 
§420. 

903 


INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.         [CH.  XXI. 

§  402.  The  Risk  and  what  it  includes. 

In  the  absence  of  specification,  loss  by  fire,  accident, 
death,  or  any  other  cause  insured  against  is  within 
tlie  policy,  ichaicvcr  the  manner  of  loss,  e.  g.,  igni- 
tion is  not  necessary  to  claim  under  a  fire  policy. 
The  insurers  are  not  liable,  however,  for  loss  by  an 
excessive  use  of  heat  purposely  applied,  as  in  over- 
roasting coft'ee,  §  402  and  n.  Insurance  against  stat- 
ute liability  does  not  cover  common-law  liability. 
Ice  included  in  river  perils  in  spite  of  parol  under- 
standing to  the  contrary  ('.).  Wind.  Hail.  Cap- 
ture. Insuring  a  ship  for  voyage  A.  does  not  cover 
voyage  B. 
§403.  "  Usurped  power."     "  Civil  Commotion." 

Mobs.     Riots.     Proximate  cause. 
"  Resistance  to  authority  "  held  not   to  include 
action  of  a  group  of  escaping  convicts. 
§  404.  Injury  by  water  and  removal  or  theft  in  consetj^uence  of 

bona  fide  and  prudent  efforts  to  save  from  fire,  are 
within  policy.    Such  efforts  must  be  encouraged.    In 
many  cases  the  property  would  burn  if  not  for  the 
water  or  removal. 
§  405.  Smoking.     Goods  illegally  kept  for  sale. 

§  406.  Lightning  policy.    Loss  by  tornado  and  lightning  covered. 

§  407.  Misconduct.     Fraud.      Suicide.     "Wilful    destruction    of 

property  fatal  to  claim  under  the  policy  unless  loss 
was  certain  any  way.     (See  also  §  411.) 
§  407  A.  If  loss  is  caused  by  wrongful  act  of  third  person  or  by 

assured  while  insane,  the  company  is  liable. 
Company  liable. 

violation  of  orders  by  guests, 
neglect  of  captain  to  register  goods, 
incendiarism, 
by  stranger. 
by  wife, 
by  assured  while  insane. 

§  408.  Negligence. 

Mere  negligence,  however  great,  if  short  of  fraud, 
is  covered  by  the  jjolicy,  §  408.  See  also  §  410. 
And  if  only  the  remote  cause  of  loss  is  no  de- 
fence even  when  the  policy  expressly  excepts 
loss  by  negligence,  §  408. 
§  409.  "Wilful  exposure.     General  current  of  authority  is  tliat 

even  the  utmost  recklessness  is  no  defence  on  a  life 
policy  unless  so  expressed. 
§  409  A.  Exposure  to  obvious  and  unnecessary  danger, 

going  along  railroad  track  at  night  is. 
crossing  in  daytime  may  be. 
going  to  rescue  of  wrecked  orew  not. 
§  410.  "Design."     Gross  negligence  not  fraud,  though  it  may 

be  evidence  of  it. 

904 


CH.  XXI.]       OF    THE    RISK,    ITS    DURATION    AND    EXTENT. 

§  411.  Misconduct  avoids  a  policy. 

It  differs  from  negligence.  It  is  said  that  misconduct  is 
a  violation  of  detinite  law  ;  carelessness  is  an  abuse  of 
discretion  under  an  indefinite  law.  Misconduct  is  a 
forbidden  act,  carelessness  a  forbidden  quality  of 
an  act.  If  the  element  of  wilfulness  conies  in,  we 
have  misconduct  or  fraud,  not  negligence. 
§  411  A.  Marine  Insurance,  Negligence,  Barratry,  Tlieft. 

§  412.  If  after  a  fire  is  out  the  weakened  walls  fall  and  crush  an  adjoin- 

ing building,  this  loss  is  within  a  policy  against  damage 
by  fire.     Otherwise  if  seven  days  after  the  fire  a  gale  blows 
the  walls  down,  or  walls  fall  from  inherent  weakness  before 
there  is  any  fire. 
§§  413-416.  Spontaneous  Combustion  (§  413)  is  within  a  fire  policy  (contra, 

§  413  n. ),  and  an  exi)losion  would  seem  also  within  it, 
§  413,  but  is  frequently  excepted,  §  415. 
Explosion  incident  to  a  fire  not  within  the  exception,  §  416. 

nor  one  resulting  from  the  business  insured,  §  415. 
Concussion  not  within  a  fire  policy,  §  414.     (Distinction 

rather  fine.) 
There  are  numerous  cases,  in  some  of  which  the  insured 
was  injured  by  explosion  following  fire,  and  in  others 
by  fire  following  an  explosion,   and  conditions  and 
opinions  are  various.     See  also  §  418. 
Bursting  of  boilers,  §  415. 
§  417.  Collision.     If  a  vessel  injured  by  collision  and  afterwards  taking 

fire  would  have  gone  to  the  bottom  and  been  totally 
lost  without  the  fire,  the  loss  is  not  by  tire ;  but  if 
the  fire  was  an  essential  factor  in  the  vessel's  loss, 
it  comes  within  the  policy,  §  417. 
It  is  sometimes  difficult  to  tell  how  far  to  carry  the  rule 
excluding  a  remote  cause.  See  §§  417,  417  A,  419. 
§  419.  Intemperance.     Accident,  &c.     Proximate  cause. 

Intemperance  causing  acts  of  exposure  which  produce  death,  is 
the  cause  of  death. 
§  419  A.  Kules  of  company  against  intemperance  must  be  obeyed. 

"  sober  and  temperate  "  does  not  imply  total  abstinence, 
"seriously  impair  health"  means  his  health;  evidence 
that  he  drank  enough  to  impair  ordinary  health  not 
sufficient, 
excessive  drinking  violates  warranty  against  pernicious 
habit  obviously  tending  to  shorten  life. 
,  Evidence.     Beneficiary  not  estopped  by  doctor's  statements. 

Agent's  knowledge  may  prevent  company  from  insisting  on  con- 
dition against  intemperance, 
and  yet  death  from  intoxication  may  avoid  the  policy. 

§§  420-421.  "What  property  is  covered. 

doubt  resolved  against  company,  §  420. 
wearing  apparel,  §  420. 

linen,  stock,  furniture,    fixtures,   jewelry,   merchandise, 
plate,  refined  oil,  house,  ship-yard,  C9,rs,  unfinished 

905 


400]  insueance:  fire,  life,  accident,  etc.      [ch.  xxi. 

house  or  boat,  lumber,  mill,  factory,  machinery,  tools, 
grain,  cattle,  §  420. 

stock  of  liair,  iron,  corn,  rice,  fur,  freight,  §  420  A. 

additions,  goods  in  outbuildings  or  on  a  hired  vessel, 
g  420  B. 

what  is  covered,  question  for  jury,  §  420  A. 

evidence  admissible  to  show  what  was  meant  to  be  in- 
cluded, §§  420,   420  A. 

misdescription  disregarded  if  sufficient  to  identify, 
§  420  A. 

usage  received  in  favor  of  assured,  §  420  A. 

after-acquired  stock  covered,  §  420  B. 

"lost  or  not  lost,"  §  420  B. 

goods  included  by  mistake,  company  not  liable,  §  420  B. 

other  goods  shipped  m  place  of  those  described,  not  cov- 
ered, §  420  B  ;   premium  recovered. 

indorsement  of  specific  goods,  secretary  cannot  waive  the 
condition,  §  420  B. 

New  York  mutual  companies  may  insure  foreign  resi- 
dents aud  property,  §  420  B. 

goods  in  trust  and  bailments,  §  420, 


§  400.  Duration  of  the  Risk  ;  When  it  commences ;  "  Time  of 
Insurance ; "  Time  of  Death.  —  Time  is  material  in  the  con- 
tract, and  as  a  general  rule  the  policy,  if  delivered,  takes 
effect  from  its  date,  unless  it  be  otherwise  stated,  as  that  it 
shall  not  be  valid  till  the  premium  be  paid,  or  some  other  con- 
dition be  complied  with,  and  then  upon  the  payment  of  the 
premium  or  compliance  with  the  required  condition,  or  a 
waiver  of  either,  it  covers  the  subject-matter  of  insurance 
from  the  date  of  the  policy,  unless  there  is  evidence  of  a  con- 
trary intent.!  If  the  premium  be  paid,  and  the  policy  be  not 
delivered  till  afterwards,  the  policy  takes  effect  by  relation  as 
of  its  date,  even  though  a  loss  intervenes.^  If  it  be  delivered, 
but  upon  the  express  stipulation  that  it  is  to  take  effect  on  a 
certain  day,  that  stipulation  will  control ;  ^  or,  upon  the  ex- 
press understanding  that  it  is  not  to  take  effect  till  another 

1  Ruse  V.  Mut.  Ben.  Life  Ins.  Co.,  23  N.  Y.  516;  Whitaker  v.  Farmers'  Union 
Ins.  Co.,  29  Barb.  (N.  Y.)  312;  Hallock  v.  Com.  Ins.  Co.,  2  Dutch.  (N.  J.)  268; 
s.  c.  affirmed,  3  id.  645 ;  arite,  §§  57,  58,  64,  65. 

2  Lightbody  v.  N.  A.  Ins.  Co.,  23  Wend.  (N,  Y.)  18  ;  City  of  Davenport  t;. 
Peoria  Mar.  &  Fire  Ins.  Co.,  17  Iowa,  276. 

3  American  Horse  Ins.  Co.  v.  Patterson,  28  Ind.  17  ;  Western  v.  Genesee 
Mut.  Ins.  Co.,  2  Ker.  (N.  Y.)  258. 

906 


OH.  XXI.]       OF    THE    RISK,    ITS    DURATION    AND    EXTENT.  [§  400 

policy  has  been  surrendered,  it  will  not  relate  back  so  as  to 
cover  a  loss  which  occurs  prior  to  the  required  surrender.^ 

In  Isaacs  v.  Royal  Insurance  Company,^  it  was  queried 
whether  a  policy  from  a  certain  day  to  a  certain  other  day 
would  cover  a  loss  on  the  first-mentioned  day ;  but  in  Massa- 
chusetts it  has  been  held  that  a  lease  from  the  "  first  day  of 
July  "  takes  effect  on  the  second  day  of  July.^  "  From  the 
day  of  the  date,"  and  "  from  the  date,"  were  formerly  held  to 
be  distinguished  in  that,  in  the  computation  of  time,  it  was 
reckoned  from  the  day  in  the  former  case,  and  excludes  it, 
while  in  the  latter  it  was  reckoned  from  the  act  or  thing; 
done,  and  includes  the  day  on  which  it  is  done.'*  But  it  has 
since  been  held  in  England  that  the  two  phrases  mean  the 
same  thing,  and  that  the  rule  of  inclusion  or  exclusion  applies 
according  to  the  intent  of  the  parties,  to  be  derived  from  the 
context.  In  this  country,  however,  there  is,  in  some  courts, 
an  inclination  to  adhere  to  the  distinction.^  It  is  impossible, 
however,  to  reconcile  the  decisions  either  with  the  rule  of 
inclusion  or  exclusion.  The  circumstances  and  intent  of  the 
parties  are  to  control ;  and  such  construction  should  be  given 
as  will  operate  most  to  the  ease  of  the  party  entitled  to  favor, 
and  by  which  rights  will  be  secured  and  forfeitures  avoided.^ 
And  where  the  policy  was  in  fact  a  reinsurance,  and  was  for 
a  year,  but  specifying  no  time  when  the  year  was  to  begin,  it 
was  held  that  it  began  from  the  date  of  the  prior  policy, 
though  that  was  some  months  prior  to  the  issue  of  the  latter 
policy." 

The  time  of  insurance,  within  the  meaning  of  a  policy 
which  provides  that  it  is  not  to  take  effect  if  the  subject  of 
insurance  is  deceased  "  at  the  time  of  insurance,"  is  not  ne- 
cessarily identical  with  the  date  of  the  policy.     By  its  special 

1  Atlantic  Ins.  Co.  v.  Goodall,  35  N.  H.  328. 

2  39  L.  J.  Exch.  189. 

3  Atkins  V.  Sleeper,  7  Allen  (Mass.),  487. 
«  Sir  II.  Howard's  Case,  2  Salk.  625. 

5  Atkins  V.  Sleeper,  7  Allen  (Mass.),  487;  Blake  v.  Crowninshield,  9  N.  H. 
304 ;  Cornell  v.  Moulton,  3  Denio  (N.  Y.),  12  ;  Weeks  v.  Hull,  19  Conn.  376. 

6  O'Connor  v.  Towns,  1  Texas,  107. 

■^  Phila.  Life  Ins.  Co.  v.  Am.  Life  Ins.  Co.,  23  Pa.  St.  65. 

907 


§  400]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.        [CH.  XXI. 

terms  the  policy  may  provide  that  the  insurance  shall  run 
from  a  certain  day  prior  to  its  date  to  a  certain  day  subse- 
quent thereto  ;  and  if  the  death  of  the  subject-matter  of  in- 
surance intervene  between  the  first  date  and  the  date  of  the 
policy,  it  will  be  a  loss  covered  by  the  policy.  When  the  pol- 
icy itself  covers  a  period  antecedent  to  its  date,  and  does  not 
specify  the  contingency  upon  which  it  shall  take  effect,  the 
date  of  the  policy  or  of  its  actual  delivery  becomes  of  little  or  no 
importance  in  determining  when  the  insurance  takes  effect.^ 

[A  mutual  company  is  not  liable  for  a  loss  occurring 
after  application,  but  before  the  company  has  received  the 
final  certificate  of  the  auditor.  Up  to  that  time  it  has  no 
power  to  contract.  The  insured  seeks  membership,  and  he 
must  be  charged  with  knowledge  of  the  charter.  Even  if 
the  agent  represented  to  him  that  the  insurance  bound  the 
company  from  the  date  of  application  the  company  is  not 
estopped.''^  A  provision  that  no  benefits  will  be  due  or  payable 
if  death  occurs  within  three  months  from  the  date  of  the  pol- 
icy, is  valid.*^  In  general,  insurance  on  goods  from  A.  to  £. 
by  a  certain  ship  commences  w^hen  the  goods  are  put  on 
board.^  When  the  underwriter  stipulated  verbally  that  if  the 
ship  did  not  sail  in  five  days  he  would  not  be  liable,  and 
where  because  of  danger  of  capture  she  did  not  sail  for  a 
month,  the  policy  was  held  good  as  the  stipulation  was  not 
contained   therein.^] 

"  While  lying  in  Victoria  Dock,  with  liberty  to  go  into  dry 
dock,"  covers  the  passage  to  and  from  the  dry  dock,  but  not  a 
period  occupied  on  the  way  for  repairs  ;  ^  and  "  while  loading 
at  B."  covers  the  period  while  tlie  vessel  is  at  B.  for  the  pur- 
pose of  loading,  whether  she  be  actually  engaged  in  loading 
or  not."     A  "  port   risk "  protects   only   while   the    vessel  is 

1  American  Horse  Ins.  Co.  v.  Patterson,  28  Ind.  17;  Kentucky  Mut.  Ins.  Co. 
V.  Jenks,  5  Ind.  96. 

2  [Manuf.  &  Merchant's  Mut.  Ins.  Co.  v.  Gent,  13  Brad.  308.] 

3  [Bniton  V.  Met.  Life  Ins.  Co.,  48  Hun,  204.] 

*  [Mobile  xMar.  D.  &  Mut.  Ins.  Co.  v.  McMillan,  31  Ala.  711  at  723.] 

s  [Whitney  v.  Haven,  13  Mass.  172  at  173.] 

•5  Pearson  v.  Commercial  Union  Ass.  Co.,  45  L.  J.  C.  P.  761. 

^  Reed  v.  Merchauts'  Mut.  Ins.  Co.,  95  U.  S.  23. 

908 


CH,  XXI.J       OF    THE    RISK,    ITS    DURATION    AND    EXTENT.  [§  401 

in  port,  and  prior  to  the   commencement  of  the  voyage  by 
leaving  the  wharf.i 

§  401.  Duration  of  the  Risk;  When  it  terminates.  — When 
the  fire  breaks  out  before  the  expiration  of  the  policy,  but 
the  property  is  not  consumed  till  after,  the  whole  damage, 
says  Alauzet,  would  be  considered  as  occurring  at  the  time 
the  fire  breaks  out.^  It  would  hardly  be  contended,  however, 
that  death  after  the  expiration  of  the  policy,  the  result  of  a 
disease  contracted  however  recently  before,  would  be  within 
the  protection  of  the  policy.  If  the  death  or  loss  should 
happen  in  a  remote  part  of  the  world,  the  difference  of  time 
might  give  rise  to  the  question  whether  the  death  was  before 
the  hour  fixed  as  the  termination  of  the  policy.  In  order  to 
give  the  insured  the  benefit  of  the  exact  time,  no  more  and 
no  less,  the  time  of  death,  where  it  occurred,  whether  in  east 
or  west  longitude,  and  therefore  earlier  or  later  than  the 
actual  time,  must  be  reduced  to  the  time  of  the  place  of  the 
contract."  Insurance  from  a  given  day  until  a  certain  other 
given  day,  and  for  so  long  after  as  the  insured  shall  pay  the 
premium  paid  on  the  first  day,  extends  to  and  includes  the 
latter  day,  it  being  the  evident  intention  that  the  policy  is  to 
be  renewed,  as  any  other  construction  would  leave  the  insured 
without  protection  on  each  day  of  renewal.*  A  comparatively 
recent  case  in  Massachusetts  presented  a  question  of  some 
complication  as  to  the  time  covered  by  the  policy.  The  pol- 
icy was  dated  Oct.  5,  1866,  and  contained  the  following 
clauses  :  "  This  policy  of  insurance  is  for  the  period  of  twelve 
months,  commencing  at  twelve  o'clock  (noon)  on  the  fifth 
day  of  October,  1866,  and  terminating  at  twelve  o'clock 
(noon)  on  the  fifth  day  of  October,  1867, "  "  against  loss  of 
life  ...  to  be  paid  within  ninety  days  after  sufficient  proof 
that  the  assured  at  any  time  after  the  date  hereof,  and  be- 
fore the  expiration  of  this  policy  shall    have  sustained   per- 

'  Nelson  v.  Sun  Ins.  Co.,  71  N.  Y.  453.  See  also  2  Parsons,  Mar.  Ins.  53  etseq. 

2  Des  Ass.,  2,  §461. 

3  Schofield  V.  Jones,  2  Ins.  L  J.  (Eng.)  640  6. 

*  Isaacs  et  al.  v.  Royal  Ins.  Co.,  22  L.  T.  681.  Tlie  court  take  pains  to  say,  in 
this  case,  that  they  do  not  wish  to  give  any  opinion  as  to  whether  the  first  day 
is  also  included. 

909 


§  401]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.        [CH.  XXI. 

sonal  injury  caused  by  any  accident  within  the  meaning  of 
this  policy,  ,  .  .  and  such  injuries  shall  occasion  death  with- 
in ninety  days  from  the  happening  thereof."  On  the  eleventh 
day  of  December  1866,  at  nine  o'clock  in  the  forenoon,  the 
insured  met  with  an  accident,  in  consequence  of  which  he 
died  on  the  12th  of  March,  1867,  about  nine  o'clock  in  the 
forenoon.  Upon  these  facts  the  court  (Chapman,  C.  J.) 
says : — 

"  No  computation  of  time  will  bring  the  death  within  ninety 
days  from  the  happening  of  the  accident.  But  the  rule  of 
computation  is  stated  in  Atkins  v.  Sleeper.^  When  time  is 
computed  from  an  act  done,  the  general  rule  is  to  include  the 
day.  When  it  is  computed  from  the  day  of  the  act  done,  the 
day  is  excluded.  The  language  of  the  instrument  requires 
that  the  computation  be  made  from  the  time  of  the  act  done, 
namely,  the  accident. 

"  But  it  is  contended  that  as  this  is  an  insurance  for  twelve 
months,  the  provision  by  which  it  is  attempted  to  exempt  the 
company  from  liability  for  the  death  of  the  insured,  happen- 
ing from  a  cause  within  the  meaning  of  the  policy  during  said 
term,  is  inconsistent  with  the  general  object  and  tenor  of  the 
policy,  and  is  void.  No  such  inconsistency  is  apparent  to  the 
court.  On  the  contrary,  the  policy  clearly  describes  the  cases 
in  which  the  loss  of  life  shall  make  the  company  responsible, 
and  limits  the  liability  to  such  cases.  It  is  further  contended 
that  if  the  provision  in  the  jjolicy  that  the  injuries  shall  occa- 
sion death  within  ninety  days  can  have  any  legal  force  or  effect, 
it  must  be  construed  to  mean  such  injuries  as  shall  occasion 
death  within  ninety  days  after  the  termination  of  the  twelve- 
month. But  as  the  ninety  days  are  expressed  to  be  from  the 
happening  of  the  accident,  this  construction  cannot  be  ac- 
cepted. It  is  said  that  unless  the  clause  be  void,  or  be  con- 
strued as  above  stated,  an  effectual  life  insurance  for  more 
than  ninety  days  was  impossible.  If  this  were  so,  it  would  be 
the  result  of  the  terms  of  the  contract  upon  which  the  action 
is  brought.  But  here  is  simply  an  insurance  against  certain 
accidents  which  may  happen  within  a  given  time,  and  result 

1  7  Allen  (Mass.),  487. 

910 


CH.  XXI.]       OF   THE   RISK,   ITS   DURATION   AND    EXTENT.  [§  401 

fatally  within  a  given  time  after  they  happen."  ^  Where  the 
risk  is  to  continue  till  the  voyage  is  stopped  by  ice  or  the 
closing  of  navigation,  it  will  be  a  question  for  the  jury  where 
the  voyage  was  stopped,  if  the  circumstances  and  causes  are 
in  dispute.^  Where  the  insurance  was  upon  a  certain  build- 
ing for  a  specified  time,  while  drying  hops,  a  loss  during  the 
time  specified,  but  after  the  insured  had  ceased  drying  hops, 
was  held  not  to  be  covered  by  the  policy  ;  otherwise,  the 
words  "  while  drying  hops  "  would  have  no  significance.^  If 
the  policy  excludes  liability  for  damage  from  "  burning  of 
forests,"  and  provides  that  tbe  risk  shall  be  suspended  during 
the  existence  of  such  contingency,  proof  that  the  fire  hap- 
pened while  the  neighboring  forests  were  burning  will  release 
the  insurers  from  liability.*  An  agreement  to  cancel,  if  exe- 
cuted, is  effectual  without  an  erasure  of  the  insured's  name 
from  the  books,  although  by  the  policy  the  insurance  can 
only  thus  terminate.''  [A  "  risk  of  fire  on  shore  for  ten  days 
prior  to  shipment"  means  that  if  the  goods  burn  while  on 
shore  awaiting  ship,  and  within  ten  days  after  the  insurance 
is  effected,  the  loss  is  covered  by  the  policy.^  In  an  action 
against  an  insurance  company  on  an  open  policy  of  insurance 
against  fire  and  other  marine  risks,  on  provisions  on  vessels 
until  landed,  where  it  was  in  evidence  that  a  part  of  the  pro- 
visions had  been  landed  when  a  fire  broke  out  on  shore,  des- 
troying them,  it  was  held  that  the  company  was  not  liable 
for  their  loss."  Where  the  policy  did  not  state  the  period  the 
risk  was  to  cover,  and  a  loss  occurred  fourteen  days  after  its 
date,  it  was  held  to  cover  such  loss,  it  being  within  a  reason- 
able time.^] 

1  Perry  v.  Prov.  Ins.  &  Inv.  Co.,  99  Mass.  162. 

2  Sherwood  v.  Agricultural  Ins.  Co.,  73  N.  Y.  447  ;    post,  §  401  a. 

3  Langwortliy  i-.  Oswego  Ins.  Co.,  Sup.  Ct.  (N.  Y.)  ;  11    Reptr.  744. 

*  Commercial  Un.  Ass.  Co.  v.  Canada  Iron,  &c.  Co.,  18  L.  C.  Jur.  (Q.  B.)  80. 
As  to  the  effect  of  days  of  grace  within  whicli  renewal  premiums  may  be  paid 
upon  the  prolongation  of  the  original  contract  beyond  its  stated  limits,  see  ante, 
§  354  et  seq. ;  Connell  v.  Scottish  Commercial  Ins.  Co.,  3  Ins.  L.  J.  (Eng.)  536. 

*  Farmers'  Mut.  Ins.  Co.  v  Wenger  (Pa.  ),  8  Ins.  L.  J.  712. 
6  [Fire  Ins.  Co.  v.  Merchants,  &c.  Trans.  Co.,  66  Md.  339.] 

'  [Mansur  v.  N.  E.  Mut.  Mar.  Ins.  Co.,   12  Gray,  520  at  527.] 

8  [Schroeder  v.  Trade  Ins.  Co.,  109  111.  157.] 

VOL.  II.— 14  911 


§  401  a]         INSURANCE  :    FIRE,    LIFE,   ACCIDENT,   ETC.         [CH.  XXI. 

§  401  a.  Place  is  also  material  in  the  contract ;  and  unless, 
under  special  exceptions,  the  removal  of  the  subject-matter  — 
as,  for  instance,  a  stock  of  goods  —  from  the  place  where  situ- 
ated when  insured  leaves  nothing  to  which  the  policy  can 
attach  at  the  time  of  the  loss,  though  no  doubt  a  recognition 
bj  the  insurers  of  the  validity  of  the  policy  after  notice  of 
removal  will  have  the  effect  to  protect  the  goods  in  their  new 
place  of  deposit.^  Sometimes,  however,  as  we  have  seen,  the 
nature  of  the  property  is  such  that  the  description  of  place  is 
necessarily  somewhat  indefinite.^  When  there  is  doubt  as  to 
the  place,  as  where  the  policy  may  apply  to  goods  contained 
in  one  or  several  rooms  or  buildings,  evidence  is  admissible 
to  solve  the  doubt,  aided  by  the  principle  that,  if  the  descrip- 
tion be  by  the  insurer,  the  insured  must  have  the  benefit  of 
the  doubt.^  Where  permission  was  given  to  remove  to  a 
new  place,  the  policy  was  held  to  protect  in  the  old  place 
till  removal.*  A  policy  on  goods  in  a  given  story  will  cover 
goods  removed  from  one  room  to  another  in  the  same  story .^ 

Insurance  on  a  stock  of  goods  covers  after-acquired  and 
substituted  goods  in  the  same  place  to  the  amount  of  the  origi- 
nal insurance,  if  the  loss  amounts  to  so  much.^  So  it  covers 
loss  by  fire  by  spontaneous  combustion  of  coals,  and  coals 
substituted,  to  the  amount  insured.''  So  it  covers  stacks  of 
wheat  on  a  part  of  the  farm  purchased  since  the  policy  was 

1  Harris  v.  Royal  Can.  Ins.  Co.,  53  Iowa,  236  ;  Williamsburg  City  Fire  Ins. 
Co.  V.  Cary,  8-3  111.  453 ;  Boynton  v.  Clinton,  &c.  Ins.  Co.,  16  Barb.  (N.  Y.)  254  ; 
Lycoming  Ins.  Co.  v.  Updegraff,  40  Pa.  St.  311. 

2  Ante,  §  219 ;  fost,  §  420 ;  Eddy  St.  Foundry  v.  Farmers'  Mut.  Ins.  Co.,  5 
R.  I.  426. 

3  Beatty  v.  Lycoming  Ins.  Co.,  52  Pa.  St.  456;  ipost,  §  420;  Lycoming  Ins. 
Co.  V.  Sailer,  67  Pa.  St.  108 ;  Bowman  v.  Agr.  Ins.  Co.,  59  N.  Y.  521  ;  Fair  v. 
Manhattan  Ins.  Co.,  112  Mass.  320;  Meadowcroft  v.  Standard  Ins.  Co.,  61  Pa. 
St.  91  ;  Hews  v.  Atlas  Ins.  Co.,  126  Mass.  389  ;  Bryce  v.  Lorillard  Ins.  Co.,  55 
N.  Y.  240. 

*  Kunzze  v.  Am.  Exchange  Ins.  Co.,  41  N.  Y.  412,  affirming  s.  c.  2  Robt. 
(N.  Y.)  443.  Contra,  McClure  v.  Lancashire  Ins.  Co.,  6  Ir.  Jur.  n.  s.  63  ;  s.  c.  4 
Ben.  Fire  Ins.  Cas.  488. 

5  Westi^.  Old  Colony  Ins.  Co.,  9  Allen  (Mass.),  316. 

6  City  Fire  Ins.  Co.  v.  Mark,  45  111.  482;  Butler  v.  Standard  Fire  Ins.  Co.,  4 
App.  R.  (U.  C.)  391 ;  ante,  §  265  ;  Planters'  Ins.  Co.  v.  Engle,  52  Md.  468. 

7  British  Am.  Ins.  Co.  v.  Joseph,  9  L.  C.  Rep.  (Q.  B.)  448. 

912 


CH.  XXI.]       OF   THE   EISK,   ITS   DURATION    AND    EXTENT.      [§  401  B 

issued,  and  even  though  the  new  purchase  is  not  adjoining 
the  other  land.^ 

[§  401  B.    Place  material.  —  Where  furniture  is  described 

as  ^'contained  in  house  number "  of  a  certain  street,  the 

description  of  locality  is  construed  as  a  continuing  warranty.^ 
Goods  described  as  being  in  a  "  store  "  are  not  covered  by  the 
policy,  if  in  reality  they  are  in  a  tavern,  for  that  is  a  more 
hazardous  location  than  the  one  described.^  Goods  insured 
as  "  contained  in  his  two-story  frame  dwelling-house,"  are 
not  covered  when  removed  to  the  barn.*  Where  the  policy  in- 
sured "  household  furniture  contained  in  a  house  and  additions 
occupied  as  a  residence  "  and  in  another  clause,  "  horse,  bug- 
gies, &c.,  in  barn,"  the  assured  was  not  allowed  to  recover  for 
a  loss  of  the  former  by  the  burning  of  the  barn,  into  which  they 
had  been  removed  on  account  of  a  previous  fire  in  the  house.-'^ 
A  policy  on  a  building  and  "  sleighs,  hacks,  &c.,  contained  there- 
in "  does  not  cover  damage  to  one  of  the  hacks  while  off  for 
repairs  in  a  shop  one  eighth  of  a  mile  away.^  Clothing,  de- 
scribed as  in  a  certain  building,  is  not  covered  while  removed 
during  a  long  journey  or  protracted  visit.^  Where  a  horse,  har- 
ness, &c.,  insured  as  "  personal  farm  property  in  buildings  and 
on  farm  "  were  destroyed  by  fire  while  in  the  barn  of  a  village 
hotel,  the  company  was  not  liable.^  There  was  in  this  case 
another  element,  viz.,  that  the  hotel  was  within  one  hundred 
feet  of  other  buildings,  and  the  by-laws  of  the  company  placed 
such  a  risk  beyond  tlie  limits  of  the  policy .^J 

1  Sawyer  v.  Dodge  Co.  Mut.  Ins.  Co.,  37  Wis.  503,  508.  See  also  Mills  v. 
Farmers'  Ins.  Co.,  37  Iowa.  400,  where  the  insurers  were  held  liable  for  a  horse 
purchased  after  the  policy  was  issued,  and  killed  while  off  the  premises  on  his 
way  to  mill.  But  in  Providence,  &c.  R.  R.  Co.  v.  Yonkers  Ins.  Co.,  10  R.  I.  74, 
])roperty  situated  on  after-acquired  property,  thougii  adjoining,  was  held  not  to 
be  within  the  risk. 

2  [Lyons  v.  Prov.  Wash.  Ins.  Co.,  14  R.  I.  100,  reversing  13  R.  I.  847.] 

3  [Prudhomme  v.  Salamander  Ins.  Co.,  27  La,  An.  695  at  696.] 

4  [English  V.  Franklin  Ins.  Co.,  55  Mich.  273-274.] 

5  [English  V.  Franklin  Ins.  Co.,  21  N.  W.  Rep.  340  at  341.] 

6  [Bradbury  v.  Insurance  Cos.,  80  Me.  396] 

•   [Towne  v.  Fire  Ass.  of  Philadelphia,  27  Brad.  4.33.] 

8  [Wildey  v.  Farm  Mut.  Fire  Ins.  Co.,  52  Mich.  446,  449.] 

9  [Ibid.  449.] 

913 


§  402]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.        [CH.  XXI. 

I  §  401  C.  Company  held  though  Property  out  of  Place.  —  A 
seal-skin  dolman  described  as  "  contained  in  "  a  certain  dwelling 
was  held  covered  by  the  policy,  although  burned  while  at  a  fur- 
rier's and  under  a  greater  risk  than  at  home.^  The  nature  and 
use  of  the  property  insured  must  be  taken  into  account.  In  the 
case  of  furniture  the  designated  location  is  an  essential  ele- 
ment, but  in  respect  to  things  naturally  moved  about  in  their 
ordinary  use  it  is  otherwise.  Many  cases  concerning  animals, 
garments,  vehicles,  and  machines  are  quoted  in  the  Wisconsin 
case  last  cited.  A  policy  on  carriages  <S:c.,  "  contained  in " 
a  livery  stable  covers  them  while  temporarily  absent  for  re- 
pairs.2  An  insurance  of  a  horse  and  other  property  "  contained 
in  a  barn  "  is  not  a  promissory  warranty  that  the  horse  is  to 
be  kept  in  the  barn  all  the  time  waiting  for  a  fire  or  a  stroke 
of  lightning.  A  loss  while  in  pasture  on  the  farm  is  covered.^ 
An  insurance  of  goods  on  board  a  ship  to  a  certain  port  ex- 
tends to  the  boat  by  which  they  are  landed.*  A  policy  may 
always  be  so  written  as  not  to  cover  any  goods  except  they  be 
at  a  specified  place,  if  sufficient  care  is  taken  to  make  the  in- 
tent perfectly  clear. ^] 

§402.  Risk;  "What  it  includes  ;  Fire.  —  Unless  there  be  in 
the  policy  specific  limitations,  the  risk  extends  to  all  losses  by 
fire,  death,  or  accident,  or  whatever  cause  of  loss  or  injury  be 
insured  against,  however  they  may  be  occasioned.^  [When  a 
fire  policy  expressly  excepts  certain  occasions  of  fire,  all  other 
occasions  or  causes  of  fire  are  included  in  the  risk.'']  Of  the 
force  and  effect  of  some  of  the  exceptions  and  limitations,  we 
have  already  treated.^  It  has  often  been  said  that  loss  by  fire 
means  by  actual  ignition  ;  and  for  this  the  early  case  of  Austin 
V.  Drewe  ^  is  cited  as  an  authority,  which  simply  decides  that 

1  [Noyes  r.  N.  W.  Nat.  Ins.  Co.,  64  Wis.  415.] 

2  [Niagara  Ins.  Co.  i-.  Elliott,  18  Ins.  L.  J.  628  (Va.)  June  89.] 

3  [Haws  V.  Fire  Ass.,  114  Pa.  St.  431 ;  De  Graff  i-.  Queen  Ins.  Co.,  38  Minn. 
501.] 

*  [Pelly  V.  Royal  Exch.  Ass.  Co.,  1  Burr.  341  at  348.] 

5  [First  Nat.  Bk.  v.  Lancashire  Ins.  Co.,  62  Tex.  461,  464  ;  Home  Ins.  Co.  v. 
Baltimore  Warehouse  Co.,  3  Otto,  527.] 

6  Ante,  §§  174,  330,  and  post,  §  420. 

■?  [Insurance  Co.  v.  Transportation  Co.,  12  Wall,  194  at  197.] 
8  Ante,  ch.  ix.  ^  6  Taunt.  436. 

914 


CH.  XXI.]       OF    THE    RISK,    ITS    DURATION    AND    EXTENT.  [§  402 

an  insurance  company  is  not  liable,  on  a  policy  insuring  against 
all  damage  by  fire  to  the  stock  and  utensils  of  a  sugar-house, 
for  damage  done  to  the  sugar  by  the  heat  of  the  usual  fires 
employed  for  refining,  the  fires  being  unusually  intense  by  rea- 
son of  negligence  in  their  management.  And  it  has  been  sug- 
gested that  the  true  ground  of  the  decision  was,  that  insurers 
do  not  undertake  to  be  responsible  for  the  excessive  use  of 
fire  purposely  used,  whereby  the  article  to  which  the  fire  is 
purposely  applied  is  damaged,  whether  by  heat  or  ignition ; 
and  that  they  would  be  no  more  liable  in  this  case  than  they 
would  where  bread  is  overbaked  or  coffee  is  overroasted.  At 
all  events,  if  the  case  of  Austin  v.  Drewe  decides  anything 
more  than  is  above  suggested,  it  has  been  denied  to  be  good 
law  by  very  high  authority.^  And  it  can  scarcely  be  doubted 
that  in  certain  cases  injury  done  to  a  building  and  its  con- 
tents by  heat,  as  by  scorching  paint,  cracking  glass,  and  blis- 
tering pictures  and  furniture,  or  heating  and  thus  destroying 
many  articles  of  commerce,  without  actual  ignition  or  visible 
burning,  is  within  the  risk  ;  though  it  is  no  doubt  true  that 
where  a  chemist,  artisan,  or  manufacturer  employs  fire  in  the 
processes  of  art  and  manufacture,  and  the  article  which  is 
thus  purposely  subjected  to  the  action  of  fire  is  damaged  in 

1  Gushing,  J.,  in  Scripture  v.  Lowell,  10  Cush.  (Mass.)  356.  After  a  very 
able  criticism  of  the  case  of  Austin  v.  Drewe,  Gushing,  J.,  adds  :  "It  has  been 
thought  proper  thus  to  analyze  the  case  of  Austin  v.  Drewe,  because,  having 
been  variously  reported  by  four  different  reporters,  and  presenting  itself  promi- 
nently in  several  of  the  text-books,  but  in  nearly  all  of  them  with  more  or  less 
of  misconception,  it  lias  become  the  starting-point,  in  legal  construction,  of  con- 
flicting lines  of  argument,  leading  to  sundry  false  conclusions,  and  among  others 
that  of  a  supposed  application  to  the  present  case."  See  also  note  of  Judge 
Bennett,  appended  to  the  case  in  the  first  volume  of  his  "  Fire  Insurance  Cases," 
p.  104.  Trumbull,  J.,  Gase  v.  Hartford  Ins.  Co.,  13  111.  676.  Pardessus,  Gours 
de  Droit  Com.,  §  590,  2,  puts  the  case  thus  :  "  If  A.'s  house  is  burned  by  an 
accidental  fire,  the  heat  whereof  injures  the  goods  of  B.,  whose  house,  however, 
the  fire  does  not  reach,  B.'s  insurer  is  responsible,  for  the  injury  is  indirectly 
caused  by  the  peril  insured  against.  But  if  A.  kindles  so  great  a  fire  in  his  fur- 
nace that  the  heat  penetrates  the  partition  wall  between  him  and  B.,  injuring 
B.'s  goods,  B.'s  insurer  is  not  liable,  as  the  injury  is  not  caused  by  the  peril  in- 
sured against."  [Ignition  is  not  necessary  ;  all  loss  arising  directly  and  imme- 
diately from  that  peril  is  covered,  Balestracci  r.  Firemen's  Ins.  Co  ,  34  La.  Ann. 
844;  as  the  foil  of  buildings,  scattering  of  acids,  &c.  Transatlantic  fire  Ins. 
Co.  V.  Dorsey,  56  Md.  70] 

915 


§  402]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.         [CH.  XXI. 

the  process,  —  the  fire  not  passing  its  ordinary  Ihnits, —  such 
damage  is  not  within  the  loss  covered  by  the  policy. ^  In  So- 
hier  v.  Norwich  Fire  Insurance  Company ,2  which  was  a  case 
where  the  fire,  originathig  from  without  a  theatre,  heated  its 
walls  to  such  a  degree  as  to  cause  it  to  take  fire  within,  the 
insurers  were  held  liable.  The  policy,  however,  provided  that 
they  should  be  exempt  from  loss  for  fire  originating  in  the 
theatre,  and  the  real  question  was,  whether  the  fire  in  this  case 
originated  in  the  theatre  ;  and  it  was  held  that  it  did  not.  In 
Brown  v.  King's  County  Fire  Insurance  Company,^  a  druggist 
was  warming  upon  his  stove  an  inflammable  ointment,  as  he 
was  wont  to  do,  which  took  fire  and  communicated  with  the 
building ;  and  it  was  held  that  this  was  a  loss  covered  by  the 
policy.  [A  policy  insuring  an  employer  against  loss  by  his 
statute' liahWity  for  employees  does  not  cover  damages  obtained 
from  him  at  common  law.*  Parol  evidence  of  an  agreement 
at  the  time  of  insurance  that  a  contract  insuring  generally 
against  river  perils  was  not  intended  to  cover  ice,  is  not 
admissible.^  Sometimes  buildings  are  insured  against  whicl^ 
or  crops  against  hail.''  Where  a  policy  on  a  ship  excepted 
liability  for  capture,  and  when  a  storm  arose  so  that  a  portion 
of  the  cargo  was  thrown  overboard  to  save  the  crew,  and  later 
the  ship  ran  into  a  foreign  port  for  safety,  and  there  fell  into 
the  hands  of  enemies,  it  was  held  that  the  company  was  liable 
for  the  goods  thrown  overboard,  but  not  for  the  rest.     The 

1  Ibid. ;  Beaumont,  Ins.  37. 

2  11  Allen  (Mass.),  336. 

3  31  How.  (N.  Y.)  508. 

*  [Morrison   v.  Scot.  Employees   Life  &  Ace.  Ass.  Co.  (Lim.),   2G  Scot.  L. . 
R.  151.] 

s  [State  Fire  &  Mar.  Ins.  Co.  v.  Porter,  3  Grant's  Cas.  128  at  121.  JJ.  Wood- 
ward and  Strong  dissented  on  the  ground  that  the  contract  was  not  clear,  and 
parol  evidence  to  explain  its  meaning  should  have  been  received,  and  this  cer- 
tainly seems  the  fairer,  sounder  view  of  the  facts  of  the  case.  The  plaintiff  was 
distinctly  told  at  the  time  of  insurance  that  the  contract  did  not  cover  ice,  and 
evidence  should  be  received  to  show  the  manner  in  which  the  parties  understood 
the  words  of  the  policy  in  such  a  case.] 

®  [Sexton  V.  Hawkeye  Ins.  Co.  69  Iowa,  99.  The  effects  of  a  storm  on  neigh- 
boring property  is  competent  to  show  that  it  was  a  "  tornado."  Poggensee  v. 
Mut.  Fire,  Lightning  &  Tornado  Ins.  Co.,  69  Iowa,  157.] 

7  [Mut.  Hail  Ins.  Co.  v.  ^Yilde,  8  Neb.  427.] 

916 


CH.  XXI.]       OF   THE   RISK,    ITS    DURATION    AND    EXTENT.  [§  403 

proximate  cause  of  loss  in  every  case  must  be  looked  to.^  If  a 
policy  is'made  expressly  to  cover  "  all  risks  contained  in  regular 
policies  of  insurance,"  loss  by  capture  is  covered,  and  no  parol 
evidence  is  admissible  to  show  that  the  parties  only  intended 
sea-risks.^  Insurance  of  a  ship  for  a  voyage,  "  Cochin,  Alipee, 
and  New  York,"  does  not  cover  the  vessel  if  she  sails  on 
"  Cochin,  Colombo,  Alipee,  New  York."  That  is  a  different 
voyage.^] 

§  403.  Risk;  "Usurped  power;"  "Civil  Commotion;"  "Mobs 
or  Riots."  Proximate  Cause.  —  Destruction  by  fire  set  by  an 
ordinary  mob  is  not  destruction  by  "  usurped  power." 
"  Usurped  power "  would  seem  to  mean  that  of  an  armed 
invasion  or  rebellion,  when  armies  are  on  foot  in  their  sup- 
port. And  perhaps  there  is  a  distinction  between  an  or- 
dinary mob  or  bread  riot,  and  a  rebellious  mob  or  one  having 
political  purposes.  The  one  would  be  treasonable,  and  might 
be  properly  said  to  usurp  power,  while  the  other  would  be 
only  criminal.  A  riot  to  reduce  the  price  of  bread  is  no 
usurpation  of  power  to  do  it,  because  government  itself  has 
no  such  power. ^  Nor  is  a  destruction  of  the  property  by 
order  of  the  municipal  authorities  to  stay  a  conflagration  a 
destruction  caused  by  "  usurped  power,"  even  though  it  be 
done  illegally.  It  is  only  a  destruction  by  those  usurping  the 
power  of  government  that  is  excluded  by  such  a  provision.^ 
"  Usurped  power  "  is  "  rebellion  conducted  by  authority  "  "  got 
to  such  a  head  as  to  be  under  some  authority."  ^  And 
fire  occasioned  by  the  burning  of  a  bridge,  lawfully  ordered 
by  the  military  authorities,  to  prevent  the  advance  of  a  hos- 
tile armed  force,  regularly  organized,  is  not  a  loss  "  occa- 


1  [Rice  V.  Homer,  12  Mass.  230  at  237.] 

2  [Levy  V.  Merrill,  4  Me.  181  at  186.] 

8  [Dickie  v.  Merchants'  Mut.  Ins.  Co.,  4  Russ.  and  Geld.  (Nova  Sco.)  244.] 

*  Wilmot,  C.  J.,  in  Drinkwater  v.  Lon.  Ass.  Co.,  2  Wilson,  363. 

6  City  Fire  Ins.  Co.  v.  Corlies,  21  Wend.  367  ;  Pentz  v.  JEinn  Ins.  Co.,  9  Paige, 
Ch.  (N.  y.)  568  ;  Field  v.  City  of  Des  Moines,  39  Iowa,  575.  The  first  fire  is  the 
proximate  cause.  The  exception  from  risk  of  losses  occasioned  by  the  explosion 
of  gunpowder  applies  only  to  cases  of  fire  originating  with  the  explosion.  Green- 
wald  V.  Insurance  Co.,  3  Phila.  323. 

6  Per  Lord  Mansfield,  Langdale  v.  Mason,  2  Marsh.  Ins.  792. 

917 


§  403]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.         [CH.  XXI. 

sioiied  by  mobs  or  riots."  ^  In  Barton  v.  Home  Insurance 
Company,^  during  the  late  rebellion,  the  national  soldiers 
were  overpowered  and  compelled  to  surrender  to  an  armed 
and  organized  force  of  rebels,  by  whom  the  property  was 
burned ;  but  there  was  no  evidence  that  the  destruction  was 
authorized  by  an  order  from  the  commanding  officers.  After 
referring  to  the  English  cases,  and  to  the  fact  that  the  case  at 
bar  was  one  of  novel  impression  in  this  country,  the  court,  in 
giving  judgment  for  the  defendant,  proceeds  :  — 

"  It  would  be  doing  violence  to  the  language  which  the 
parties  have  seen  fit  to  use,  and  would  be  also  a  strained  and 
unnatural  interpretation  of  their  meaning,  to  say  that  the 
insurer  would  be  liable  in  all  cases,  except  when  he  could 
show  that  the  burning  took  place  by  order  of  the  officer  imme- 
diately commanding  the  rebellious  forces.  The  language  of 
the  proviso  is,  that  the  company  shall  not  be  liable  for  any  loss 
or  damage  by  fire  which  may  happen  by  means  of  invasion, 
military  or  usurped  power,  &c.  If  the  military  or  usurped 
power,  or  the  invasion,  was  the  means  that  occasioned,  or  the 
proximate  cause  of,  the  loss,  then  the  company  cannot  be  held 
liable  within  the  terms  of  the  contract.  An  army  of  invasion, 
or  engaged  in  rebellion,  is  liable  to  commit  acts  of  spoliation 
or  burning  without  any  direct  commands  from  the  superior 
officers,  and  the  insurer  certainly  never  intended  to  incur  a 
risk  by  reason  of  such  acts.  To  exonerate  the  defendant  from 
its  liability,  it  is  not  material  how,  or  in  what  way,  the  fire 
originated,  provided  it  was  within  the  range  of  any  one  or 
more  of  the  excepted  causes.  The  real  question  is,  did  the 
fire  happen  or  the  loss  occur  by  reason  of,  or  in  consequence 
of,  the  military  and  usurped  power  of  the  rebels  ?  .  .  .  and 
were  they  the  proximate  cause  of  the  burning  and  destruction 
of  the  property  ?  "  So  where  the  property  was  ordered  to  be 
burned  by  a  Union  officer  to  prevent  its  falling  into  the  hands 
of  his  Confederate  assailants,  the  burning  was  held  to  be  within 
the  exception.^     The  doctrine  of  this  case  is,  however,  ques- 

1  Harris  v.  York  Mut.  Ins.  Co.,  50  Pa.  St.  341. 

2  42  Mo  156. 

3  ^tna  Ins.  Co.  v.  Boon,  95  U.  S.  117,  reversing  s.  c.  40  Conn.  575. 

918 


CH.  XXI.]       OF   THE   RISK,    ITS   DURATION   AND   EXTENT.  [§  403 

tioned  on  the  propriety  of  the  application  of  the  rule  proxima 
causa,  &c.,iu  a  later  case  in  Virginia,  where  it  is  held  that  the 
real  and  proximate  cause  of  the  fire  was  the  unnecessary 
action  of  the  Union  forces,  and  not  the  unlawful  invasion  of 
the  Confederate  forces.  The  invasion  had  not  rendered  the 
burning  necessary,  and  therefore  had  not  caused  it,  —  a  rule 
which  certainly  opens  up  a  field  of  inquiry  bristling  with 
great  if  not  insuperable  difficulties.^ 

Civil  commotion  seems  to  be  something  less  than  usurped 
power,  and  something  more  than  a  mob  or  riot.  It  is  an  insur- 
rection of  the  people,  setting  the  authority  of  the  government 
at  defiance,  venting  its  fury  upon  all  who  are  obnoxious,  and 
seeking  general  confusion  and  destruction,  and,  perhaps,  with 
a  view  to  prevent  the  enforcing  of  certain  particular  laws. 
The  anti-Roman  Catholic  riots  of  London  in  1780,  which  grew 
out  of  hostility  to  the  laws  granting  certain  privileges  to  the 
Catholics,  and  were  long-continued  and  violent  and  tumul- 
tuous, amounted  to  a  "  civil  commotion  "  within  the  meaning 
of  a  policy  exempting  the  insurers  from  loss  in  case  of  "  civil 
commotion."  This  "is  not  an  occasional  riot,"  said  Lord 
Mansfield  to  the  jury  in  that  case;  "that  would  be  another 
question.  I  do  not  give  any  opinion  what  that  miglit  be. 
...  1  think  a  civil  commotion  is  this,  —  an  insurrection  of 
the  people  for  general  purposes,  though  it  may  not  amount  to 
a  rebellion  where  there  is  a  usurped  power."  ^  If  the  insurer 
be  liable  for  loss  occasioned  by  a  riot,  the  fact  of  the  riot  need 
not  first  be  established  by  a  criminal  prosecution,  nor  is  it 
material  that  the  riotous  assemblage  was  originally  gathered 
for  a  lawful  purpose.^  In  this  case  there  seems  to  have  been 
an  affray,  succeeded  by  a  riot ;  that  is,  said  the  court,  "  a 
tumultuous  disturbance  of  the  peace  by  three  persons  or 
more  ; "  and  the  fact  that  it  was  preceded  by  an  affray  did  not 
make  it  the  less  a  riot.  In  Spruil  v.  North  Carolina  Mutual 
Life  Insurance  Company,*  a   runaway  slave,  whose  life  was 

1  Portsmouth  Ins.  Co.  v.  Reynolds,  .32  Grat.  613. 

2  Langdale  v.  Mason,  2  Marsli    Ins.  792. 

3  Dupin  V.  Milt.  Ins.  Co.,  5  La.  Ann.  482. 
*  IJones  (N.  C),  126. 

919 


§  404]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.         [CH.  XXI. 

insured,  was  shot  while  resisting  the  lawfully  appointed  patrol 
who  were  pursuing  him  ;  and  upon  the  question  whether  his 
death  was  "  by  means  of  any  invasion,  insurrection,  riot,  or 
civil  commotion,  or  of  any  military  or  usurped  authority,  or 
by  the  hands  of  justice,"  the  court  defined  an  insurrection  to 
be  "  a  seditious  rising  against  the  government ;  a  rebellion ; 
a  revolt ; "  and  a  riot  to  be  "  where  three  or  more  persons 
actually  do  an  unlawful  act,  either  with  or  without  a  common 
cause, .  .  .  the  intention  with  which  the  parties  assemble,  or 
at  least  act,  being  unlawful,"  —  in  the  latter  respect  differing 
from  the  judgment  of  the  Supreme  Court  of  Louisiana,  as 
stated  above.  In  the  same  case  a  commotion  was  said  to  be 
"  a  tumult ;  and  a  tumult  to  be  a  promiscuous  commotion  in  a 
multitude,  an  irregular  violence,  a  wild  commotion.  A  civil 
commotion,  therefore,  requires  the  wild  or  irregular  action  of 
many  persons  assembled  together."  And  to  die  by  the  hands 
of  justice  was  said  to  be  "  to  die  by  some  general  sentence  for 
the  commission  of  some  felony."  As  the  slave  met  his  death 
in  resistance  to  lawful  authority,  the  loss  was  held  not  to  be 
within  any  of  the  exceptions.  [A  loss  caused  by  a  party  of  men 
firing  shots,  driving  away  the  watchman,  and  setting  fire  to 
the  premises  is  a  loss  by  "  riot."  ^  A  clause  exempting  the  com- 
pany in  case  of  fire  resulting  from  riot  or  other  "  notorious 
resistance  to  authority,"  construed  in  connection  with  the  pre- 
ceding clause  relieving  the  company  in  case  of  fire  caused  by 
invasion,  foreign  enemy,  insurrection,  civil  commotion,  lawful 
military  power,  or  usurped  power,  does  not  free  the  company 
where  the  fire  was  caused  by  five  convicts,  who  conspired  to 
escape  from  prison  and  who  yielded  immediately  on  coming  in 
contact  with  an  officer.^] 

§  404.  Risk  ;  Injury  by  Water  and  Removal  ;  Theft.  —  Dam- 
age resulting  from  bona  fide  efforts  to  save  the  property  from 
the  fire,  as  by  water,^  and  breakage  by  removal,  and  by  loss  or 

1  [Lycoming  Fire  Ins.  Co.  v.  Schwenk,  95  Pa.  St.  89,  90.] 

2  [Strauss  v.  Imperial  Fire  Ins.  Co.,  94  Mo.  182.] 

3  [Goods,  in  tlie  lower  story  of  a  house  which  was  on  fire,  were  damaged  by 
water,  and  it  was  hehl  that  the  insurers  were  liable  on  a  policy  against  fire. 
Geisek  v.  Crescent  Mut.  Ins  Co.,  19  La.  Ann.  297.  The  goods  would  have  burned 
if  the  water  had  not  put  out  the  fire.] 

920 


CH.  XXI.]       OF    THE    RISK,    ITS    DURATION    AND    EXTENT.  [§  404 

theft  consequent  upon  exposure  occasioned  by  the  fire,  are 
within  the  loss  covered  by  a  policy  against  damage  by  fire.^ 
The  theft  must  be  one  of  the  consequences  of  the  fire  or 
removal,  and  if  so,  the  time  of  the  theft,  whether  at  the  time 
of  the  fire  or  afterwards,  is  immaterial.''^  But  if  loss  by  theft 
be  expressly  excluded,  there  can  be  no  recovery,  even  though 
by  the  terms  of  the  policy  the  company  is  not  to  be  liable  at 
all  for  loss  unless  the  insured  "  use  all  due  diligence  in  removal 
and  preservation  of  the  property."  ^  The  exclusion  must  be 
unequivocal.  And  doubt  will  be  resolved  against  the  insurer.^ 
And  the  removal  should  be  fairly  and  reasonably  necessary, 
and  not  as  the  result  of  an  unreasonable  and  unfounded  appre- 
hension, as  when  fire  is  at  a  considerable  distance.  And  in 
one  case  it  has  been  held  that  damages  from  removal,  where 
there  was  a  reasonable  apprehension  of  danger,  and  where 
the  fire  was  already  burning  the  fourth  building  distant  in  the 
same  block,  were  not  recoverable.^  But  the  better  doctrine 
no  doubt  is,  that  whether  the  removal  be  necessary  or  not 
depends  upon  the  circumstances  of  the  case  ;^  and  that  if  the 
removal  be  under  such  circumstances  that  had  it  not  taken 
place  the  insured  would  have  been  guilty  of  negligence,  he 
may  recover,  while  he  cannot  recover  if  the  goods  are  wan- 
tonly or  unnecessarily  removed,  or  perhaps  if  prudence  did 
not  require  them  to  be  removed.^     And  this  is  true  although 

1  Whiteliurst  v.  Fayetteville  Mut.  Ins.  Co.,  6  Jones  (N.  C),  352:  Wliite  v. 
Republic  Fire  Ins.  Co.,  57  Me.  91  ;  Stanley  v.  Western  Ins.  Co.,  3  L.  R.  (Exch. 
Cases)  71,  Thompson  y.  Montrejil  Ins.  Co.,  6  U.  C.  (Q.  B.)319;  Lewis  y  Spring- 
field Fire  &  Mar.  Ins.  Co.,  10  Gray  (Mass.),  159  ;  Tilton  v  Hamilton  Fire  Ins. 
Co.,  1  Bosw.  (Superior  Ct.  of  N.  Y.)  367  ;  Independent  Mut.  Ins.  Co.  v.  Agnevf, 
34  Pa.  St.  96  ;  Witherell  v.  Maine  Ins.  Co.,  49  Me  200;  Talamon  v.  Home  Ins. 
Co.,  16  La.  Ann.  426  ;  Agnew  v.  Insurance  Co.,  3  Phila.  193. 

■J  Newmark  v.  Lon.  &  Liv.  Fire  &  Life  Ins.  Co.,  30  Mo.  160. 

8  Fernandez  v.  Merchants'  Mut.  Ins.  Co.,  17  La.  Ann.  131 ;  Webb  v.  Prot.  Ins. 
Co  ,  14  Ma  o 

4  Lieber  v.  London,  &c   Ins.  Co  ,  6  Bush  (Ky.),  039. 

6  Hillier  v.  Alleghany  County  Ins.  Co.,  3  Barr  (Pa.),  470. 

fi  [Whether  the  removal  of  goods  was  necessary,  must  be  judged  not  by  the 
result  but  by  the  circumstances  as  tliey  appeared  at  the  time  of  removal.  Bales- 
tracci  v.  Firemen's  Ins   Co  ,  34  La.  Ann   844.] 

"  Case  V.  Hartford  Ins.  Co,  13  111  676,  Brady  v.  N.  W.  Ins.  Co.,  11  Mich. 
425. 

921 


§  406]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.         [CH,  XXI. 

the  policy  insures  while  the  property  "  shall  be  and  remain  " 
in  the  building.^  [A  policy  excepted  liability  for  a  plate-glass 
window  if  broken  by  fire  or  during  removal.  A  fire  occurred 
next  door ;  the  assured  removed  his  stock  in  part,  in  anticipa- 
tion of  loss ;  while  so  doing  a  mob  broke  the  window  for  the 
purpose  of  plunder,  and  it  was  held  that  the  company  was 
liable.2j 

§  405.  Risk  ;  Smoking  ;  Illegal  Practices.  —  If  smoking  be 
prohibited,  or  declared  to  be  not  allowed,  a  prohibition  by  the 
insured,  with  abstinence  on  his  own  part,  and  reasonable  and 
proper  precautions  against  it  on  the  part  of  others,  is  a  com- 
pliance with  tlie  requirement.^  And  the  policy  covers  goods 
illegally  kept  for  sale,  the  insurance  not  being  upon  the  busi- 
ness or  mode  of  sale,  but  upon  the  property  itself .*  [Under  a 
warranty  ajamst  seizure  on  account  of  illicit  trade,  the  under- 
writers are  liable  for  a  loss  by  illicit  trade,  barratrously  car- 
ried on  by  the  master.^] 

§  406.  Risk;  Lightning.  —  Loss  by  ignition  resulting  from 
lightning  is  covered  by  a  policy  insuring  against  danger  by  fire, 
or  by  fire  from  lightning.  But  loss  by  being  torn  to  pieces 
by  lightning  without  combustion,  is  not.^  Insurance  against 
loss  by  fire  resulting  from  lightning  is  one  thing,  and  insur- 
ance against  loss  by  lightning  is  quite  another ;  "*  and  a  com- 
pany authorized  to  insure  against  the  former  is  not  thereby 
authorized  to  insure  against  the  latter.^  [When  a  policy  ex- 
pressly provided  that  the  insurer  should  be  liable  for  all  loss 
or  damage  caused  by  lightning,  it  was  held  that  this  language 
covers  all  the  known  effects  of  lightning,  and  not  merely  those 
arising  from  combustion.^     The  policy  was  held  to  cover  a 

1  Holtzman  v.  Franklin  Ins.  Co.,  4  Crancli,  C  Ct.  295. 

2  [Marsden  v.  City  &  County  Ins.  Co.,  I  L.  R.  C.  P.  232  at  239.] 

3  Ins.  Co.  of  North  America  v.  McDowell,  50  111.  121;  Aurora  Fire  Ins.  Co. 
V.  Edrly,  55  id.  222. 

4  Niagara  Fire  Ins.  Co.  v.  De  Graff,  12  Mich.  124.     And  see  ante,  §  246. 

5  [Luckley  v.  Delafield,  2  Caines  (N.  Y.),  221  at  223.] 

^  Babcock  v.  Montgomery  County  Mut.  Ins.  Co.,  6  Barb.  (N.  Y  )  637;  s.  c. 
aflarmed,  4  Comst.  (N.  Y.)  326  ;  Kenniston  v.  Merrimack  County  Mut.  Ins  Co., 
14  N   H.  341. 

1  Ibid.  8  Andrews  v.  Union  Mut.  Ins.  Co.,  37  Me.  256. 

9  [Spenseley  v.  Lancashire  Ins.  Co.,  54  Wis.  433  at  441.] 

922 


CH.  XXI.]       OF   THE   RISK,   ITS    DURATION    AND    EXTENT.     [§  407  A 

loss  by  a  tornado  in  which  there  was  electrical  disturbance 
operating  as  an  efficient  cause  in  the  destruction.] 

§  407.  Risk;  Misconduct;  Fraud;  Wilful  Destruction  of 
Property  insured;  Suicide.  —  LoSS  hy  misconduct  is  not  covered 
by  the  policy,  as  where  one  sets  fire  to  a  steamboat  by  throw- 
ing on  combustibles,  brought  to  an  improper  place  in  contra- 
vention of  law,  and  for  the  purpose  of  getting  up  a  great  head 
of  steam  while  the  steamboat  is  racing  with  another  boat.^ 
Nor  is  loss  by  fraud,  wilful  burning,  voluntary  suicide,  or 
other  wilful  destruction  of  the  subject-matter  of  insurance, 
whereby  the  event  insured  against  is  brought  about.  [If  a 
horse  dies  by  reason  of  the  cruel  beating  and  abuse  of  his 
master,  the  latter  can  recover  no  insurance.^]  No  one  can  lay 
the  foundation  of  a  claim  for  insurance  in  his  own  reckless 
or  wilful  wrong  ;  but  fraud  cannot  be  predicated  upon  acts 
which  may  lawfully  be  done,  or  left  undone,  no  matter  what 
may  be  the  motive.^  [It  is  error  to  charge  that  the  insured 
must  show  that  the  loss  was  an  honest  one,  and  not  traceable 
to  himself.^  If  wilful  destruction  is  justifiable,  the  property 
being  in  certain  peril  of  a  worse  kind,  it  is  not  fatal.  When 
a  captain  burns  a  vessel  to  prevent  her  falling  into  an  enemy's 
hands,  the  company  is  liable  on  a  fire  policy .°] 

[§  407  A.  Wrongful  Act  of  Third  Person  or  Act  of  Assured 
while  Insane.  —  When  the  assured  represented  that  a  count- 
ing-room was  warmed  with  coal  by  one  stove,  and  that  the 
funnel  and  stove  were  well  secured,  this  does  not  make  it 
necessary  that  they  should  be  so  kept  when  not  in  use.^  And 
when  the  assured  admitted  shipwrecked  sailors  into  the  insured 
premises  for  one  night,  but  ordered  that  no  fire  should  be 
built  in  the  said  stove,  which  was  not  then  well  secured,  but 

1  Citizens'  Ins.  Co.  v.  Marsh,  41  Pa.  St.  387.  See  jwst,  §  411,  for  distinction 
between  misconduct  and  negligence. 

2  [Western  Ins.  Co.  v.  O'Neill,  21  Neb.  548.  Good.  The  wretch  in  this  par- 
ticular case  ought  to  have  been  put  in  States  prison.] 

3  Franklin  Ins.  Co.  v.  Humphrey,  65  Ind.  549. 

4  [Dwyer  v.  Continental  Ins.  Co.,  57  Tex.  181.  The  burden  is  on  the  com- 
pany.] 

5  [Gordon  v.  Rimmington,  1  Camp.  12.3  at  124.] 

6  [Loud  V.  Citizens'  Mut.  Ins.  Co.,  2  Gray,  221  at  223.] 

923 


§  408]  INSUEANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.        [CH.  XXI. 

fire  was  built  witliout  the  assured's  knowledge  or  consent,  the 
policy  was  held  good,  and  covering  the  loss  thereby  resulting. 
When  insurance  was  effected  by  the  owner  of  a  vessel  after 
loss  of  the  same  but  in  entire  good  faith,  and  where  it  ap- 
peared that  the  master  of  the  vessel  had  fraudulently  refrained 
from  communicating  the  loss  for  the  avowed  purpose  of  giv- 
ing the  owner  time  to  insure  without  knowledge  of  the  loss, 
it  was  held  that  the  owner  could  recover,  and  was  not  affected 
by  the  conduct  of  the  master.^  Neglect  by  a  sea  captain  to 
register  goods  before  leaving  the  docks,  as  required  by  law, 
does  not  avoid  a  policy  thereon.^  If  a  policy  excepts  loss  from 
incendiarism,  it  will  not  cover  a  loss  occasioned  by  the  firing 
of  the  adjoining  house  by  a  stranger  for  whose  acts  the  insured 
was  in  no  way  responsible. ^  It  seems  that  a  felonious  burn- 
ing by  the  wife  of  the  assured  is  covered  by  the  policy .*  The 
wife's  insurance  is  not  avoided  by  her  husband's  burning 
the  property  without  her  knowledge  or  complicity.^  In 
the  absence  of  express  agreement,  the  company  is  not 
relieved  because  the  fire  was  caused  by  the  assured  while 
insane.*^] 

§  408.  Risk  ;  Negligence.  —  Mere  carelessness  and  negli- 
gence, however  great  in  degree,  of  the  insured,  or  his  tenants 
or  servants,  not  amounting  to  fraud,  though  the  direct  cause 
of  the  fire,  are  covered  by  the  policy .^  Indeed,  one  of  the 
principal  objects  of  insurance  against  fire  is  to  guard  against 

1  [General  Interest  Ins.  Co.  v.  Ruggles,  12  Wheat.  (U.  S.)  408  at  411.] 

2  [Carruthers  v.  Gray,  3  Camp.  142  at  14;i.] 

3  [Walker  v.  Lond.  &  Prov.  Ins.  Co.,  Ir.  L.  R.  22  Ex.  572.] 

4  [Midland  Ins.  Co.  v.  Smith,  G  Q  B.  D.  561.] 

5  [Perry  v.  Mechanics'  Mat.  Ins.  Co.,  11  Ins.  L.  J.  390.     1st  Cir.  (R.  I.).] 

6  [Karow  v.  Continental  Ins.  Co.,  57  Wis.  56.] 

'  [In  the  absence  of  express  stipulation  the  fact  that  the  loss  might  have 
been  avoided  by  care  on  the  part  of  tlie  insured  or  his  agent  will  not  relieve 
the  insurer.  Enterprise  Ins.  Co.  v.  Parisot,  35  Ohio  St.  35  ;  Perrin  v.  Protec- 
tion Ins.  Co.,  11  Ohio,  147  at  171.  Unless  it  amounts  to  fraud  or  wilfulness. 
Phenix  Ins.  Co.  v.  Sullivan,  39  Kans.  449  ;  Columbia  Ins.  Co.  v.  Lawrence,  10 
Pet.  507  at  517.  And,  of  course,  if  the  proximate  cause  of  loss  is  one  of  the 
perils  insured  against,  negligence  of  the  insured  as  a  remote  cause  will  not  re- 
lieve the  company  unless  it  amounts  to  fraud,  Lebanon  Mut.  Ins.  Co.  v.  Kepler, 
100  Pa.  St.  28  ;  even  though  the  policy  excepts  injuries  caused  by  negligence. 
Greenwich  Ins.  Co.  v.  Raab,  11  Brad.  636.] 
924 


CH.  XXI.]       OF   THE   RISK,   ITS   DURATION    AND    EXTENT.  [§  408 

the  negligence  of  servants  and  others  ;  and,  therefore,  while 
it  may  be  said  generally  that  no  one  can  recover  compensation 
for  an  injury  which  is  the  result  of  his  own  negligence  or 
want  of  care,  the  contract  of  insurance  is  excepted  out  of  the 
o-eneral  rule.  Nor  does  it  make  any  difference  whether  the 
negligence  is  that  of  the  insured  himself  or  of  others.  The 
law  looks  only  at  the  proximate  cause  of  the  loss.i  But  neg- 
ligence in  a  matter  as  to  which  the  insurers  expressly  stipulate 
that  they  will  not  assume  the  risk  —  as  where  ashes  are  placed 
by  a  boy  in  wooden  vessels,  the  insurers  stipulating  that  they 
will  not  assume  the  risk  if  ashes  are  allowed  to  remain  in 
wood,  although  the  fact  was  unknown  to  the  insured,  and  was 
done  without  orders  and  contrary  to  the  usual  practice  —  will 
work  a  forfeiture.^  Whether  the  fire  is  the  result  of  negli- 
gence is  of  course  a  question  of  fact  for  the  jury,  if  the  facts 
from  which  it  is  to  be  inferred  are  in  dispute,  and  is  so  much 
a  question  of  circumstances  that  so  trifling  a  fact  as  dry 
weather,  and  the  direction  and  strength  of  the  wind,  ai"c  to  be 
taken  into  account  in  determining  whether  a  fire,  occurring  by 

1  Cumberland  Valley  Mut.  Prop.  Co.  v.  Douglas,  58  Pa.  St.  419 ;  Shaw  v. 
Robberds  et  a!.,  6  Ad.  &  El.  75;  Catlin  (;.  Springfield  Fire  Ins.  Co.,  1  Sumner 
(U.  S.  C.  Ct  ),  434  ;  Sanford  v.  Mechanics'  Mut.  Fire  Ins.  Co.,  12  Cash.  (Mass.) 
541 ;  Daniels  v.  Hudson  River  Fire  Ins.  Co.,  id.  416 ;  Mickey  v.  Burlington  Ins. 
Co.,  Sup.  Ct.  (Iowa),  2  Ins.  L.  J.  15;  Austin  v.  Drewe,  G  Taunt.  4oiJ ;  s.  c.  4 
Campbell  (N.  P.),  561  ;  Maryland  Fire  Ins.  Co.  ('.Whitford,  2  Law  Transcript, 
284,  (1869);  Columbia  Ins.  Co.  v.  Lawrence,  10  Pet.  (U.  S.)  507;  Gates  v. 
Madison  County  Mut.  Ins.  Co.,  1  Seld.  (N.  Y.)  469;  Williams  v.  New  England 
Mut.  Fire  Ins.  Co.,  31  Me.  219 ;  Johnson  v.  Berkshire  Mut.  Fire  Ins.  Co.,  4  Al- 
len (Mass.),  388;  St.  Louis  Ins.  Co.  v.  Glasgow,  8  Mo.  713;  Waters  v.  Mer- 
chants' Louisville  Ins.  Co.,  11  Pet.  (U.S.)  213;  Grove  w.  Farmers'  Mut.  Fire 
Ins.  Co.,  48  N.  H.  41  ;  National  Ins.  Co.  v.  Webster,  83  111.  470;  Germania  Ins. 
Co.  V.  Sherlock,  25  Ohio  St.  33;  Jameson  v.  Royal  Ins.  Co.,  Ir.  Rep.  7  C.  L. 
126.  [Tiie  underwriter  cannot  set  up  the  negligence  of  the  servants  of  the  as- 
sured as  a  defence.  Mueller  v.  Putnam,  45  Mo.  84  at  88 ;  Insurance  Co.  v.  Slier- 
wood,  14  How.  351  at  364  ;  Kansas  Ins.  Co.  v.  Berry,  8  Kans.  159  at  168  ;  Dixon 
V.  Sadler,  5  M.  &  W.  405  at  414  ;  Sperry  v.  Del.  Ins.  Co.,  2  Wash.  C.  C.  243  at 
252  ;  Arctic  Ins.  Co.  v.  Austin,  6  T.  &  C.  (N.  Y.)  63  at  70;  Phoenix  Ins.  Co.  v. 
Cochran,  51  Pa.  St.  143  at  148.  Unless  it  be  wilful  or  so  gross  as  to  amount  to 
fraud.  Lycoming  Ins.  Co.  v.  Barringer,  73  111.  230  at  235.  Want  of  ordinary 
care  on  the  part  of  the  assured  prevents  recovery.  Young  v.  Wasliington  Ins. 
Co.,  14  Barb.  545  at  547  (mere  dictum).] 

2  City  of  Worcester  v.  Worcester  Mut.  Fire  Ins.  Co.,  9  Gray  (Mass.),  27. 

925 


§  409  A]        INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.        [CH.  XXI. 

the  dropping  of  coals  upon  the  track,  and  thence  coinmimi- 
cating-  through  the  dry  grass  to  the  plaintiff's  farm  and  land, 
is  due  to  the  negligence  of  a  railway  company .^  And  if  the 
policy  requires  the  insured,  upon  the  occurrence  of  a  fire,  to 
use  all  reasonable  means  for  the  "  protection  "  of  the  prop- 
erty, this  means  that  he  shall  take  the  requisite  steps  to  pre- 
vent its  further  deterioration ;  but  it  does  not  require  him  to 
repair  or  restore  to  the  original  condition.^ 

§  409.  Risk  ;  Negligence  ;  \?7ilful  Exposure.  —  Where  an 
accident  policy  forbids  "  wilful  exposure,"  negligence  is  no 
defence.'^  So  where  the  policy  provides  liability  for  "  wilful 
and  wanton  exposure."  "*  But  in  Morel  v.  Mississippi  Valley 
Life  Insurance  Company,^  where  the  policy  said  nothing  about 
negligence,  it  was  held  that  the  insured,  having  "  inadvert- 
ently" put  his  elbow  out  of  the  window  of  a  railway  car- 
riage, whereby  he  contributed  to  the  accident,  could  not 
recover,  —  a  decision  whicli  is  not  only  unsupported  by  the 
citation  of  any  case,  but  is  counter  to  the  almost  universal 
current  of  the  authorities,^  And  no  case  in  life  insurance 
has  been  found  where  negligence  of  usual  precautions  in  the 
preservation  of  health,  or  even  the  utmost  carelessness  and 
recklessness  relative  thereto,  have  been  made  a  ground  of 
defence.  Yet  no  doubt  many  cases  of  death  have  occurred 
attributable  to  such  negligence  as  the  cause.' 

[§  409  A.  Exposure  to  Obvious  and  Unnecessary  Danger.  — 
If  one  voluntarily  and  unnecessarily  places  himself  in  a  posi- 
tion of  obvious  danger,  and  the  precise  injury  happens  to  him 
which  there  is  reason  to  fear,  as  if  one  runs  along  a  railroad 
track  in  the  night  to  catch  a  train  on  a  parallel  track  and  is 
run  over,  his  act  is  within  the  clauses  against  exposure  to 

1  Webb  V.  R.  W.  &  O.  R.  R.  Co.,  49  N.  Y.  420. 

2  Hoffman  v.  JEtna.  Fire  Ins.  Co.,  1  Robt.  (Superior  Ct.  N.  Y.)  501 ;  s.  c.  af- 
firmed, 32  N.  Y.  405. 

3  Prov.  Life  Ins.  &  Inv.  Co.  v.  Martin,  32  Md.  310. 

4  Shneider  v'.  Prov.  Life  Ins.  Co.,  24  Wis.  28. 

5  4  Bush  (Ky.),  585. 

6  And  see  post,  chapter  on  Accident  Insurance. 

''  As  to  what  would  be  the  rule  where  there  are  several  apparent  causes,  of 
which  negligence  may  be  one,  see  ante,  §  301,  and  post,  §  530. 

926 


CH.  XXI.]       OP   THE   RISK,   ITS   DURATION    AND    EXTENT.  [§  410 

"  obvious  and  unnecessary  danger,"  and  requiring  due  dili- 
gence for  personal  safet}^,  and  the  policy  is  void.^  Crossing  a 
railroad  track  in  broad  daylight  in  front  of  an  approaching 
train,  there  being  no  obstruction  to  prevent  sight,  nor  any  evi- 
dence of  short  sight  or  deafness,  is  within  an  exception  against 
exposure  to  obvious  risk,  and  the  company  is  not  liable.  If 
the  insured  had  been  paying  reasonable  attention  to  what  he 
was  doing  the  risk  would  have  been  obvious  to  him.^  But 
one  who  voluntarily  goes  to  the  rescue  of  a  ship's  crew  in  a 
strong  sea,  does  not  expose  himself  to  "  unnecessary  "  danger. 
Although  the  insured  was  a  farmer  it  was  his  duty  as  a  man 
to  go  to  the  rescue  of  the  crew  of  a  ship  driven  ashore  near  his 
farm.^] 

§  410.  Risk  ;  Gross  Negligence  ;  Design.  —  Gross  negligence 
of  workmen  in  making  repairs,  it  was  said,  in  Jolly  v.  Balti- 
more Equitable  Society,^  will  avoid  the  policy.  But  there 
was  nothing  in  the  case  that  required  any  decision  upon  that 
point,  and  it  is  not  probable  that  anything  short  of  such  neg- 
ligence as  raises  a  presumption  of  bad  faith,  amounting  to 
fraud  or  design,  was  intended.  This,  by  all  the  authorities, 
avoids  a  policy,  as  no  man  can  be  allowed  in  a  court  of  justice 
to  profit  by  his  own  wrong,  or  to  avail  himself  of  his  own 
turpitude  as  a  ground  of  recovery  in  a  suit.^  But  losses  by 
"  gross  negligence  "  and  "  design  "  are  sometimes  expressly 
excepted  as  grounds  of  liability.  The  first  term,  as  used  in  a 
condition  exempting  from  loss  on  that  account,  it  has  been 
said,  "  is  the  want  of  that  diligence  which  even  careless  men 
(dissoluti  homines)  are  wont  to  exercise.^  '  For  he  who  is 
only  less  diligent  than  very  careful  men  cannot  be  said  to 
be  more  than  slightly  inattentive ;  he  who  omits  ordinary  care 

1  [Tuttle  V.  Travelers'  Ins.  Co.,  134  Mass.  175.] 

2  (Cornish  v.  Ace.  Ins.  Co.,  C.  A.  2-3  Q  B.  D.  453.] 
»  [Tucker  v.  Mut.  Ben.  L.  Co.,  50  Hun,  50.] 

*  1  Harr.  &  Gill,  295. 

5  Henderson  i\  Western  Mar.  &  Fire  Ins.  Co.,  10  Rob.  (La.)  164 ;  Huekins  v. 
People's  Mut.  Ins.  Co.,  11  Fost.  (N.  H.)  238;  Robinson  v.  Mercer  County  Mut. 
Fire  Ins.  Co.,  3  Dutch.  (N.  J.)  134;  Western  Farmers'  Ins.  Co.  v.  Miller,  1  Hnndy 
(Cincinnati  Superior  Ct.),  325.  And  see  also  authorities  cited  in  the  preceding 
section. 

6  Hein.  EI.  Jur.  lib.  3,  tit.  14,  §  787. 

VOL.  II.— ,15  927 


§  411]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.         [CH.  XXI. 

is  a  little  more  negligent  than  men  ordinarily  are  ;  and  he  who 
omits  even  slight  diligence  fails  in  the  lowest  degree  of  pru- 
dence, and  is  grossly  negligent.'  "  ^  Loss  by  mere  negligence 
is  not  loss  "  by  design,"  which  imports  plan,  scheme,  and 
intention.2  [Gross  negligence  may  be  evidence  of  fraud, 
but  is  not  of  itself  mala  Jides.^'] 

§  411.  Risk  ;  Negligence  amounting  to  Misconduct.  —  But 
negligence  which  amounts  to  misconduct  is  not  insured 
against.  Misconduct  is  defined  to  be  a  transgression  of  some 
established  and  definite  rule  of  action,  where  no  discretion  is 
left  except  what  necessity  may  demand,  as  contradistinguished 
from  negligence,  carelessness,  and  unskilfulness,  which  are 
transgressions  of  some  established  but  indefinite  rule  of  ac- 
tion, where  some  discretion  is  necessarily  left  to  the  actor. 
Misconduct  is  a  violation  of  definite  law  ;  carelessness,  an 
abuse  of  discretion  under  an  indefinite  law.  Misconduct  is 
a  forbidden  act ;  carelessness,  a  forbidden  quality  of  an  act, 
and  is  necessarily  indefinite.  Thus  where  the  captain  of  a 
steamer,  in  running  a  race  with  another  steamer,  and  for  the 
purpose  of  making  more  steam,  brings  from  the  hold  of  the 
vessel  a  barrel  of  turpentine,  knocks  the  head  out,  and  places 
it  so  near  the  furnace  that  the  fire  is  communicated  to  the 
wood  upon  which  the  turpentine  is  thrown,  and  thence  to  the 
barrel,  such  manner  of  use  of  turpentine  being  in  contraven- 
tion of  an  act  of  Congress,  as  matter  of  law,  this  is  miscon- 
duct, and  avoids  the  policy.*  In  Chandler  v.  Worcester 
Insurance  Company,^  Shaw,  C.  J.,  puts  the  case  of  a  party 
insured  standing  by  the  fire,  which  was  yet  so  trifling  that  by 
throwing  on  a  cup  of  water,  which  was  at  hand,  the  fire  might 
be  extinguished,  as  a  case  of  misconduct  which  would  avoid  a 

1  Campbell  v.  Monmouth  Mut.  Fire  Ins.  Co.,  59  Me.  430.  There  is  a  growing 
tendency  amongst  the  courts  to  deny  that  there  is  any  legal  distinction  between 
negligence  and  "gross"  negligence.  New  York  Cent.  K.  R.  v.  Lockwood,  17 
Wall.  (U.  S.)  357.^ 

•■2  Catlin  i:  Springfield  Fire  Ins.  Co.,  1  Sumner  (U.  S.  C.  Ct.),  434. 

3  [Goodman  v.  Harvey,  4  Ad.  &  El.  870  at  876.] 

4  Lowrie,  C  J.,  in  Citizens'  Ins.  Co.  v.  Marsh,  41  Pa.  St.  387,  overruling  s.  c. 
2  Pittsburgh  Rep.  (Crumrine)  273 ;  Levi  r.  N.  0.  Ins.  Ass.,  2  Wood  (U.  S.  C. 
Ct.)  63. 

6  3  Cush.  (Mass.)  328. 

928 


CH.  XXI.]       OF   THE   RISK,   ITS    DURATION    AND    EXTENT.     [§  411  A 

policy.  The  difference  between  this  and  designed  destruc- 
tion, by  actually  setting  fire,  is  certainly  hardly  appreciable  as 
affecting  the  intent  of  the  insured,  though  ostensibly  in  one 
case  there  is  a  positive  act,  while  in  the  other  there  is  no 
action  at  all.  But  it  should  appear  that  by  proper  effort 
there  is  reasonable  cause  to  believe  the  fire  may  be  extin- 
guished.^ [If  the  element  of  wilfulness  comes  in  we  have, 
not  mere  negligence  but  misconduct.  Irrespective  of  con- 
ditions to  that  effect,  the  insured  ought  not  to  refrain  from 
using  means  within  his  power  to  prevent  loss,  or  to  hinder 
others  from  saving  the  property .^J 

[§  411  A.  In  Marine  Insurance  if  the  damage  might  have 
been  avoided  by  the  use  of  ordinary  care,  the  insurers  are  not 
liable.^  Negligence  of  seamen  causing  an  accidental  fire  is  a 
good  defence  to  an  action  on  a  policy.  Insurers  are  not  re- 
sponsible for  negligence  of  the  master  and  crew  not  amount- 
ing to  barratry,  i.  e.  knavery  or  fraud."^  When  a  ship  was 
negligently  loaded  at  a  foreign  port,  thereby  injuring  her,  and 
thereafter  in  a  storm  was  lost,  the  insurers  were  held  liable 
although  the  negligent  loading  rendered  her  less  seaworthy 
than  otherwise  she  would  have  been.^  Where  the  loss  to  a 
vessel  is  immediately  caused  by  a  peril  insured  against,  it  is 
immaterial  that  the  peril  was  brought  about  by  the  crew,  — 
agents  of  the  assured.  In  the  absence  of  fraud  only  the 
proximate  cause  is  looked  at.^  But  where  a  vessel  is  injured 
by  a  peril  insured  against,  and  further  damages  arise  from 
neglect  of  the  master  or  his  servants  to  repair  or  transship, 
&c.,  the  company  is  not  liable  for  these  further  damages. 
When  a  policy  insures  against  loss  by  thieves  or  barratry  of 

1  Aurora  Fire  Ins.  Co.  v.  Jolinson,  46  Ind.  -315 ;  Kellogg  v.  Cli.  &N.  W.  R.  R. 
Co.,  26  Wis.  223,  257.  See  also  Toledo,  Peoria,  &  Wabash  R.  R.  Co.  v.  Pindar, 
53  III.  447. 

^  [Devlin  v.  Queen  Ins.  Co.,  46  U.  C.  R.  Ill  ] 

3  [The  Titania,  19  Fed.  Rep.  101  S.  Dist.  of  New  York,  1883.  If  the  insured 
himself  is  negligent,  he  ought  not  to  recover  ;  if  only  an  agent,  lie  ought.] 

*  [Grim  v.  Phoenix  Ins.  Co.,  13  Johns.  451  at  458 ;  Fayerweather  v.  Phenix 
Ins.  Co.,  54  N.  Y.  Super.  545  ;  Pipon  v.  Cope,  1  Camp.  434  at  436  (marine 
policy.)] 

s  [Redman  v.  Wilson,  14  M.  &  W.  476  at  483.] 

6  [Mathews  ;;.  Howard  Ins.  Co.,  11  N.  Y.  9  at  16.] 

929 


§  412]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.        [CH.  XXT. 

master  or  crew,  the  insured  makes  a  prima  facie  case  for  re- 
covery on  showing  a  theft  without  showing  that  it  was  com- 
mitted by  assailing  thieves ;  the  theft  may  have  been  by  the 
crew.  So  with  barratry,  which  covers  all  knavery,  fraud, 
cheating,  or  breach  of  trust  of  the  master  or  crew  ;  the  assured 
is  entitled  to  recover  for  a  loss  by  theft,  without  showing  due 
care  on  the  part  of  the  master.  It  is  said  that  if  the  negli- 
gence of  the  master  not  amounting  to  fraud,  gave  opportunity 
to  the  crew  to  steal,  the  company  would  not  be  responsible ; 
but  such  facts  must  be  shown  by  the  company.^] 

§  412.  Risk  ;  Fire  occasioned  by  falling  of  "Walls  ;  Proximate 
Cause.  —  Where  a  fire  had  happened,  and  the  day  after  it  was 
extinguished  the  walls  of  the  burnt  edifice,  in  consequence  of 
being  weakened  by  the  fire,  fell  upon  another  building,  crush- 
ing it  in,  the  latter  injury  was  held  to  be  covered  by  a  policy 
against  damage  by  fire.  The  fire  is  in  such  case  the  proxi- 
mate cause,  though  not  the  actual  instrument  of  the  destruc- 
tion, just  as  where  furniture  is  injured  by  water  used  to 
quench  the  fire,  or  a  mirror  is  broken  by  the  falling  of  mate- 
rials loosened  by  the  flames,  in  which  cases  it  would  hardly 
be  contended  that  the  loss  was  not  by  fire.  The  Lord  Presi- 
dent thought  that  if  the  gable  had  fallen  during  the  fire  and 
caused  the  destruction,  it  would  not  have  been  doubted  that 
the  loss  was  covered  by  the  policy,  and  he  could  not  see  that 
the  interval  which  actually  elapsed  could  make  any  difference 
in  the  princi]ile.  The  cause  of  the  loss  was  in  cither  case  the 
same.^  But  where  seven  days  elapsed  between  the  fall  and 
the  fire,  and  the  fall  occurred  during  a  gale  of  w^ind,  it  was 
held  the  loss  was  not  insured.^  Where,  however,  the  walls 
of  a  warehouse,  from  weakness  or  other  cause  not  proceeding 
from  fire,  and  without  its  agency,  fell  in  upon  themselves, 
becoming,  with  the  goods  contained  therein,  one  mass  of  ruin, 
out  of  which  fire  proceeded,  it  was  held  that  this  was  not  a 
loss  by  fire.     When  the  fire  took  place  the  subject  insured 

1  [American  Insurance  v.  Bryan,  26  Wend.  563;  a  splendidly-reasoncrl 
case.] 

2  Johnston  v.  West  of  Scotland  Ins.  Co.,  7  Ct.  of  Sess.  Cas.  (Scotch)  52. 
8  Gaskarth  v.  Law  Union  Ins.  Co.  (Eng.),  6  Ins.  L.  J.  159. 

930 


CH.  XXI.]      OF   THE   RISK,   ITS   DURATION    AND    EXTENT.  [§  413 

had  ceased  to  be,  and  had  become  a  congeries  of  materials. 
The  cause  of  the  loss  was  the  fall,  and  not  the  fire.  The  fire 
did  not  produce  the  fall,  but  the  fall  produced  the  fire,  and 
the  destruction  was  by  the  former.  That  a  fire  sprung  up 
after  the  fall  in  the  rubbish  and  consumed  the  fallen  materials 
was  immaterial.  The  heap  of  rubbish  was  not  insured.  The 
building  alone  was  insured,  and  that  at  the  time  of  the  fire 
had  ceased  to  be,  and  that  too  by  reason  of  a  peril  not  insured 
against.  The  fire  in  this  case  was  not  the  efficient  or  proxi- 
mate cause  of  the  loss.^  A  building  still  standing  upon  its 
supporting  posts,  though  out  of  plumb  and  practically  aban- 
doned as  unfit  for  occupancy,  cannot  be  said  to  have  fallen.^ 
Otherwise,  if  substantially  all  the  floors  and  roof  have  fallen 
in,  leaving  only  the  walls  standing.^  And  where  one  building 
became  undermined  and  fell,  covering  in  its  ruins  certain 
chemicals  which  took  fire,  which  fire  communicated  with 
anotlier  building,  a  part  of  which,  with  the  goods  therein, 
Ijad  been  involved  in  the  crash,  but  a  part  also  had  remained 
standing  with  the  goods  undisturbed,  an  action  to  recover  for 
damage  by  fire  to  the  goods  so  remaining  undisturbed  was 
sustained.*  It  was  contended  by  the  defendants  in  this  case 
that  after  the  fall  of  part  of  the  building  the  goods  could  no 
longer  be  said  to  be  "  contained  therein,"  within  the  meaning 
of  the  policy.  But  the  court  thought  they  were  certainly  as 
much  contained  in  the  building  and  covered  by  the  policy  as 
if  they  had  been  moved  out  to  avoid  the  fire,  but  nevertheless 
had  been  consumed. 

§  413.  Risk  ;  Spontaneous  Combustion  ;  Explosion  ;  Igni- 
tion ;    Proximate  Cause.  —  There  can  be   no  doubt   that  fire 

1  Nave  V.  Home  Mut.  Ins.  Co.,  37  Mo.  429. 

2  Firemen's,  &c.  Ins.  Co.  v.  Congregation,  &c.,  80  111.  658. 

3  Huck  V.  Globe  Ins.  Co.,  127  Mass.  306.  See  also  Breuner  v.  Liverpool,  &c. 
Ins.  Co.,  51  Cal.  101. 

4  Lewis  V.  Springfield  Fire  &  Mar.  Ins.  Co.,  10  Gray  (Mass.),  159.  In  Dows 
V.  Insurance  Co.,  127  Mass.  346,  it  was  held  by  a  divided  court  that  the  provision, 
"  If  a  building  shall  fall,  except  as  the  result  of  a  fire,  all  insurance  shall  cease," 
applied  rather  to  a  case  where  the  building  falls  by  inherent  defects,  or  by  being 
undermined,  or  prostrated  by  a  storm,  than  to  a  case  where,  by  a  sudden  com- 
bustion of  inflammable  gas,  ;in  explosion  takes  place,  by  the  force  of  wiiich  the 
building  is  made  a  heap  of  ruins. 

931 


§  413]         insurance:  fire,  life,  accident,  etc.      [ch.  xxi. 

originating  in  spontaneous  combustion  is  within  the  risk 
against  fire.^  The  subject  of  loss  by  explosion  has  given  rise 
to  much  elaborate  and  learned  discussion,  and  recently  to 
decided  differences  of  opinion,  presented  on  both  sides  with 
marked  ability,  which  we  shall  now  proceed  to  state.  The 
burning  of  a  steamboat  by  fire  caused  by  the  accidental  ex- 
plosion of  gunpowder  on  board  was  early  held  to  be  "  loss  or 
damage  by  fire,"  since  the  explosion  was  caused  by  fire.^ 
And  following  this  case  it  was  held  that,  where  a  building 
was  purposely  blown  up  by  gunpowder  to  stay  the  ravages 
of  a  conflagration,  and  crockery  ware  stored  therein,  the 
crates  themselves  having  been  burned  after  the  explosion, 
was  thus  destroyed,  fire  was  the  proximate  cause  of  the  loss.^ 
And  this  has  been  held  to  be  so  although  the  policy  excepted 
loss  by  the  explosion  of  gunpowder,  this  exception  being  held 
to  apply  only  to  fire  originating  in  the  explosion  of  gun- 
powder.* Subsequently,  in  Scripture  v.  Lowell  Mutual  Fire 
Insurance  Company,^  where,  upon  the  fact  that  a  cask  of  gun- 

1  Brit.  Am.  Ins.  Co.  v.  Joseph,  9  L.  C.  (Q.  B.)  448.  [It  is  held,  however,  that 
an  ordinary  marine  policy  does  not  cover  spontaneous  combustion,  resulting 
from  the  inherent  infirmity  of  the  goods  insured.  Providence  W.  Ins.  Co.  v. 
Adler,  65  Md.  102.] 

2  Waters  v.  Merchants'  Louisville  Ins.  Co.,  11  Pet.  (U.  S.)  213. 

3  City  Fire  Ins.  Co.  v.  Corlies,  21  Wend.  (N.  Y.)  367. 
^  Greenwald  v.  Insurance  Co.,  3  Phila.  323. 

6  10  Cash.  (Mass.)  3-56.  "The  question,"  says  Cushing,  J.,  who  gave  the 
opinion,  "  is  a  nice  one.  Upon  careful  reflection,  however,  we  have  come  to 
the  conclusion  that  the  received  opinions  on  the  subject,  and  the  adjudications 
referred  to,  are  in  accordance  with  reason  and  principle.  It  seems  not  to  be 
denied  that  actual  combustion,  produced  by  the  ignition  of  gunpowder,  is  within 
the  present  policy.  If,  tlien,a  combustible  substance,  in  the  process  of  combus- 
tion, jiroduces  explosion  also,  it  is  not  easy  to  perceive  why,  of  the  diverse  but 
concurrent  results  of  the  combustion,  the  one  sliould  be  ascribed  to  fire  any 
more  tlian  the  other.  The  plain  fact  here  is  the  application  of  fire  to  a  sub- 
stance susceptible  of  ignition,  the  consequent  ignition  of  that  substance,  and 
immediate  damage  to  the  premises  tliereby.  It  is  no  sufficient  answer  to  say 
that  some  of  the  phenomena  produced  are  in  the  form  of  explosion.  All  the 
effects,  whatever  they  may  be  in  form,  are  the  natural  results  of  the  combustion 
of  a  combustible  substance ;  and  as  the  combustion  is  the  action  of  fire,  this 
must  be  held  to  be  the  proximate  and  legal  cause  of  all  the  damage  done  to 
the  premises  of  the  plaintiff.*  .  .  . 

*  It  would  doubtless  be  otherwise  if  the  policy  excepted  loss  by  explosiou. 
See  pes',  §  416  a. 

932 


CII.  XXI.]       OF   THE    RISK,    ITS    DURATION    AND    EXTENT.  [§  413 

powder,  being  set  on  fire  accidentally  by  a  match,  exploded, 
set  fire  to  a  bed,  charred  and  stained  some  of  the  woodwork, 

"  In  the  present  case  there  is  no  room  for  question  concerning  a  series  of 
causes,  as  wlietlier  primary  or  secondary,  proximate  or  remote  ;  for  the  agent  is 
one  anil  tlie  same  throughout,  namely,  fire.  The  causa  was  burning  powder; 
the  causa  causans  was  burning  a  match  ;  at  each  stage  of  causation  it  was  the 
action  of  fire.  Nay,  to  be  exact,  the  burning  of  the  gunpowder,  like  the  burning 
of  the  match,  was  a  succession  of  several  complex  acts  of  burning.  Yet  fire  is  the 
agent  at  each  of  these  distinct  stages  of  causation.  Suppose  tliere  was  a  barrel 
of  sulphur  in  the  plaintiff's  attic,  instead  of  gunpowder  ;  and  tiiis  being  ignited 
with  a  match,  afterwards  the  fire  had  passed  from  the  burning  sulplmr  to  the 
substance  of  the  liouse.  This  would  be  recognized  at  once  as  a  case  of  fire.  It 
does  not  change  the  legal  relation  of  causes  to  substitute  a  barrel  of  burning 
gunpowder  for  a  barrel  of  burning  sulphur.  The  only  difference  in  the  ele- 
ments of  the  question  is,  that  the  gunpowder,  when  ignited,  consumes  with  more 
of  rapidity  than  sulphur,  and  the  combustion  is  accompanied  or  followed  by  ex- 
plosion. Still,  the  agent  is  fire,  though  it  acts  in  different  ways  upon  tlie  differ- 
ent successive  subjects  of  its  action,  beginning  with  the  match  and  terminating 
with  the  plaintiff's  house. 

"  On  the  other  hand,  cases  are  conceivable,  other  than  by  the  use  of  gun- 
powder, of  explosion  without  any  combustion,  which,  nevertheless,  being  the 
result  of  tile  action  of  fire,  are  still,  it  would  seem,  within  the  range  of  the  gen- 
eral principle.  Various  mineral  substances  exist,  of  value  in  commerce  and  the 
arts,  which  explode  by  the  action  of  fire,  without  either  ignition  or  combustion. 
In  general,  any  close  vessel,  of  whatever  material  composed,  when  filled  with 
an  expansive  fluid,  is  liable  to  explode  by  the  action  of  heat,  though  it  may  be 
that  the  vessel  and  its  contents  are  alike  incombustible.  The  same  thing  hap- 
pens, under  certain  conditions,  to  some  forms  of  wood,  which,  although  com- 
bustible, may  by  the  action  of  fire  explode  without  ignition  ;  or  which,  as  in  the 
present  case,  of  a  house,  by  having  compressed  within  it  some  burning  sub- 
stance, which  is  explosive  as  well  as  combustible,  like  gunpowder,  may  suffer 
the  double  injury  of  combustion  in  part,  and  in  part  of  explosion.  ...  In  the 
hypotliesis  that  fire  is  to  be  regarded  as  causa  pro.riwa  in  the  present  case,  we 
can  see  but  one  supposable  defect,  namely,  the  suggestion  that  though  it  be  con- 
ceded that  the  explosion  of  burning  gunpowder  and  its  effects  are  the  action  of 
fire,  yet  this  particular  effect  on  the  building  is  not  exhibited  in  the  form  of 
igneous  action.  The  cases  above  supposed,  of  the  shrivelling  of  some  master- 
piece of  pictorial  art,  the  cracking  or  discoloring  of  some  rich  vase  or  gem,  the 
Ijursting  of  a  cask  of  wine  through  the  expansion  of  its  contents,  —  these,  it  may 
be  said,  are  distinctly  cases  of  damage,  without  ignition  it  is  true,  but  by  the 
direct  and  specific  action  of  heat  as  such  ;  wliile  it  is  denied  that  such  is  the  fact 
in  the  present  case  of  the  blowing  up  of  a  dwelling-house  by  the  ignition  of  gun- 
powder. We  do  not  think  the  premises  of  this  argument  are  sustained  by  the 
physical  facts  wiiich  occurred.  If  tliey  were  so,  then  tlie  nearest  analogy  would 
be  of  damage  by  smoke  ;  that  is,  the  moisture  thrown  off  by  burning  wood,  and 
carrying  with  it  ashes,  empyreumatic  oil,  and  other  constituent  parts  of  the 
wood,  either  in  their  natural  condition,  or  transformed  by  the  process  of  com- 
bustion.    Now  it  is  obvious  that  mere  smoke,  without  any  direct  action  of  heat, 

933 


§  413]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.        [CH.  XXI. 

and  blew  off   the  roof  of  the  house,  the  question  was  thus 
stated  by  the  court :  "  By  the  ignition  of  gunpowder  within  a 
dwelUng-house,  damage  is  done  to  the   house,  that  damage 
consisting  in  part  of  combustion  and  part  of  explosion.     Is 
the  wJiole  damage  covered  by  a  policy  insuring  against  '  loss  ,• 
or  damage  by  fire '  ? "     And  after  a  very  able  and   learned 
examination  of  the  question  in  all  its  bearings,  the  conclusion 
arrived  at  was  that,  "  when  the  effects  produced  are  the  im- 
mediate results  of  the  action  of  a  burning  substance  in  contact 
with  a  building,  it  is  immaterial  whether  these  results  mani- 
fest themselves  in  the  form  of  combustion  or  of  explosion,  or 
of  both  combined.     In  either  case  the  damage  occurring  is  by 
the  action  of  fire,  and  covered  by  the  ordinary  terms  of  a 
policy  against  fire."     [In  a  Canada   case    it  was  held  that 
where  the  condition  makes  the  company  liable  for  loss  caused 
by  the  explosion  of  coal  gas,  and  loss  by  fire  caused  by  any 
other  explosion,  the  policy  does  not  cover  the  damage  result- 
ing directly  from  an  explosion  of  gunpowder,  but  only  such 
loss  as  results  from  fire  caused  by  the  explosion.^     In  the 
Dominion   Supreme   Court,   however,   this   decision   was   re- 
versed, and  the  doctrine  of  Massachusetts  adopted,  that  all 
damage  caused  by  the  explosion  is  caused  by  fire,  since  com- 
bustion is  inseparable  from  the  explosion  itself.^     A  policy 
insuring  against  damage  "  by  fire  originating  in  any  cause  " 
covers  the  results  of  an  explosion,  since  it  is  a  scientific  fact 
that  an  explosion  is  preceded  by  ignition  and  accompanied  by 
intense  heat.^j 

may  do  great  damage  to  many  kind  of  merchandise,  such  as  delicate  textile- 
fabrics,  esculent  vegetables,  articles  of  taste,  and  other  numerous  objects  ;  and 
if  a  dwelling  or  a  magazine  take  fire,  and  some  parts  of  it  only  be  consumed,  but 
the  contents  of  the  apartments  to  which  the  actual  fire  does  not  extend  are  nev- 
evtlieless  damaged  by  the  smoke  penetrating  into  and  filling  them,  can  it  be 
ilnubted  that  the  damage  thus  done  is  a  loss  within  the  ordinary  conditions  of  a 
fire  policy  ?  Semble,  per  Gibbs,  C.  J.,  arguendo,  in  Austin  v.  Drewe,  Holt,  N.  P. 
127.  Yet,  incontestably,  damage  by  smoke  is  an  effect  which  is  not  in  itself 
igneous  action,  though  it  be  the  result  thereof;  while,  as  we  conceive,  the  ex- 
plosion of  gunpowder  is  igneous  action." 

1  [Ilobbs  V.  Guardian  Fire  Ins.  Co.,  7  Ont.  R.  631 ;  Hobbs  v.  Northern  Ass. 
Co.,  8  id   34.3,  Armour,  J.,  dissenting.] 

2  [Hobbs  r.  Guardian  Fire  Ins.  Co.,  12  Can.  Supr.  Ct.  631.] 
8  [Renshaw  v.  Fireman's  Ins.  Co.,  33  Mo.  App.  391.] 

934 


CH.  XXI.]       OF    THE    RISK,    ITS    DURATION    AND    EXTENT.  [§  415 

§  414.  Risk ;  Explosion  ;  Concussion.  —  The  COUrt  in  10 
Cush.  expressly  avoided  giving  an  opinion  in  cases  wliere 
there  is  no  ignition  or  combustion,  and  where  the  damage  is 
caused  merely  by  concussion.  Tlie  question  of  liability  in 
such  a  case  arose  in  England,^  where  the  property  was  in- 
jured by  the  concussion  consequent  on  the  explosion  of  a 
powder  magazine  situated  at  some  distance  from  the  property 
insured,  and  it  was  held  that  it  could  not  be  said  that  in  that 
instance  the  loss  was  "  occasioned  by  fire."  It  was  occasioned 
by  a  concussion  caused  by  fire.  And  to  the  same  effect,  upon 
similar  facts,  was  the  case  of  Caballero  v.  Home  Mutual  In- 
surance Company. 2 

§  415.  Risk  ;  Explosion  ;  Steam.  —  It  was  early  held  that 
under  an  ordinary  policy  against  loss  by  fire,  loss  by  explo- 
sion of  a  steam-boiler,  the  explosion  not  being  caused  by  any 
unusual  fire,  and  no  fire  supervening,  no  recovery  can  be  had. 
Such  an  explosion  could  not  be  distinguished  from  the  break- 
ing or  derangement  of  any  other  part  of  the  machinery .^  It 
has  also  been  held  by  a  divided  opinion  that  if  the  fire  is 
caused  by  the  explosion  of  a  steam-boiler,  and  the  policy  pro- 
vides against  liability  "  for  any  loss  occasioned  by  the  explo- 
sion of  a  steam-boiler,"  the  loss  thereby  is  not  recoverable 
under  the  terms  of  the  policy.*     So  where  the  policy  provided 

1  Everett  v.  London  Ass.  Co.,  19  C.  B.  n.  s.  126. 

2  15  La.  Ann.  217.     See  also  Brown  v.  St.  Nicholas  Ins.  Co.,  61  N.  Y.  332. 
8  Millaudon  v.  Orleans  Ins.  Co.,  4  La.  Ann.  15. 

4  St.  John  V.  Am.  Mut.  Mar.  &  Fire  Ins.  Co.,  1  Duer  (N.  Y.  Superior  Ct.), 
371 ;  s.  c.  affirmed,  1  Ker.  (N.  Y.)  516.  ["Not  liable  for  the  bursting  of  the 
boilers  "  means  not  liable  for  any  damages  resulting  from  or  on  account  of  the 
same.  Strong  v.  Sun  Mut.  Co.,  31  N.  Y.  103  at  112.  And  no  apportionment  of 
loss  arising  from  such  cause,  or  of  that  arising  from  fire  following  it  and  caused 
by  it,  can  be  made,  and  the  insurer  is  not  liable.  Montgomery  v.  Firemen's 
Ins.  Co.,  16  B.  Mon.  (Ky.)  427  at  442;  Roe  v.  Columbus  Ins.  Co.,  17  Mo.  301  at 
306;  McAllister  v.  Tenn.  Ins.  Co.,  17  Mo.  306  at  309.  (In  these  cases  the  ex- 
plosion was  the  cause  of  the  fire,  and  was  held  to  be  the  proximate  cause  of  the 
whole  loss.)  Where  afire  resulted  from  an  explosion  but  was  apparently  ex- 
tinguished, and  afterward  a  second  and  a  third  time  the  flames  broke  forth,  these 
fires  were  presumed  to  result  from  the  explosion  in  the  absence  of  contrary 
proof.  Tanneret  ik  Mercliants'  Mut.  Ins.  Co.,  34  La.  Ann.  249.  When  a  run- 
ning policy  provided  that  it  did  not  cover  any  loss  or  damage  "accrued  at  the 
time  of  the  entry  or  indorsement,  caused  by  any  gale,  disaster  by  exjilosion, 
fire,  or  otlierwise,  which  occurrence  might  be  known  to  the  applicant,  the  pub- 

935 


§  415]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.        f  CH,  XXI. 

that  the  company  should  not  be  liable  for  loss  "  by  fire  which 
shall  happen  or  arise  by  any  explosion,"  nor  for  loss  "  by  ex- 
plosion of  any  kind,"  it  was  held  that  the  insurers  were  not 
liable  for  damage  by  fire  which  originated  from,  and  was 
caused  by,  the  explosion  of  a  steam-boiler  used  on  the  prem- 
ises.^ [A  condition  that  if  the  premises  "be  damaged  by  the 
bursting  of  a  boiler  or  explosion  from  any  cause,  the  policy 
shall  be  void  the  instant  the  casualty  occurs,"  is  valid  and 
imambiguous,  and  an  explosion  with  damages  annuls  the  policy 
instantly.2  When  a  policy  excepts  all  liability  for  loss  or 
damage  caused  by  explosions  the  exception  must  be  held  to 
include  all  loss  and  damage  by  fire  of  which  an  explosion  was 
the  efficient  cause.^  When  a  policy  declared  that  the  company 
should  not  be  liable  "  for  damage  to  property  by  lightning 
aside  from  fire,  nor  for  damages  occasioned  by  the  explo- 
sion of  a  steam-boiler,  nor  for  damages  by  fire  resulting 
from  such  explosion,  nor  explosions  caused  by  gunpowder, 
gas,  or  other  explosive  substances  "  it  was  held  that  the  com- 
pany was  liable  for  damage  hy  fire  resulting  from  an  explosion 
of  gas,  but  not  for  damage  caused  by  the  explosive  force  of  the 
gas  without  its  communicating  fire  to  the  insured  property.* 
An  exception  in  a  policy  of  liability  for  loss  "  occasioned 
by  explosions  of  any  kind,  by  means  of  invasion,  riots,  &c.," 
was  held  not  to  he  limited  to  explosions  occasioned  by  inva- 
sion, and  that  the  parties  did  not  intend  by  a  special  premi- 
um to  exempt  from  tbe  printed  exception  the  explosion  risk.^ 

lie,  or  tlie  company,  at  the  time  of  such  application  being  made,  whether  such 
property  was  known  to  be  involved  therein  or  not,  &c.,"  and  when  it  was  known 
as  aforesaid  that  a  certain  ship  had  exploded  her  boiler  at  the  time  of  applica- 
tion, but  not  that  goods  to  be  covered  by  the  policy  were  on  board,  it  was  held 
that  the  policy  did  not  cover  the  loss.     Mark  v.  ^tna  Ins.  Co.,  20  Ind.  390  at  394.] 

1  Hayward  r.  Liv.  &  Lon.  Fire  &  Life  Ins.  Co.,  7  Bosw.  (N.  Y.  Superior  Ct.) 
38.5  ;  affirmed,  2  Abb.  Ct.  of  App.  Dec.  349,  substantially  overruling  Hayward  v. 
Northwestern  Ins.  Co.,  19  Abb.  Pr.  116.     And  see  post,  §  418. 

'•2  [Waldeck  v.  Springfield  Fire  &  Mar.  Ins.  Co.,  56  Wis.  96.] 

3  [United  L.  F.  &  M.  Ins.  Co.  v.  Foote,  22  Ohio  St.  340  at  349.] 

4  [Boatmen's  Fire  &  Mar.  Ins.  Co.  v.  Parker,  23  Ohio  St.  85  at  95  The  court 
endeavored  to  distinguish  United  Life,  &c.  Ins.  Co.  v.  Foote,  on  the  ground  that 
the  clause  "  resulting  from  such  explosion  "  was  placed  before  the  mention  of  gas 
explosion  instead  of  after  it.] 

5  [Smiley  v.  Citizens'  Fire,  Mar.,  &  Life  Ins.  Co.,  14  W.  Va.  33  at  52.] 

936 


CII.  XXI.]       OF    THE    RISK,    ITS    DURATION    AND    EXTENT.  [§  415 

But  explosions  resulting  incidentally  from  the  manufacture 
which  the  parties  contemplate  will  be  carried  on  in  the  build- 
ing, are  not  excepted  by  a  general  clause  against  liability  for 
explosions.  For  example,  a  policy  on  a  fiour  mill  covers 
damages  by  an  explosion  caused  by  the  action  of  a  fire  on  the 
flour-dust  in  the  mill.^]  It  has  also  been  said,  that  the  com- 
pany would  not  be  liable  under  an  exemption  from  loss  "  by 
fire  which  might  occur  by  means  of  explosion,"  if  the  explo- 
sion sets  in  operation  the  fire  wliich  burns  the  insured  property, 
though  the  fire  may  travel  from  the  seat  of  explosion  through 
other  buildings  continuously  to  the  building  burned.  In  order 
to  render  the  company  liable,  a  new  force  or  power  sufficient 
to  cause  the  fire  must  intervene  ;  and  the  incidental  facts  of 
intervening  buildings  and  favoring  winds  are  not  the  equivalent 
of  this  new  force.^  But  in  a  later  case  ^  the  question  came 
again  under  discussion,  where  the  provision  of  the  policy  was 
that  the  insurers  should  not  be  liable  "  for  any  loss  or  damage 
by  fire  caused  by  means  of  an  invasion,  ttc,  .  .  .  nor  for  any 
loss  caused  by  the  explosion  of  gunpowder,  camphcno,  or  any 
explosive  substance,  or  explosion  of  any  kind,"  witli  a  differ- 
ent result.  The  question  was  whether  under  this  form  of 
policy  the  insurers  were  liable  for  loss  by  fire  caused  by  explo- 
sion.* After  adverting  to  Hayward  v.  Liverpool  and  London 
Insurance  Company,^  as  expressly  in  words  excluding  such 
liability,  and  to  St.  John  v.  American  Mutual  Insurance 
Company,^  as  in  the  negative  by  a  divided  opinion,  and 
pointing  out  the  fact  that  the  opinions  of  the  several  judges, 
constituting  the  majority,  were  based  not  merely  upon  differ- 
ent, but  inconsistent  grounds,  thus  substantially  depriving  the 
decision  of  its  claim  to  be  considered  as  an  authority,  and  fur- 
ther referring  to  Stanley  v.  Western  Insurance  Company  "  as 

1  [Washburn  v.  Miami  Valley  Ins.  Co.,  2  Fed.  Rep.  638 ;  2  Flip.  664 ;  9  Ins. 
L.  J.  761,  6tli  Cir.  Ohio,  1880  ] 

2  Insurance  Co.  v.  Tweed,  7  Wall.  (U.  S.)  44. 

8  Commercial  Ins.  Co.  v.  Robinson,  64  111.  26-5. 

*  The  report  in  the  Journal  does  not  state  what  exploded,  nor  does  it  seem 
to  be  material. 

5  7  Bosw.  (N.  Y.  Superior  Ct.)  385. 

6  1  Ker.  (N.  Y.)  516.  7  3  l.  R.  E.xch.  Cases,  71. 

937 


§  415]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.         [CH.  XXI. 

in  point  for  the  insurers,  the  court,  after  remarking  that 
equivocal  expressions  must  be  construed  most  strongly  contra 
proferentes,  proceeds :  — 

"  It  will  be  observed  that  in  a  clause  of  the  policy  preced- 
ing the  one  under  consideration,  the  company  stipulated  that 
it  should  not  be  liable  for  any  loss  or  damage  by  fire,  caused 
by  means  of  an  invasion,  insurrection,  &c.  Here  exemption 
is  specially  secured  against  liability  for  losses  by  fire  caused 
by  explosion.  The  difference  in  phraseology  between  the  two 
clauses  is  so  marked  that,  when  we  consider  their  connection 
with  each  other,  we  cannot  resist  the  conclusion  that  the 
difference  was  intended. 

"  Whether  the  difference  was  intentional  or  not  cannot  be 
certainly  ascertained,  but  it  is  reasonable  to  resolve  the  doubt 
against  the  company.  The  object  of  the  company's  existence 
is  to  insure  against  fire.  That  is  what  it  holds  itself  out  to 
the  public  as  able  and  willing  to  do.  When  a  person  takes 
out  a  policy  and  pays  his  premium  he  takes  it  for  granted, 
without  reading  his  policy,  that  he  cannot  make  the  risk  more 
hazardous  to  the  company  by  storing  highly  inflammable  ma- 
terials upon  his  premises.  He  knows  that  would  be  acting 
in  bad  faith  with  the  company,  and  that  the  policy  has  prob- 
ably provided  against  it ;  but  he  would  have  no  reason  to  sup- 
pose that  among  the  voluminous  stipulations  of  the  policy 
there  would  be  found  one  intended  to  deprive  him  of  its  ben- 
efit, because  a  fire,  which  has  destroyed  his  property,  originated 
in  another  house  a  half-mile  distant,  in  the  explosion  of  a  cam- 
phene  lamp.  Most  fires  originate  in  acts  of  carelessness,  and 
it  is  chiefly  to  guard  themselves  against  the  carelessness  of 
others  that  prudent  persons  insure.  Yet  the  construction  of 
this  policy  contended  for  by  the  company,  would  make  the 
assured  assume  the  liability  for  the  carelessness  of  others. 
He  is  thus  deprived  of  the  very  protection  he  seeks  by  his 
insurance,  if,  when  his  house  burns  up,  he  can  be  denied  the 
payment  of  his  policy  because  the  fire  was  caused  by  an  explo- 
sion upon  the  premises  of  others.  The  great  fire  at  Chicago 
is  supposed  to  have  originated  in  the  overturning  and  ex- 
plosion of  a  lamp ;  but  we  are  not  aware  that  any  of  the  insur- 
938 


CH.  XXI. J       OP   THE   RISK,    ITS   DURATION    AND   EXTENT.         [§  415 

ance  companies  that  suffered  by  that  fire  have  sought  to 
interpose  this  defence,  although  this  clause  is  a  very  common 
one  in  insurance  policies,  and  was  probably  contained  in  many 
that  had  been  issued  on  the  property  there  destroyed.  Coun- 
sel for  the  company,  feeling  the  unreasonable  character  of 
their  interpretation  of  this  condition  in  cases  where  the  fire 
comes  from  an  explosion  on  other  premises,  speak  of  it  as  if  it 
referred  only  to  explosion^  on  the  premises  of  the  insured. 
But  the  policy  will  bear  no  such  construction  or  limitation. 
We  must  eitlier  hold  that  the  clause  refers  to  loss  by  explo- 
sions simply,  without  reference  to  fire,  or  to  losses  by  fire 
occasioned  by  explosions  anywhere,  whether  on  or  remote 
from  the  premises.  There  is  no  middle  term.  It  must 
receive  one  of  these  constructions,  or  the  other.  One  is  con- 
sistent with  the  context,  reasonable  in  itself,  and  just  to  both 
parties.  The  other  requires  the  interpolation  of  two  addi- 
tional words  in  the  policy,  is  inconsistent  with  the  context, 
and  in  a  large  degree  would  make  fire  insurance  a  mere  mock- 
ery. We  cannot  hesitate  wliich  construction  to  choose.  But, 
say  the  counsel  for  the  appellant,  this  company  does  not  pro- 
fess to  insure  against  losses  by  explosion,  but  only  by  fire,  and 
the  clause  construed  as  we  construe  it  is  unmeaning,  or  at 
least  useless.  But  not  so.  The  clause  was  designed  to  ap- 
ply to  all  cases  where  the  explosion  was  the  immediate  cause 
of  the  loss. 

"  Suppose  fire  is  carelessly  applied  to  powder  or  other  explo- 
sive substance ;  an  explosion  follows,  which  rends  furniture 
and  building.  This  explosion  is  the  result  of  the  ignition  of 
the  explosive  material,  and  it  might  be  claimed  that  the  loss 
caused  thereby  was  a  loss  by  fire.  The  courts  might  not  so 
hold,  independently  of  the  clause  of  the  policy  ;  but  we  can 
well  understand,  when  we  examine  these  policies,  that  the 
insurers  may  have  introduced  this  clause  for  the  purpose  of 
leaving  no  room  for  argument  or  doubt.  Again,  suppose  a 
case  where  a  fire  is  speedily  subdued,  but  before  it  is,  it  has 
ignited  powder,  and  an  explosion  has  taken  place  which  has 
caused  much  damage,  but  has  not  extended  the  fire ;  in  such 
a  case  the  company  would  claim  that  they  were  protected  by 

939 


§  416]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.  [CH.  XXI. 

this  clause  from  liability  for  the  consequences  of  the  explo- 
sion. It  is  not  necessary,  however,  for  us  to  show  how  the 
clause  was  designed  to  operate.  It  is  sufficient  to  say  that, 
in  our  judgment,  it  cannot  receive  the  construction  claimed  by 
the  company."  ^ 

§  416.  Risk  ;  Explosion;  Gas.  —  On  the  other  hand,  it  has 
been  held  in  a  very  recent  case  in  Ohio,  that  a  policy  insur- 
ing against  "  loss  or  damage  by  fire,"  but  providing  that  the 
company  shall  not  be  responsible  for  any  "  loss  or  damage 
occasioned  by  or  resulting  from  any  explosion  whatever,"  is 
to  be  construed  as  if  the  excepting  clause  read  "  loss  or  dam- 
age by  fire,"  and  does  not  cover  a  loss  happening  from  an 
explosion  which  takes  place  by  reason  of  a  column  of  an  ex- 
plosive mixture  coming  in  contact  with  the  flame  of  a  gas- 
jet,  whereby  a  fire  was  set  in  motion  which  destroyed  the 
property  .2 

1  The  cases  of  Stanley  v.  "Western  Ins.  Co.,  3  Law  Rep.  (Exch  )  Cas.  71,  usu- 
ally regarded  as  opposed  to  the  doctrine  of  the  case  just  cited  from  Illinois, 
and  the  case  of  Harper  v.  City  Fire  Ins.  Co.,  1  Bosw.  (N.  Y.  Superior  Ct  )  520. 
are  referred  to  in  the  next  section.  In  Stanley's  case,  the  policy  exempted  the 
insurers  from  liability  for  loss  arising  from  explosion,  except  explosion  by  gas. 
The  insured  premises  were  used  in  the  business  of  extracting  oil,  during  which 
process  a  vapor  was  evolved,  which  being  mixed  with  a  certam  quantity  of 
atmospheric  air,  became  explosive.  This  vapor  escaping  came  in  contact  with 
the  flame  of  the  lamps,  and  an  explosion  ensued,  succeeded  by  a  fire.  The 
court  held  that  the  gas  intended  by  the  policy  was  ordinary  illummating  gas, 
and  that  the  insurers  were  not  liable  for  loss  by  concussion  or  from  fire  occa- 
sioned by  tiie  explosion,  but  were  liable  for  loss,  if  there  was  any,  by  reason  of 
the  original  fire,  or  any  subsequent  extension  of  that  fire  unconnected  with  the 
explosion. 

^  United  Life;  Fire,  &  Marine  Insurance  Co.  v.  Foote,  22  Ohio  St.  340.  The 
opinion  is  so  able  and  instructive,  that  we  give  its  more  important  parts 
Mcllvaine,  J.  .  — 

"  By  the  terms  of  the  policy  it  appears  that  the  plaintiffs  were  msured  against 
'loss  or  damage  by  fire,  to  the  amount  of  five  thousand  dollars,  on  their  stocks 
of  merchandise,  consisting  principally  of  liquors,  fixtures,  tools,  and  office  furni- 
ture, contained  in  their  brick  building,  situate  on  the  southwest  corner  of  Con- 
gress and  Kilgour  Streets,  Cinciiuiati,  Ohio,  and  occupied  by  them  as  a  liquor 
store,  with  privilege  of  rectifying  and  manufacturing  fine  spirits  by  steam  not 
generated  in  the  building.  The  principal  defence  arose  under  one  of  the  con- 
ditions of  the  policy,  which  is  in  these  words  :  — 

"  '  VIL  This  company  is  not  liable  for  loss  or  damage  by  lightning  or  tor- 
nado, unless  expressly  mentioned  or  insured  against,  but  will  be  responsible  for 
loss  or  damage  to  property  consumed  by  fire  occasioned  by  lightning.     Nor  will 

940 


CH.  XXI.]       OP   THE   EISK,   ITS   DURATION    AND    EXTENT.      [§  416  a 

§  41o  a.  Fire  causing  Explosion.  —  So  where  the  policy  ex- 
chided    liability  "  for  loss   by  lightning  or  explosion  of  any 

tliis  company  be  responsible  for  any  loss  or  damage  to  property  consumed  by 
fire  happening  by  reason  of  or  occasioned  by  any  invasion,  insurrection,  riot, 
or  civil  commotion,  of  any  military  or  usurped  power,  nor  where  the  loss  is 
occasioned  or  superinduced  by  fraud,  dishonesty,  or  criminal  conduct  of  the 
insured,  nor  to  any  loss  or  damage  occasioned  bij  or  resulting  from  any  explosion  what- 
ever, whether  of  steam,  gunpowder,  camphene,  coal-oil,  gas,  nitro-glycerine,  or  any  ex- 
p'osive  article  or  substance,  unless  expressly  insured  against,  and  special  premium  paid 
therefor. ' 

"  The  testimony  shows  that  at  the  time  of  taking  out  the  policy,  and  until 
the  time  of  tlie  fire,  the  plaintiffs  were  engaged  in  the  business  of  rectifying 
whiskey  and  manufacturing  fine  spirits  by  the  use  of  steam,  in  the  building  oc- 
cupied by  them  as  a  liquor  store,  and  in  which  the  insured  stock  of  merchan- 
dise, consisting  principally  of  liquors,  &c.,  was  kept.  The  size  of  the  building 
was  sixty  by  one  hundred  and  eighty  feet,  and  was  four  stories  high.  There 
was  communication  between  the  stories  through  open  stairways  and  hatches. 
Tlie  business  of  rectifying  was  carried  on  in  the  basement  story,  where  the 
stills  —  large  metallic  vessels  —  were  located.  The  upper  stories  were  chiefly 
used  for  storage  of  liquors  and  cooperage.  The  process  of  rectifying  was  con- 
ducted as  follows  :  The  raw  spirits  of  liquor  was  conveyed  by  means  of  pipes 
called  leaders,  from  the  tubs  situate  in  the  upper  stories  to  the  stills  below ; 
when  the  stills  were  thus  charged,  the  liquor  therein  was  converted  into  vapor 
by  means  of  steam  which  passed  through  the  stills  !n  copper  pipes  called 
worms  ;  the  vapor  thus  evolved  was  conducted  by  other  pipes  to  a  condenser, 
where  it  was  reduced  to  a  liquid  state.  The  vapor  evolved  in  the  process  of 
rectification  is  an  inflammable  substance.  It  readily  mixes  with  the  atmos- 
phere, and  when  so  mixed  in  certain  proportions  is  explosive,  and  when  such 
mixture  is  brought  into  contact  with  flame  it  explodes.  On  the  morning  of  the 
fire  a  large  still  was  being  charged  through  a  leader  about  two  inches  in  diame- 
ter, which  passes  into  its  still  through  a  vacuum  valve  (an  aperture  in  the  still 
near  its  top),  tlie  diameter  of  which  was  about  four  inches.  At  the  same  time 
steam  was  passing  through  the  worm,  converting  the  liquor  in  the  still  into  va- 
por, whicli  escaped  through  the  vacuum  valve  into  the  still-room,  and  thence 
no  doubt  into  the  other  parts  of  the  building.  The  process  of  thus  dischar- 
ging the  still,  accompanied  with  the  discharge  of  vapor,  had  continued  for  some 
time,  —  perliaps  an  hour  preceding  the  fire.  During  the  progress  of  this  pro- 
cess, two  jets  of  gas  were  burning  in  the  still-room,  one  at  a  distance  of  three 
or  four  feet  from  the  vacuum  valve,  and  the  other  in  another  part  of  the  room. 
There  was  no  other  fire  or  flame  in  the  room  or  in  the  building  at  the  time. 

"  Such  being  the  circumstances,  an  explosion  took  place  in  the  still-room.  A 
sudden  and  violent  combustion  of  the  vapor,  accompanied  with  a  noise,  described 
by  one  witness  as  being  like  the  crack  of  a  gun  ;  by  another,  as  if  a  bundle  of 
iron  had  been  thrown  on  the  pavement ;  by  another,  as  a  crash,  and  by  another, 
as  a  gush  of  fire,  and  at  the  same  instant  the  flame  was  driven  through  a  door- 
way into  another  building,  whereby  a  witness  was  badly  burned.  Immediately 
after  the  explosion  a  flame  was  discovered  escaping  from  the  still  through  the 
vacuum  valve,  and  at  the  same  time  the  building  was  discovered  to  be  on  fire 

941 


§  416  a]  INSURANCE  :    fire,    life,    accident,    etc.       [CH.  XXI. 

kind  unless  fire  ensues,  and  then  for  damage  by  fire  only," 
it  was  held,  in  case  where  it  appeared  that  a  vapor  evolved 

throughout  the  several  stories.  From  these  facts  and  circumstances,  we  think 
it  was  clearly  shown  that  the  fire,  by  whicli  tlie  building  and  stock  of  merclian- 
dise  insured  were  consumed,  was  occasioned  by  and  resulted  from  an  explosion 
of  spirit  vapor  mixed  with  atmosphere,  and  that  the  explosion  was  caused  by 
the  mixture  coming  in  contact  with  the  burning  gas-jet. 

"  1.  The  first  question  which  we  noticed  particularly  is  this:  Was  the  explo- 
sion which  in  fact  occurred  such,  in  degree  of  violence,  as  was  contemplated 
by  the  parties  to  the  policy  ' 

"  The  word  'explosion  '  Is  variously  used  in  ordinary  speech,  and  is  not  one 
that  admits  of  exact  definition.  Its  general  characteristics  may  be  described, 
but  the  exact  facts  which  constitute  what  we  call  by  that  name  are  not  suscep- 
tible of  such  statement  as  will  always  distinguish  the  occurrences.  It  must  be 
conceded  that  every  combustion  of  an  explosive  substance,  whereby  other  prop- 
erty is  ignited  and  consumed,  would  not  be  an  explosion  within  the  ordinary 
meaning  of  the  term.  It  is  not  used  as  the  synonym  of  combustion.  And  ex- 
plosion may  be  described  generally  as  a  sudden  and  rapid  combustion,  causing 
violent  expansion  of  the  air,  and  accompanied  by  a  report.  But  the  rapidity 
of  the  combustion,  the  violence  of  the  expansion,  and  the  vehemence  of  the  re- 
port, vary  in  intensity  as  often  as  the  occurrences  multiply.  Hence,  an  explo- 
sion is  an  idea  of  degrees,  and  the  true  meaning  of  the  word,  in  eac!\  particular 
case,  must  be  settled,  not  by  any  fixed  standard  or  accurate  measurement,  but 
by  the  common  experience  and  notions  of  men  in  matters  of  tiiat  sort.  In  this 
case,  although  the  building  was  not  rent  asunder,  or  the  properly  therein  broken 
to  pieces,  there  was  a  sudden  flash  of  flame,  a  rush  of  air,  and  a  report  like  the 
'crack  of  a  gun,' which  certainly  brings  the  occurrence  within  the  common 
meaning  of  the  word  as  used  in  many  instances,  'Any  explosion  whatever'  is 
the  phrase  used  in  the  condition  to  ttie  policy,  and  it  is  qualified  by  the  context 
only  to  the  extent  that  it  must  be  an  '  explosion  '  of  some  '  explosive  substance, 
and  of  sufficient  force  as  to  result  in  loss  or  damage  to  the  property  insured.' 
And  these  characteristics  we  have  found  to  exist  in  the  occurrence  that  resulted 
in  the  loss  of  the  insured  property. 

"  2.  It  is  claimed  that  the  fire  which  destroyed  the  property  insured  did  not 
result  from  the  explosion,  but,  on  the  contrary,  that  the  explosion  was  incident 
to  and  caused  by  the  fire,  which,  if  there  had  been  no  explosion,  would  have 
accomplished  the  whole  loss  and  damage ;  or,  at  least,  that  such  inference 
may  be  drawn  from  the  facts  in  the  case  as  fairly  and  legitimately  as  contrary 
inferences. 

"The  proof  unquestionably  shows  that  the  origin  of  the  fire  and  the  explo- 
sion was  simultaneous.  It  may  be  true,  in  a  strictly  scientific  sense,  that  all 
explosions  caused  by  combustion  are  preceded  by  a  fire.  The  scientist  may 
demonstrate,  in  a  case  where  gunpowder  is  destroyed  by  fire,  or  in  any  case 
where  the  explosion  is  caused  by  or  accompanies  combustion,  that  ignition  and 
combustion  precede  the  explosion  ;  but  the  common  mind  has  no  conception  of 
such  combustion,  as  a  fact  independent  of  the  explosion,  where  they  concur  in 
such  rapid  succession  that  no  appreciable  space  of  time  intervenes.  The  terms 
of  this  policv  must  be  taken  in  their  ordinary  sense;  and  we  are  satisfied  that 

942 


CH.  XXI.]       OF   THE   RISK,   ITS   DURATION   AND    EXTENT.      [§  416  a 

from  the  material  in  process  of  manufacture,  coming  in  con- 
tact with  a  burning   lamp,  exploded,  tearing   off   the    roof, 

the  proofs  show,  according  to  the  ordinary  sense  and  understanding  of  men  in 
reference  to  such  matters,  that  the  explosion  occasioned  the  fire  which  destroj'ed 
tlie  property  insured  ;  or,  in  otiier  words,  that  the  loss  resulted  from  an  explo- 
sion, within  the  true  intent  and  meaning  of  this  policy. 

"  It  is  true  that  the  explosion  was  caused  by  a  burning  gas-jet,  but  that  was 
not  such  fire,  as  contemplated  by  tlie  parties,  as  the  peril  insured  against.  Tlie 
gas- jet,  though  burning,  was  not  a  destructive  force,  against  the  immediate  ef- 
fects of  wh'ich  the  policy  was  intended  as  a  protection.  Althougli  it  was  a  pos- 
sible means  of  putting  such  destructive  force  in  motion,  it  was  no  more  tha 
peril  insured  against  than  a  friction-match  in  the  pocket  of  an  incendiary.  The 
conclusions  of  fact  to  whicli  we  tlius  arrive  are  mere  inferences  from  otlier  facts, 
— facts,  however,  about  whicli  tiiere  was  no  conflict  in  the  testimony,  —  yet 
they  are  so  manifestly  true  that  we  tliink  it  was  an  error  of  law,  under  our 
statute,  to  reverse  the  judgment  rendered  tliereon  at  the  special  term  of  the 
Superior  Court,  upon  the  strength  of  contrary  inferences  drawn  from  the  same 
facts  by  the  reviewing  court 

"  3.  The  next  question  arises  upon  the  terms  of  tlie  policy,  and  is  one  of 
construction  purely.  Was  it  intended  by  the  provisions  of  the  seventh  condi- 
tion to  exempt  from  the  risks  assumed  by  the  policy  losses  by  fire  occasioned  by 
an  explosion  ^ 

"  It  is  claimed  that  the  clause  exempting  losses  by  explosion  taken  alone,  or 
construed  in  connection  with  other  clauses  in  tlie  condition,  does  not  show  sucli 
intention.  It  is  true  that  the  words  '  by  fire,'  or  their  equivalent,  are  omitted  in 
this  clause,  though  expressed  in  some  of  the  former  clauses ;  the  foundation 
point,  however,  in  construing  this  condition,  is  found  in  the  general  undertaking 
of  the  policy.  It  will  be  observed  that  the  underwriter  undertook  to  insure 
against  loss  and  damage  by  fire  only,  but,  nevertheless,  against  loss  and  dam- 
age by  fire  generally  ;  and  the  maxim  causa  proxma  non  remota  spectatur  applies. 
Now  we  think,  without  doubting,  that  the  purpose  of  inserting  this  condition 
was  to  relax  the  rigor  of  this  maxim,  and  exempt  from  the  general  risk  of  the 
policy  certain  losses,  whicli  would  otherwise  fall  within  its  scope  and  meaning. 
The  first  clause  of  the  condition  provides  that  '  this  company  is  not  liable  for 
loss  or  damage  by  lightning  or  tornado,  unless  expressly  mentioned  and  in- 
sured against.'  If  tliis  were  the  whole  of  the  clause,  and  it  were  not  under- 
stood that  the  loss  and  damage  referred  to  were  such  as  miglit  result  from  fire 
occasioned  by  lightning  or  tornado,  it  would  be  utterly  meaningless  and  nugatory, 
for  the  reason  that  the  underwriter  had  not  undertaken  to  insure  against  liglit- 
ning  or  tornado.  So  far  the  construction  is  plain  enough ;  but  a  ditficulty 
arises  from  tlie  conclusion  of  the  clause,  to  wit, 'but  will  be  responsible  for 
loss  or  damage  to  property  consumed  by  fire  occasioned  by  lightning.'  The 
exception  to  the  rule  of  exemption  from  loss  by  lightning  appears  to  be  as 
broad  as  the  rule  itself  But  I  apprehend  that  a  case  might  arise  in  which  effect 
and  operation  could  be  given  to  all  the  terms  of  this  clause,  including  those 
which  are  implied  as  well  as  those  expressed.  At  all  events,  it  is  perfectly 
clear  that  loss  and  damage  by  lightning  and  tornado  are  not  within  the  ex- 
VOL.  n.  _  16  943 


§  416  a]  INSURANCE  :    FIRE,  LIFE,    ACCIDENT,    ETC.       [CH.  XXI. 

shattering  the  walls,  and  damaging  the  machinery,  upon 
wliich  a  fire  supervened,  that  the   insurers  were  liable  for 

pressed  risks  of  the  policy,  unless  a  fire  supervenes ;  nor  is  there  anything  in  the 
policy  from  which  such  risks  can  be  implied. 

"  The  condition  continues  :  '  Nor  will  the  company  be  responsible  for  any  loss 
or  damage  to  property  consumed  by  fire  happening  by  reason  of  or  occasioned 
by  any  invasion,  insurrection,  riot,  or  civil  commotion,  or  any  military  or  usurped 
power.'  The  exemptions  here  provided  for  are  expressly  limited  to  losses  within 
tlie  terms  of  the  general  risk  of  the  policy.  But  if  such  limitation  had  not  been 
expressed,  it  would  have  been  implied. 

"  The  next  clause  Is  as  follows  :  '  Nor  where  the  loss  is  occasioned  or  super- 
induced by  the  fraud,  dishonesty,  or  criminal  conduct  of  the  insured.'  There  13 
no  pretext  for  holding  that  the  loss  here  contemplated  is  other  than  loss  by  fire, 
although  no  such  qualification  is  expressed.  Then  follows  the  clause  in  ques- 
tion, which,  to  all  intents  and  purposes,  is  framed  like  the  preceding  one:  '  Nor 
to  any  loss  or  damage  occasioned  by  or  resulting  from  any  explosion  whatever, 
whether  of  steam,  gunpowder,  camphene,  coal-oil,  gas,  nitro-glycerine,  or  any 
explosive  article  or  substance,  unless  expressly  insured  against  and  special  pre- 
mium paid  therefor.' 

"  Unless  there  is  something  in  the  subject-matter  of  this  clause  that  indicates 
that  the  words  'by  fire'  were  omitted  for  the  purpose  of  showing  a  design  and 
intention  to  adhere  to  and  continue  the  general  risk  in  case  an  explosion  should 
result  in  a  fire,  we  think  that  they  or  their  equivalents  should  be  supplied  by 
implication  or  construction.  Is  such  purpose  indicated  by  any  fair  use  of  the 
terms  employed  '  That  a  loss,  or  any  other  combustion,  results  from  an  explo- 
sion, where  the  explosion  itself  is  caused  by  a  destructive  fire  already  in  pro- 
gress, comes  within  the  general  risk  of  a  policy  against  fire  only,  is  a  doctrine 
not  only  reasonable  in  itself,  but  is  sustained  by  authority.  Waters  v.  La.  Mer. 
Ins.  Co.,  11  Pet.  213  ;  Scripture  v.  Low.  Mut.  Fire  Ins.  Co.,  10  Cush.  357;  Mil- 
laudon  v.  N.  O.  Ins.  Co.,  4  La.  Ann.  15.  And  it  is  quite  clear  that  a  loss  by  fire 
which  is  occasioned  by  an  explosion  is  within  the  like  risk.  Now,  the  express 
terms  of  this  clause  are, '  any  loss  or  damage  occasioned  by  or  resulting  from  any 
explosion  whatever.'  These  terms  are  certainly  comprehensive  enough  to  in- 
clude both  descriptions  of  loss,  —  whether  loss  by  the  explosive  force,  or  loss  by 
superinduced  combustion.  And  that  such  is  their  legal  effect  has  been  directly 
decided  in  the  case  of  Stanley  v.  Western  Insurance  Company,  Law  Reports, 
1868,  3  Exch.  Cas.  71.  It  is  not  necessary  at  this  time  to  either  approve  or  dis- 
approve to  the  whole  extent  the  doctrine  in  Stanley's  case,*  as  in  this  case  no 
damage  was  sustained  from  the  explosion  without  the  intervention  of  a  fire,  nor, 
indeed,  was  the  explosion  caused  by  a  fire  within  the  meaning  of  the  policy.  But 
we  can  find  no  good  reason  for  doubting  that  loss  and  damage  by  fire,  resulting 
from  an  explosion,  was  intended  to  be  exempted  by  this  condition  from  the 
general  risk  of  the  policy,  and  are  of  opinion,  therefore,  that  this  clause,  properly 
construed,  should  read,  '  nor  any  loss  or  damage  by  fire  occasioned  by  or  result- 
ing from  any  explosion  whatever.' 

"  4.  It  is  claimed  by  defendants  in  error  that  the  peril  by  which  the  property 

*Ante,  §  415,  n. 

944 


CH.  XXI.]       OF   THE   RISK,   ITS   DURATION    AND    EXTENT.       [§  416  a 

the  damage  done  by  the  fire,  but  not  for  that  done  by  the  ex- 
plosion.i     If  under  such  a  policy  the  fire  precedes  the  explo- 

insured  was  destroyed  was  within  the  exception  to  the  seventh  condition ;  that 
is,  it  was  '  expressly  insured  against,  and  special  premium  paid  therefor ; '  or,  in 
other  words,  was  excepted  out  of  the  exception. 

"  The  reasoning  by  whicli  tliis  proposition  is  sought  to  be  maintained  is  thus 
stated  :  — 

"  The  body  of  the  policy  covered  loss  by  fire  on  liquors,  &c.,  with  the  privi- 
lege of  rectifying  and  manufacturing  fine  spirits  by  steam  not  generated  in  the 
building.  The  property  insured  was  whiskey,  as  well  in  the  process  of  rectifica- 
tion and  manufacture  as  manufactured  whiskey  in  the  still,  as  well  as  spirits  in 
the  barrel,  —  the  whiskey  vapor  itself,  while  passing  through  the  columns  to  tlie 
cooler,  or  wherever  else  it  might  make  its  way. 

"  If  it  was  in  tliis  form  an  explosice  substance  or  article,  such  as  is  intended  by 
tlie  language  of  the  condition,  or  if  in  tiie  process  of  manufacture  allowed  by  the 
policy  It  was  likely  to  become  such  by  escape  and  mingling  with  the  air  in  the 
building,  then  the  insurance  was  upon  it,  as  an  agent  known  to  be  explosive 
under  certain  circumstances  likely  to  happen,  and  with  the  express  assent  of  the 
company  to  the  carrying  on  of  that  process,  in  the  course  of  which  its  explosive 
nature  would  naturally  and  probably  be  developed. 

"  The  principle  sought  by  this  argument  to  be  applied  is  announced  in  Har- 
per V.  New  York  City  Insurance  Company  ;  tlie  condition  exempted  the  com- 
pany from  liability  for  loss  occasioned  by  camphene.  The  fire  was  occasioned  by 
a  workman's  throwing  a  lighted  match  into  a  pan  upon  the  floor  containing 
camphene.  The  risk  was  upon  a  printing  stock,  privileged  for  a  printing-office, 
camphene  not  being  expressly  enumerated.  But  it  was  shown  that  tliat  article 
was  a  usual  part  of  such  a  stock,  and  its  use  was  therefore  authorized.  For  this 
reason  alone,  because  it  was  implicitly  insured,  it  was  held  that  the  exception 
did  not  apply. 

"  The  following  extract  from  the  opinion  expresses  its  doctrine  :  — 

"'A  policy  can  be  so  framed  as  to  allow  the  presence  of  a  dangerous  article, 
and  even  so  as  to  insure  its  value,  while  at  the  same  time  it  might  exempt  the 
insurer  from  loss  if  occasioned  by  the  presence  or  use  of  the  article.  But  I 
think  it  would  need  very  great  precision  of  language  to  express  such  an  inten- 
tion. Where  camphene  or  any  hazardous  fluid  is  insured,  and  its  use  is  plainly 
admitted,  the  dangers  arising  from  that  source  are  so  obviously  within  the  risk 
undertaken,  that  effect  should  be  given  to  the  policy  accordingly,  unless  a  dif- 
ferent intention  is  very  plainly  declared.'  « 

"In  answer  to  this  claim,  we  say  :  — 

"  1.  That  the  spirit  vapor,  having  escaped  from  its  confinement  and  passed 
into  the  still-room,  where  it  became  mixed  with  atmosphere  so  as  to  form  an  ex- 
plosive substance,  under  circumstances  that  precluded  all  possibility  of  reclaim- 
ing and  utilizing  it,  it  was  no  longer  a  part  of  the  stock  of  merchandise  insured, 
and  was  not  under  the  protection  of  the  policy. 

"  2.  If,  from  the  nature  of  the  property  insured,  the  parties,  at  the  time  the 


1  Briggs  V.  N.  Am.  Ins.  Co.,  53  N.  Y.  446;  Briggs  j;.  N.  Br.,  &c.  Ins.  Co.,  66 
Barb.  (N.  Y.)  325. 

945 


§  417]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.         [CH.  XXI. 

sion,  the  entire  loss  is  to  be  attributed  to  the  fire,  though  the 
explosion  be  destructive.^  And.  perhaps,  if  there  be  no  fire 
but  the  ignition  of  the  explosive  material,  the  whole  loss  must 
be  attributed  to  the  explosion. ^  Where  the  insurers  were 
not  to  be  liable  for  collision  unless  fire  ensued,  and  then 
only  for  the  loss  and  damage  by  fire,  and  the  policy  fur- 
ther stipulated  that  they  were  not  to  be  liable  for  fire 
arising  from  petroleum,  it  was  held  that  they  were  not 
liable  for  loss  caused  by  fire  after  the  collision  arising  from 
petroleum.^ 

§  417.  Risk  ;  Collision  ;  Proximate  Cause.  —  A  case  of  Con- 
siderable delicacy  has  recently  been  before  the  United  States 
Circuit  Court  of  Connecticut,  —  the  case  of  the  Norwich  and 
New  York  Transportation  Company  v.  The  Western  Massa- 
chusetts Insurance  Company,*  —  in  which  the  question  was, 
whether  where  a  steamer  collided  with  a  sailing-vessel,  whereby 

risk  was  taken,  might  reasonably  have  anticipated  the  peril  by  which  it  was 
afterward  destroyed,  it  is  reasonable  to  suppose  that  such  peril  was  in  contem- 
plation at  the  time,  and  that  tiiey  contracted  in  reference  to  it.  Hence,  if  the 
general  risk  of  tlie  policy  was  expressed  in  terms  broad  enough  to  include  the 
peril,  it  must  be  presumed  that  they  intended  to  do  so  ;  and,  on  the  other  hand, 
if  an  exception  to  the  risk  was  made  in  terras  which  fairly  and  plainly  took  such 
particular  peril  out  of  the  general  risk,  it  must  be  presumed  that  they  intended 
to  exempt  such  particular  peril  from  the  risk.  Again,  if  it  be  claimed  that 
there  was  an  exception  to  such  exemption,  whereby  the  particular  peril  was 
saved  from  the  exemption  and  left  under  the  general  risk,  it  is  reasonable  that 
the  terms  of  exception  should  be  at  least  as  explicit  as  the  terras  of  exemp- 
tion.    How  is  it  in  this  case  ?     The  risk  was  against  all  loss  by  fire. 

"  The  exception  from  the  risk  was  '  any  loss  or  damage  occasioned  by  an  ex- 
plosion of  steam,  gunpowder,  &c.'  The  exception  to  this  exception  was,  '  unless 
expressly  insured  against,  and  special  premium  paid  therefor.'  Therefore  it 
only  remains  to  be  said,  that  no  loss  or  damage  occasioned  by  an  explosion  of 
any  of  these  substances  named  was  expressly  insured  against,  nor  was  any  spe- 
cial premium  paid  for  any  such  special  risk." 

1  [If  a  fire  occurs  by  a  cause  within  the  policy,  and  an  explosion  takes  place 
as  an  incident  to  the  fire  so  as  to  increase  the  loss,  the  wliole  damage  is  within 
the  policy,  although  it  contains  an  exemption  from  liability  for  explosion.  Trans- 
atlantic Fire  Ins.  Co.  v.  Dorsey,  56  Md.  70.] 

'^  Washburn  c.  Artisans'  Ins.  Co.,  9  Ins.  L.  J.  68 ;  Washburn  v.  Insurance 
Companies,  C.  Ct.  (Ohio),  id.  761,  where  Tweed's  case,  ante,  §  415,  is  distin- 
guished.    See  also  atite,  §  413. 

3  Imperial  Fire  Ins   Co.  v.  Express  Co.,  95  U.  S.  227. 

*  34  Conn.  561.     See  §  417  A. 

946 


CH.  XXI.]       OP   THE   RISK,   ITS   DURATION   AND   EXTENT.  [§  417 

the  steamer  was  so  much  disabled  that  she  sank  till  the 
water  rose  to  her  furnaces  and  forced  the  fire  out  upon  her 
woodwork,  which  continued  to  burn  till  her  upper  works 
were  consumed,  when  she  sank  and  became  a  total  loss,  — 
wliether  this  was  a  loss  by  fire.  And  it  was  held  that  this 
depended  upon  the  fact,  submitted  to  the  jury,  whether  but 
for  the  intervention  of  the  fire  she  would  have  filled  and  gone 
to  the  bottom.  If  she  would,  then  it  was  not  a  loss  by  fire  ; 
but  if,  on  the  other  hand,  she  would  only  have  filled  and  par- 
tially sunk,  had  not  the  fire  intervened,  but  yet  remained  in 
such  a  condition  that  she  might  have  been  towed  to  a  place  of 
safety  and  repaired,  then  it  was  a  loss  by  fire.  The  fire  was 
the  proximate  cause  of  the  loss. 

The  same  facts  in  another  case  ^  came  before  the  court,  and 
went,  on  appeal,  to  the  Supreme  Court.  The  case  was  tried 
without  the  intervention  of  a  jury,  and  the  court  below  found 
as  follows  :  — 

"  While  on  one  of  her  regular  trips  from  Norwich  to  New 
York,  on  Long  Island  Sound,  the  steamer  collided  with  a 
schooner,  the  latter  striking  her  on  her  port  side,  and  cutting 
into  her  hull  below  the  water  line,  in  consequence  of  which 
she  immediately  and  rapidly  began  to  fill  with  water.  Within 
ten  or  fifteen  minutes  after  the  collision,  the  water  reached 
the  floor  of  the  furnace,  and  the  steam  thereby  generated 
blew  out  the  fire,  which  communicated  with  the  woodwork 
of  the  boat.  Her  upper  works  and  her  combustible  freight 
were  soon  enveloped  in  flames,  and  they  continued  to  burn 
half  or  three  quarters  of  an  hour,  when  she  gradually  sank  in 
twenty  fathoms  of  water,  keeling  over.  The  steamer  was  so 
constructed  that  her  main  deck  was  completely  housed  in 
from  stem  to  stern,  up  to  her  promenade  or  hurricane  deck 
above.  Her  freight  was  stowed  on  the  main  deck,  and  her 
cabin  and  staterooms  were  on  the  hurricane  deck.  From 
the  effects  of  the  collision  alone  she  would  not  have  sunk 
below  her  promenade  deck,  but  would  have  remained  there 
suspended  in  the  water,  and  would  have  been  towed  to  a 
place  of  safety,  where  she,  her  engines,  tackle,  and  furniture 

1  Howard  Fire  Ins.  Co.  v.  Norwich  &  N  Y.  Transp.  Co.,  12  Wall  (US.)  194. 

947 


§  417]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.        [CH.  XXI. 

could  have  been  repaired  and  restored  to  their  condition 
prior  to  the  collision  for  the  sum  of  fifteen  thousand  dollars, 
the  expense  of  towage  included.  The  sinking  of  the  steamer 
below  her  promenade  deck  was  the  result  of  the  action  of  the 
fire  in  burning  off  her  light  upper  works  and  housmg,  thus 
liberating  her  freight,  allowing  much  of  it  to  drift  away, 
whereby  her  floating  capacity  was  greatly  reduced,  so  that  she 
sunk  to  the  bottom ;  and  all  the  damage  which  she  suf- 
fered beyond  the  fifteen  thousand  dollars  above  named  as 
chargeable  to  the  collision  (amounting  to  seventy-three  thou- 
sand dollars),  including  the  cost  of  raising  the  boat,  was  the 
natural  and  necessary  result  of  the  fire,  and  of  the  fire  onlij. 

"  It  is  now  urged  in  behalf  of  the  plaintiffs  in  error  that 
these  findings  establish  the  sinking  of  the  steamer,  wherein 
consisted  principally  the  loss,  or  that  part  of  it  in  excess  of 
fifteen  thousand  dollars  chargeable  to  the  collision,  was  the 
result  of  two  concurrent  causes,  one  the  fire,  and  the  other 
the  water  in  the  steamer's  hold,  let  in  by  the  breach  made  by 
the  collision.  As  the  influx  of  the  water  was  the  direct  and 
necessary  consequence  of  the  collision,  it  is  argued  that  the 
collision  was  the  predominating,  and  therefore  the  proximate, 
cause  of  the  loss.  The  argument  overlooks  the  fact,  distinctly 
found,  that  the  damage  resulting  from  the  sinking  of  the  vessel 
was  the  natural  and  necessary  result  of  the  fire  only.  If  it  be 
said  that  this  was  but  an  inference  from  facts  previously 
found,  it  was  not  for  that  reason  necessarily  a  mere  legal 
conclusion. 

"  But  we  need  not  rely  upon  this.  Apart  from  that  find- 
ing, the  other  findings,  unquestionably  of  facts,  show  that 
neither  the  collision  nor  the  presence  of  water  in  the  steam- 
er's hold  was  the  predominating,  efficient  cause  of  her  going 
to  the  bottom.  That  result  required  tlie  agency  of  the  fire. 
It  is  found  that  the  water  would  not  have  caused  the  vessel 
to  sink  below  her  promenade  deck,  had  not  some  other  cause 
of  sinking  supervened.  It  would  have  expended  its  force  at 
that  point.  The  effect  of  the  fire  was  necessary  to  give  it 
additional  efficiency. 

"The    fire    was,   therefore,    the    efficient,    predominating 
948 


CH.  XXI.]       OF   THE   RISK,   ITS    DURATION    AND    EXTENT.  [§  417 

cause  as  well  as  nearest  in  time  to  the  catastrophe,  which 
not  only  directly  contributed  to  all  the  damage  done,  after 
the  steamer  had  sunk  to  her  promenade  deck,  but  enlarged 
the  destructive  power  of  the  water,  and  rendered  certain  the 
submergence  of  the  vessel.  This  plainly  appears,  if  we  sup- 
pose that  the  fire  had  occurred  on  the  day  after  the  collision, 
and  had  originated  from  some  other  cause  than  the  collision 
itself.  The  effects  of  the  prior  disaster  would  then  have  been 
complete. 

"  The  steamer  would  have  been  full  of  water,  sunk  to  her 
promenade  deck,  and,  remaining  thus  suspended,  would  have 
been  towed  to  a  place  of  safety  and  saved,  in  that  condition, 
to  her  owners,  except  for  the  new  injury.  But  the  fire  occur- 
ring on  the  next  day,  destroying  the  upper  works  and  the 
housing,  thus  liberating  the  light  freight  and  greatly  reducing 
the  floating  capacity  of  the  steamer,  would  have  caused  her 
to  sink  to  the  bottom  as  she  did.  In  the  case  supposed,  the 
water  would  have  been  as  truly  a  concurrent  and  efficient 
cause  of  the  steamer's  sinking,  as  it  was  in  the  case  now  in 
hand.  It  would  have  operated  in  precisely  the  same  man- 
ner, remaining  dormant  until  given  new  activity.  But  could 
there  have  been  any  hesitation  in  that  case,  in  determining 
which  was  the  proximate,  the  efficient,  predominating  cause 
of  the  sinking  of  the  vessel?  And  can  it  be  doubted  that 
the  underwriters  against  loss  by  fire  would  be  held  respon- 
sible for  such  a  loss  ? 

"  Wherein  does  the  case  supposed  differ  in  principle  from 
the  present,  when  the  facts  found  are  considered  ?  True,  the 
fire  in  this  case  was  caused  by  the  collision,  but  the  policy 
insured  against  fire  caused  by  collision.  True,  the  fire  imme- 
diately followed  the  filling  of  the  steamer  with  water,  or  com- 
menced while  she  was  filling,  but  the  effects  of  the  fire  are 
conclusively  distinguished  from  the  breach  in  the  steamer's 
hiill,  and  the  filling  of  her  hold  with  water. 

"The  damages  caused  by  the  several  agencies  have  been 
discriminated,  and  its  proper  share  assigned  to  each.  It  is  an 
established  fact  that  the  damaging  effect  of  the  water,  inde- 
pendent of  the  fire,  would  not  have  reached  beyond  sinking 

919 


§  417]  INSURANCE  :    FIRE,  LIFE,   ACCIDENT,   ETC.        [CH.  XXI. 

of  the  steamer  to  its  upper  deck,  when  she  would  have  been 
saved  from  further  injury. 

"  There  is,  undoubtedly,  difficulty  in  many  cases  attending  ' 
the  application  of  the  maxim,  '■proxima  causa  non  remota  spec-  • 
tatur^  but  none  when  the  causes  succeed  each  other  in  order  ' 
of  time.  In  such  cases  the  rule  is  plain.  When  one  of 
several  successive  causes  is  sufficient  to  produce  the  effect, 
for  example,  to  cause  a  loss,  the  law  will  never  regard  an 
antecedent  cause  of  that  cause,  or  the  ' causa  causans' ^  In 
such  a  case  there  is  no  doubt  which  cause  is  the  proximate 
one  within  the  meaning  of  the  maxim.  But  when  there  is  no 
order  of  succession  in  time,  when  there  are  two  concurrent 
causes  of  a  loss,  the  predominating,  efficient  one  must  be 
regarded  as  the  proximate,  when  the  damage  done  by  each 
cannot  be  distinguished."  ^  Loss  by  fire  caused  by  collision 
is  covered  by  a  fire  policy,  collision  not  being  excepted.^ 
[A  loss  by  collision  without  fault  on  either  side  is  a  loss  "  by 
the  perils  of  the  sea  "  within  the  policy.*  The  company  does 
not  insure  against  the  misconduct  of  the  master  and  crew  of 
a  vessel,  P.,  insured  by  it,  and  if  by  such  misconduct  P.  runs 

1  Gen.  Mut  Ins   Co.  v.  Sherwood,  14  How.  351,  366. 

2  See  also  Brown  v.  St.  Nicholas  Ins.  Co.,  61  N.  Y.  832;  Allison  v.  Corn 
Exch.  Ins.  Co.,  57  N.  Y.  87.  These  two  cases  well  illustrate  the  perplexities 
of  the  courts  in  the  application  of  settled  rules.  In  the  former,  a  canal-boat, 
while  being  towed  down  the  Delaware,  was  separated  by  a  heavy  gale  from  the 
tug,  and  forced  ashore.  Ice  did  not  interfere  with  navigation  at  the  time,  but 
during  the  same  night  ice  formed  about  the  boat,  so  that  the  tug  could  not  reach 
it.  After  the  thaw,  wind  and  ice  forced  the  boat  on  another  vessel,  and  she  was 
sunk  by  the  collision.  It  was  held  that  the  gale,  and  not  the  ice,  was  the  prox- 
imate cause.  In  the  latter  case,  a  canal-boat  was  at  her  moorings.  In  IMarch, 
a  great  accumulation  of  ice  took  place  in  the  river,  by  which  a  dam  was  formed, 
which  caused  the  water  to  overflow  into  the  canal  basin,  whereby  the  boat  was 
damaged.  In  this  case  it  was  held  that  the  ice  was  the  proximate  cause.  In 
lonides  v.  Universal  Ins.  Co.,  10  Jur.  n.  s.  18,  tlie  captain  lost  his  reckoning  by 
reason  of  the  extinguishment  of  the  light  at  Cape  Hatteras  by  the  Confederates, 
and  tlie  ship  went  ashore.  The  loss  was  held  to  be  by  reason  of  tlie  perils  of 
the  sea,  and  not  by  reason  of  hostilities.  See  also  Taunton  v.  Royal  Ins  Co.,  2 
H.  &  M.  235,  where  it  was  unsuccessfully  contended  that  where  property  is 
destroyed  by  an  explosion  of  gunpowder  the  proximate  cause  was  the  concus- 
sion of  the  air,  and  that  the  fire  was  the  remote  cause. 

3  Germania  Ins.  Co.  v.  Sherlock,  25  Ohio  St.  33. 
<  [Peters  v.  Warren  Ins.  Co.,  14  Pet.  99  at  108.] 

950 


CH.  XXI.]       OF   THE   RISK,   ITS   DURATION    AND   EXTENT.     [§  417  A 

iuto  another  vessel,  B.  and  B.  recovers  a  judgment  against  the 
vessel  P.,  the  latter  cannot  hold  the  insurance  company  liable 
to  refund  such  money  to  it,  although  collision  is  one  of  the 
perils  insured  against.  The  proximate  cause  of  loss  to  P.  in 
the  case  is  not  collision  but  negligence.  Without  this  feature 
the  collision  would  have  given  B.  no  cause  of  action  against 
P.i  When  a  policy  provided  that  the  company  should  not  be 
responsible  for  loss  arising  from  petroleum  or  other  explo- 
sive oils,  and  when  by  a  collision  of  two  trains  a  fire  was 
started  by  the  petroleum  in  one  of  them,  by  which  the  goods 
were  destroyed,  it  was  held  that  the  company  was  not 
liable.2] 

[§  417  A.  Proximate  Cause  is  a  Question  of  Fact  for  the 
Jury .3 — Where  the  company  was  not  to  be  liable  for  "  derange- 
ment or  breaking  of  machinery  or  any  consequence  thereof," 
and  it  appeared  that  the  mud  valve  was  out  of  order,  and 
steam  was  blown  off  to  make  repairs,  during  which  the  mas- 
ter, although  he  saw  repairs  going  on,  ordered  the  boat  to  be 
let  go  without  inquiring  into  the  state  of  the  steam,  and 
because  there  was  not  steam  enough  to  work  her,  the  ship 
went  over  the  falls  of  the  river  and  was  badly  damaged,  it 
was  held  that  the  insurers  were  liable.*  Goods  on  a  steamboat 
were  insured  against  "immediate  loss  by  fire."  A  collision 
occurred  which  caused  a  fire  to  break  out.  The  vessel  after- 
ward sank  before  the  fire  reached  the  insured  goods.  It  was 
held  that  if  the  goods  would  not  have  been  lost  but  for  the 
fire,  it  was  a  case  of  loss  by  fire.  It  is  not  necessary  that  the 
insured  property  should  be  injured  or  consumed  by  the  fire. 
The  insurer  is  liable  for  all  losses  which  result  from  the  fire, 
and  can  be  fairly  attributed  to  it.  If  the  property  is  injured  by 
water  used  to  put  out  the  fire,  or  the  vessel  sink  because  the 
fire  renders  it  impossible  to  run  the  engine  or  stop  the  leak, 
the  loss  is  within  the  policy.^     When  a  ship  was  stranded  and 

1  [Mathews  v.  Howard  Ins.  Co.,  11  N.  Y.  9,  17-19.] 

2  [Insurance  Co.  v.  Express  Co.,  95  U.  S.  227  at  232.] 

3  [Penn.  R  R.  v.  Hope,  80  Pa.  St.  372,  engine  sparks  ;  Penn.  R.  R.  u. 
Kerr,  62  Pa.  St  353,  distinguished.     See  Milwaukee  v.  Kellogg,  94  U.  S.  469.] 

»  [Orient  Ins.  Co.  v  Adams,  123  U.  S.  67  (1887.)] 

6  [New  York  Exp.  Co  v.  Traders'  Ins.  Co.,  132  Mass.  377,  381.] 

951 


§  419]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.        [CII.  XXL 

lost  practically,  and  while  in  that  condition  the  goods  on 
board  were  captured  by  enemies,  it  was  held  a  loss  covered 
by  a  policy  "  free  from  capture  or  seizure."  ^  But  where 
barratry  is  insured  against  and  capture  excepted,  a  seizure  in 
consequence  of  the  barratrous  act  of  the  master  frees  the 
company.  The  barratry  would  not  have  caused  loss  but  for 
the  capture.^] 

§  418.  Risk  ;  Explosion  ;  Proximate  Cause.  —  An  interesting 
marme  case  was  recently  before  the  New  York  Commission 
of  Appeals,^  in  which  arose  the  question  whether  a  steamship 
which  was  insured  under  a  policy  which  excepted  loss  by  the 
bursting  of  boilers,  but  covered  all  losses  "  occurring  subse- 
quent to  and  in  consequence  of  such  bursting,"  and  the  loss 
of  which  was  occasioned  by  such  a  violent  explosion  as  to 
sink  her  in  five  or  ten  minutes,  was  protected  by  the  policy. 
And  it  was  held  that  she  was  not,  on  the  ground  that  upon 
the  explosion  the  vessel  became  valueless,  and  the  loss  total 
and  immediate,  and  not  subsequent  to  the  cause  that  occa- 
sioned it>  We  have  already  seen  ^  that  where  a  building 
falls  in  ruins,  and  the  ruins  take  fire  from  combustion  of 
chemicals  which  were  amongst  the  stock,  no  recovery  can  be 
had,  the  destruction  being  by  the  fall,  and  not  by  the  fire. 

§  419.  Risk  ;  Intemperance  ;  Wound  ;  Proximate  Cause.  — 
Intemperance,  doubtless,  in  a  general  sense,  shortens  life ;  but 
it  is  not,  therefore,  a  cause  of  death  within  the  meaning  of  a 
policy  made  void  if  the  applicant  should  die  by  reason  of 
intemperance  from  the  use  of  intoxicating  liquor.  The  conse- 
quences of  such  a  construction  would  be  that  an  insurance 
company  which  had  insured  the  life  of  one  known  to  be 
intemperate,  and  had  charged  a  higher  rate  of  premium  on 
that  very  account,  could  exonerate  itself  from  liability  by 
showing  that  the  life  of  the  assured  had  been  shortened  by 

1  [Hahn  v.  Corbett,  2  Bing.  205  at  210.] 

•-'  [Cory  V.  Burr,  8  Q.  B  D.  313;  9  Q.  B.  D.  463 ;  8  App.  Cas.  393.] 

3  Evans  i'.  Columbian  Ins.  Co.,  44  N.  Y.  146. 

*  Hunt,  C,  dissents  in  an  opinion  of  g:reat  force  and  acuteness,  to  which  we 
refer,  as  containing  some  excellent  illustrations  of  the  distinction  between  proxi- 
mate, mediate,  and  remote  causes. 

5  Nave  r.  Home  Ins.  Co.,  37  Mo. ;   ante,  §  412. 

952 


CH.  XXI.]       OP   THE   RISK,   ITS   DURATION    AND    EXTENT.      [§  419  A 

intemperance.  A  sound  principle  does  not  lead  to  conse- 
quences so  unjust  and  unreasonable.  A  proximate  cause  of 
an  effect  is  that  which  immediately  precedes  and  produces  it, 
as  distinguished  from  the  remote,  mediate,  or  predisposing 
cause.  When  several  causes  contribute  to  death  as  a  result, 
it  may  be  difficult  to  determine  which  was  the  remote  and 
whicli  the  immediate  cause  ;  yet  this  difficulty  does  not  re- 
move the  necessity  of  such  determination.^  The  same  case 
came  before  the  court  again,^  when  it  appeared  that  the  in- 
sured in  a  fit  of  delirium  tremens  escaped  from  those  having 
him  in  charge,  ran  out  into  the  streets,  and  was  exposed  in 
scanty  clothing  to  the  inclemency  of  the  weather,  which  ex- 
posure contributed,  with  intemperance,  to  bring  on  congestion 
of  the  lungs,  of  which  he  died.  And  the  court  held  that 
these  facts  would  support  a  defence  on  the  ground  of  intem- 
perance, under  a  clause  exempting  the  insurers  from  liability 
if  the  insured  should  die  "  by  reason  of  intemperance  from 
the  use  of  intoxicating  liquor."  Whether  the  congestion  was 
caused  by  the  exposure  or  intemperance,  they  were  both  the 
direct  consequences  of  his  intemperate  use  of  intoxicating 
liquor.  And  where  the  insured  was  wounded,  and  the  wound, 
not  causing  his  death,  caused  him  to  fall  into  the  water, 
whereby  he  was  drowned,  it  was  held  to  be  a  death  by  acci- 
dent.    And  on  appeal  the  court  say  :  — 

"  The  part  of  the  charge  to  the  effect  that  if  the  wound  led 
to  the  cause  of  the  death  then  it  would  be  an  accidental  death, 
could  have  been  understood  only  in  the  sense  of  the  wound 
being  produced  by  an  accident,  but  that  this,  not  causing 
death,  did  cause  him  to  fall  into  the  water,  where  he  died 
from  drowning,  then  the  death  was  accidental;  so  understood, 
it  was  entirely  correct."  ^ 

[§  419  A.  Intemperance.  —  If  a  policy  is  to  be  forfeit  if  the 
insured  does  not  obey  the  rules  of  the  association,  it  will  be 
avoided  if  he  uses  intoxicating  liquors  as  a  beverage  in  viola- 

>■  Miller  V.  Mut  Ben.  Life  Ins  Co.,  31  Iowa,  216. 

2  34  Iowa,  222  ;  New  York  Life  Ins.  Co.  v  Boiteaux,  5  Big.  Life  &  Ace.  Ins 
Gas.  437. 

8  Mallory  v.  Travelers'  Ins.  Co.,  47  N.  Y.  52. 

953 


§  420]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.        [CH.  XXI. 

tion  of  one  of  the  rules.^  Among  the  Royal  Templars  a  vio- 
lation of  the  total  abstinence  pledge  will  forfeit  the  insurance.''' 
The  words  "  sober  and  temperate  "  do  not  imply  total  absti- 
nence, though  frequent  intoxication  is  a  breach.^  Where  a 
policy  is  to  be  void  if  the  insured  becomes  so  intemperate 
as  to  seriously  impair  his  health,  evidence  that  what  he  drank 
was  sufficient  to  seriously  impair  a  man's  health  is  inadmis- 
sible ;  there  must  be  evidence  that  his  health  was  impaired.* 
A  stipulation  that  if  the  assured  shall  become  intemperate  to 
a  certain  degree  the  policy  may  be  cancelled,  will  control  a 
general  provision  that  such  intemperance  shall  avoid  the 
policy.^  Excessive  drinking  of  liquor  is  a  violation  of  a  war- 
ranty that  the  insured  "  will  not  practise  any  pernicious  habit 
that  obviously  tends  to  shorten  life."  ^  When  a  habit  of  in- 
temperance is  in  issue  it  is  competent  to  ask  a  witness  if  he 
has  ever  seen  the  insured  under  the  influence  of  liquor,  or  has 
seen  him  take  more  than  one  drink,  and  after  drinking  act 
uproariously,  abusing  his  family,  &c.^  The  beneficiary  is  not 
estopped  by  the  physician's  statements  of  the  cause  of  death.^ 
Where  all  the  time  the  agent  knew  the  insured  to  be  an  habit- 
ual drunkard,  the  condition  against  intemperance  cannot  be 
insisted  upon  by  the  company,  but  this  knowledge  does  not 
prevent  the  avoidance  of  the  policy  under  another  clause  if 
the  insured  dies  from  the  effects  of  intoxication.^] 

§  420.  Risk  ;  Property  covered  by  the  Policy.  —  If  it  be 
doubtful  what  goods  or  buildings  or  places  are  covered  by  the 
policy,  the  doubt  will  be  resolved  against  the  insurers,  and 
evidence  will  be  admissible  to  resolve  the  doubt. ^^    A  policy 

1  [Hogins  V.  Supreme  Council,  &c.,  76  Cal.  109.] 

2  [Royal  Templars  of  Temperance  v   Curd,  111  111.  281.] 

3  [Brockway  v.  Mut.  Ben.  Life  Ins.  Co.,  9  Fed.  Hep.  249  (Pa  ),  1881.] 

4  [Odd  Fellows  Mut.  Life  Ins.  Co.  v.  Rolikopp,  94  Pa.  St  59] 

5  [Nortliwestern  Mut.  Life  Ins.  Co  v.  Hazelett,  105  Ind.  212.) 

6  [Schultz  V.  Mut.  Life  Ins.  Co.,  10  Ins.  L  J.  171,  2d  Cir.  (N.  Y.),  1881;  6 
Fed.  Rep.  672 ;  Brockway  v.  Mut.  Ben.  Life  Ins  Co  ,  10  Ins.  L.  J.  762  ^  9  Fed. 
Rep.  249.] 

7  [United  Brethren  Mut  Aid  Soc.  v.  O'Hara,  120  Pa.  St.  256.] 
^  [Bentz  V.  Northwestern  Aid  Ass.,  40  Minn  202. J 

"  [Newman  i;  Covenant  Mut.  Ins.  Ass  ,  76  Iowa,  56  ] 
10  Franklin  Fire  Ins   Co  v  Updegraff,  43  Pa  St  350;  Clark  i-.  Firemen's  Ins. 

954 


CH.  XXT.J       OF    THE    RISK,    ITS    DURATION    AND    EXTENT.  [§  420 

on  "  wearing-apparel,  furniture,  and  stock  of  a  grocery,"  does 
not  cover  "  linen  and  sheets "  smuggled  and  intended  for 
sale ;  and  a  watch,  being  a  memorandum  article,  is  not  in- 
cluded in  wearing-apparel  ;  ^  nor  is  a  stock  of  linen-drapery 
goods  included  in  "  household  furniture,  linen,  wearing-ap- 
parel, and  plate,"  though  the  insured,  who  was  not  a  linen- 
draper,  was  also  insured  upon  his  stock  in  trade.  By  the 
maxim  noscitur  a  sociis  "  linen,"  in  this  case,  was  held  to  cover 
only  household  linen.^  But  household  furniture  covers  fur- 
niture stored  in  the  garret  for  use.^  "  Stock  in  trade,"  as 
applicable  to  mechanical  pursuits,  is  to  have  a  more  extended 
application  than  as  applied  to  a  merchant's  stock  in  trade. 
It  includes,  in  the  former  case,  the  fixtures  and  implements 
of  business.*  Furniture  and  movables  are  not  "  fixtures."  ^ 
"  Jewelry  and  clothing,"  being  stock  in  trade,  will  not  cover 
musical  instruments,  surgical  instruments,  guns,  pistols,  and 
books ;  ^  but  "  stock  of  watches,  watch  trimmings,  &c.,"  in- 
cludes within  its  comprehension  plate,  silver-ware,  and  the 
tools  of  trade,  and  such  other  articles  as  form  part  of  similar 
stocks  in  the  locality  where  the  insurance  is  effected.'^  "  Mer- 
chandise "  will  not  cover  articles  kept  for  use,  while  "  property  " 
will.^  ["  Merchandise  "  in  a  policy  will  generally,  at  least,  be 
applied  to  goods  for  sale,  and  does  not  include  a  "  beam-scale," 
belting,  &c.,  in  a  warehouse,  the  policy  being  on "  grain  and 


Co.,  18  La.  Ann.  431  ;  ante,  §  367  ;  Burr  v.  Broadway  Ins.  Co.,  16  N  Y.  267 ; 
Beatty  v.  Lycoming  Ins.  Co.,  52  Pa.  St.  456 ,  Lycoming  Ins.  Co.  v.  Sailor,  67  id- 
108;  Neve  v.  Columbian  Ins.  Co.,  2  McMullan  (S.  C),  220;  Wiiitmarsh  v.  Con- 
way Fire  Ins.  Co.,  16  Gray  (Mass.),  359;  Planters'  ins.  Co.  v.  Engle,  52  Md. 
468 ;  Steele  v.  Franklin  Fire  Ins.  Co.,  17  Pa.  St.  290  ;  post,  §  424.  Even  subse- 
quently acquired  or  added  property  may  be  shown  to  have  been  within  the  in- 
tention of  the  parties,  the  description  being  sufHcicnt  to  cover  it.  Perry  County 
Ins.  Co.  V.  Stewart,  17  Pa.  St.  45. 

1  Clary  v.  Prot.  Ins,  Co.,  Wright  (Oiiio),  227. 

2  Watchorn  v.  Langford,  3  Camp   (N.  P  )  422. 
8  Clark  V.  Firemen's  Ins.  Co.,  18  La.  431. 

<  Moadinger  v  Mech.  Fire  Ins.  Co.,  2  Hall  (N.  Y.  Superior  Ct.),  490. 

6  Hohnes  v.  Charlestown  Mut.  ins   Co  ,  10  Met   (Mass  )  211. 

^  Rafael  v  Nashville  Mar.  &  Fire  Ins  Co  ,  7  La  Ann  244. 

^  Crosliy  V.  Franklin  Ins   Co.,  5  Gray  (Mass  ),  504. 

«  Burgess  v.  Alliance  1ns   Co,  10  Allen  (Mass  ),  221      See  §  239. 

955 


§420]  insurance:  fire,  life,  accident,  etc.     [ch.  xxi. 

other  merchandise."  ^]  Silver  spoons  and  forks  are  not "  plate," 
as  that  word  is  commonly  understood  ;'^  nor  does  "  refined 
oil  "  cover  lard  oil.^  "  House  "  or"  building  "  embraces  every- 
thing appurtenant  and  necessary  to  the  main  building,  and  used 
though  not  connected  with  it,  or  represented  in  tlie  plan  as 
part  of  it.^  "  Ship-yard  "  embraces  sucli  places  as  are  ordi- 
narily used  as  part  of  the  yard,  though  within  the  street.^  "  On 
the  line  of  the  road  "  includes  all  branches  used  by  the  rail- 
road ;^  and  "  on  their  premises  "  includes  a  boat  lying  at  the 
wharf  of  a  railway  company.''  "  Cars  owned  or  used  by  the 
company "  includes  cars  belonging  to  other  railroads  than 
the  insured.^  But  an  "  unfinished  house "  does  not  include 
materials  prepared  for  its  completion,  and  deposited  in  an 
adjoining  one,  which  was  also  insured.^  Nor  does  insurance 
on  a  "  bark  now  being  built  "  include  materials  prepared  to  put 
into  her,  lying  about  the  yard ;  ^^  and  insurance  on  "  lumber 
manufactured,  and  in  the  process  of  manufacture  in  said  build- 
ing," will  not  cover  lumber  in  tlie  yard ,  ^'  but  "  stock  manu- 
factured, or  in  process  of  manufacture,"  covers  raw  or  unmanu- 
factured stock. ^2  SlicIi  materials  are  not  covered  by  the  policy 
until  they  become  a  part  of  the  vessel. ^^  But  "  stock  of  lum- 
ber" will  include  pieces  partly  prepared  to  put  into  the  vessel.^* 

1  [Kent  V.  Liverpool  &  London  Ins.  Co.,  26  Ind  294  at  298.] 

2  Hanover  Fire  Ins.  Co  v.  Mannasson,  29  Mich  316. 
2  "Weisenberger  v.  Harmony  Ins.  Co.,  56  Pa.  St.  442. 

*  Workman  r.  Insurance  Co  ,  2  La.  507  ;  Blake  o  Exch.  Mut.  Ins.  Co.,  12  Gray 
(Mass.),  265;  White  r.  Mut.  Fire  Ins.  Co  ,  8  id.  566. 

5  Webb  V.  Nat.  Fire  Ins.  Co  ,  2  Sandf.  (Superior  Ct  N.  Y.;  497. 

6  Fitchburg  R.  R.  Co   v.  Ch   Mut   Ins.  Co.,  7  Gray  (Mass.),  64. 

■7  Farmers'  &c.  Ins.  Co.  v  Harmony  &c  Ins  Co.,  51  Barb  (N.  Y.)  33;  af- 
firmed, 41  N.  Y  619. 

"  Commonwealth  v  Hide,  &c.  Ins.  Co  ,  112  Mass.  136.  In  Annapolis,  &c.  Ins. 
Co.  t'.  Baltimore  Ins.  Co.,  32  Md  37,  tiie  words  "contained  in"  were  held,  un- 
der the  peculiar  wording  of  the  policy  and  tlie  circumstances  of  the  case,  to 
cover  certain  cars  only  wiiile  they  were  in  the  car-houses. 

^  Ellmaker  v.  Franklin  Fire  Ins.  Co.,  5  Pa.  St  18.3. 

10  Mason  v.  Franklin  Ins.  Co  ,  12  G  &  .1   (Md  )  468. 

11  North  Am.  Ins.  Co  v.  Throop,  22  Mich.  146. 

12  SpraUey  v.  Hartford  Ins.  Co.,  1  Dill.  C  Ct  392. 

13  Ibid.;  Hood  o.  Manhattan  Fire  Ins.  Co.,  1  Ker.  (N.  Y.)  532,  reversing  8  c 
2  Duer  (Superior  Ct  NY),  191. 

"  Webb  V.  Nat.  Fire  Ins.  Co ,  2  Sandf.  (Superior  Ct.  N.  Y.)  497. 

956 


CH.  XXI  ]       OP   THE   RISK,   ITS    DURATION    AND    EXTENT.         [§  420 

"  Steam  sawmill  "  includes  machinery  necessary  to  its  opera- 
tion.' And  so  does  "  starch  factory,"  2  and  "  grist-mill."  ^ 
[The  word  "  factory "  does  not  necessarily  mean  a  single 
building,  but  may  include  several  where  they  are  used  to- 
gether for  a  common  purpose  in  the  same  inclosure,  unless 
by  the  terms  of  the  policy  restricted  to  one.*]  "  Machinery  " 
includes  all  the  essential  parts,  such  as  "  dyes  "  necessary  to 
its  successful  and  productive  operation;^  and  "  mill  building  " 
may  include  the  machinery  in  the  building.^  But  insurance 
on  "  logwood  warehouse,  in  which  chopping  dyewood  is  per- 
formed," was  held  so  unequivocally  not  to  cover  machinery 
therein  as  to  make  evidence  inadmissible.^  Paper  bags  are 
not  tools  of  a  flour-mill  ^  But  patterns  used  for  making  cast- 
ings, when  applied  by  hand,  are  "  tools  of  trade."  ^  Wearing 
apparel  is  protected  while  in  ordinary  use,  though  away  from 
its  usual  place  of  deposit  ;^*'  so  is  a  carriage  out  for  repairs,^^ 
and  a  thrashing-machine  out  for  use  ;'2  go  are  mules  and  horses 
in  actual  use  about  the  premises,  or  in  the  prosecution  of  its 
busincss.^^  "  Grain  in  stacks  "  may  include  flax.^^  "  Cattle" 
includes  hogs,'^  and  "grain"  has  been  held  to  include  pease,^^ 

1  Bigler  v.  New  York  Cent.  Ins.  Co.,  20  Barb.  (N.  Y.)  635. 

2  Peoria  Mar.  &  Fire  Ins.  Co.  v.  Lewis,  18111.  553. 

8  Shannon  v  Gore,  &c.  Ins.  Co.,  2  Ont.  App.  Kep,  896. 

*  [Liebenstein  v-  Baltic  Fire  Ins.  Co.,  45  111.  301  ] 

^  Seavey  r.  Central  Ins  Co,  111  Mass.  540;  Washington  Ins  Co.  v.  Dav- 
ison, 30  Md  91  ;  Buchanan  v.  Exch.  Fire  Ins.  Co.,  61  N.  Y.  26. 

«  Brugger  v.  State,  &c.  Ins  Co.,  C.  Ct.  (Or.),  8  Ins.  L.  J.  293:  Excelsior 
Ins.  Co.  V   Royal  Ins.  Co.,  55  N.  Y.  343. 

'  Hare  v.  Barstow,  8  Jur.  928 

8  Hutchinson  v.  Niagara,  &c.  Ins.  Co.,  39  D.  C  (Q  B.)  483- 

9  Lovewell  r.  Westchester  Ins  Co.,  124  Mass  418 

"'  Longueville  v.  Western  Assurance  Co  ,  51  Iowa.  553. 

"  McCluer  v.  Girard  Fire  Ins.  Co.,  43  Iowa,  349. 

'-  Everett  v.  Continental  Ins   Co.,  21  Minn   76. 

13  Holbrook  v  St.  Paul  Mar.  &  Fire  Ins.  Co  ,  25  Minn.  229  ;  ante.  §  219  ;  Mills 
V.  Farmers  Ins.  Co.,  37  Iowa,  400.  But  see  Gorman  v.  Hand  in  Hand  Ins.  Co., 
11  W.  R.  C.  L  224,  where,  by  a  very  strict  construction,  hay  not  specified  and 
horses  and  agricultural  implements  while  awaj*  from  their  specified  places  were 
held  not  to  be  covered  bj'  tlie  policy. 

"  Hewitt  V.  Watertown  Fire  Ins   Co.  flowa),  10  Ins  L  J  375. 

15  Decatur  Bank  v.  St  Louis  Bank,  21  Wall.  (U.  S.)  294. 

^  State  V.  Williams,  2  Strobh.  (S C)  474. 

957 


§  420  A]        INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.         [CH.  XXI. 

millet,  and  sugar-cane  seed.^  And  insurance  on  "  all  tlie 
articles  making  up  the  stock  of  a  pork-house,  and  all 
within  the  building  and  pertinent  thereto,"  covers  everything 
properly  belonging  to  the  stock  of  a  pork-house,  without  re- 
gard to  individual  ownership,  although  the  policy  states  that 
goods  on  commission  are  to  be  insured  as  such.^  "  Articles 
used  for  packing"  and  "in  packing"  include  coal  to  carry  on 
the  works.^ 

[§  420  A.  Property  Covered  {continued).  — What  is  covered 
by  the  description  is  a  question  for  the  jury.*  Although  the 
words  of  a  policy  may  be  broad  enough  to  cover  certain 
goods,  evidence  of  facts  outside  the  policy  is  admissible  to 
show  that  those  goods  were  not  intended  to  be  covered.^  If 
enough  of  the  description  is  true  to  identify  the  property, 
other  portions  of  it  which  are  false  will  be  disregarded,  when 
the  question  is  merely  what  property  was  insured.^  Evidence 
will  be  received  as  to  the  identity  of  the  property  destroyed  and 
that  insured.  Describing  a  story-aud-a-half  house  as  a  "  one 
story "  house  is  not  fatal.  Until  the  misdescription  affects 
not  merely  the  question  of  identity  but  the  nature  of  the  risk 
it  is  not  material.'  A  "  three  story  granite  building"  men- 
tioned in  a  policy  may  mean  a  building  with  a  granite  front 
only,  and  three  stories  high  in  front  and  at  the  rear,  though 
only  one  story  in  the  middle.^  Insurance  on  a  "  stock  of  hair, 
wrought,  raw,  and  in  process  "  does  not  extend  to  fancy  goods 
made  of  other  materials,  although  usually  kept  and  sold  in  a 
retail  hair  store.^  An  insurance  on  a  ship  and  "  property  on 
board  "  covers  bank  bills,  the  property  of  the  assured. ^'^  Also 
when  the  insurance  was  for  the  benefit  of  the  master,  whose 

1  Holland  v.  State,  34  Ga.  455. 

2  ^tna  Ins.  Co  v.  Jackson,  16  B.  Mon   (Ky.)  242,  250. 

3  Phoenix  Ins.  Co.  v.  Favorite,  49  111  259;  Home  Ins.  Co.  v.  Favorite,  46  id 
263. 

*  [Southwest  Lead  &  Zinc  Co.  v.  Phcenix  Ins   Co.,  27  Mo  App.  446.] 

5  [Richardson  v   Home  Ins   Co.,  47  N.  Y.  Super.  138.] 

6  [Hatch  V  New  Zealand  Ins.  Co  ,  67  Cal.  122] 

7  [Eakin  v.  Home  Ins.  Co.,  1  Tex.  Civ.  Cas.  §§  12-34,  1235] 

8  [Medina  v.  Builders,  Mut.  Fire  Ins.  Co,  120  iMass.  225  at  226.] 

9  [Ibid.] 

"'  [Whiton  V.  Old  Colony  Ins.  Co.,  2  Met  1  at  3.] 

958 


CH.  XXI.]       OF   THE   RISK,  ITS   DURATION   AND    EXTENT.       [§  420  B 

only  interest  was  his  commission,  this  was  held  covered.^ 
"  Iron  "  includes  steel.^  Rice  is  not "  corn  "  within  the  meaning 
of  a  policy  of  insurance.^  Common  repute  among  merchants 
dealing  in  the  article  is  admissible  to  show  what  is  and  what 
is  not  included  in  the  term  "  fur."  *  Evidence  is  admissible 
to  prove  a  usage  among  owners  of  whale-ships  and  under- 
writers to  treat  a  policy  on  outfits  as  covering  one-fourth  part 
of  the  catchings.^  On  a  general  policy  of  insurance  on  a  ship, 
evidence  is  inadmissible  to  show  that  the  common  custom 
and  usage  of  underwriters  is  not  to  pay  for  boats  slung  on  the 
outside  of  the  ship.^  When  a  cargo  of  lumber,  &g.,  was  con- 
signed to  a  master  of  a  vessel  and  shipped  thereon,  and  the 
owner  was  to  pay  as  freight  three-fifths  of  the  lumber  and  a 
sum  of  money  for  the  other  articles,  and  a  total  loss  occurred, 
it  was  held  that  a  policy  made  by  the  master  on  the  property 
on  board  covered  the  three-fifths  of  the  lumber,  but  not  the 
money'''  payable  on  the  other  articles.  Freight  cannot  be 
insured  as  property,  but  in  this  case  as  to  lumber  there  was 
an  interest  in  the  property.] 

[§  420  B.  Property  Covered  {continued).  —  A  policy  for  a 
long  period  upon  goods  in  a  retail  shop  applies  to  the  goods 
successively  in  the  shop  from  time  to  time.^  Where  a  policy 
covered  "  a  planing  mill  and  addition  "  and  "  machinery,  shaft- 
ing, &c.,"  the  engine  room  twenty-two  feet  away  and  con- 
nected by  a  shaft  and  a  spout  was  held  to  be  designated  as  the 
addition,  there  being  no  other.^  A  policy  on  an  "  elevator 
building  and  additions "  covers  adjacent  buildings  attached 
to  and  used  with  the  elevator.^^  An  insurance  on  "  chair 
lumber  and   such  other  stock  as  is  usually  used  in  a  chair 

1  [Holbrook  v.  Brown,  2  Mass.  280  at  282. 

2  [Hart  V.  Standard  M.  Ins.  Co.,  22  Q.  B.  D.  499.] 
8  [Scott  V.  Bourdillon,  5  B.  &  P.  213  at  213.] 

*  [Astor  !'.  Union  Ins.  Co.,  7  Cowen,  202  at  214.] 

s  [Macy  V.  Whaling  Ins   Co.,  9  Met.  854  at  .364.] 

«  [Blackett  v.  Royal  Exch.  Ass.  Co  ,  2  C.  &  J.  244  at  249.] 

^  [Wiggin  V.  Mercantile  Ins.  Co  ,  7  Pick.  271  at  274.] 

8  [Hooper  v.  Hudson  R.  F.  Ins,  Co.,  17  N.  Y.  424  at  426.] 

5  [Home  Mut.  Ins.  Co   v.  Roe,  71  Wis.  ,33.] 

10  [Cargill  V.  Millers',  &c  Mut  Ins.  Co.,  33  Minn.  90,] 

VOL.  li.  —  17  959 


§  420  B]        INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.        [CH.  XXI. 

manufactory,  contained  in  their  chair  manufactory  situated, 
<fec.,"  was  held  to  cover  property  of  the  same  kind  in  an  en- 
gine house,  ten  feet  from  the  main  building,  connected  by  a 
platform  and  belting.^  An  insurance  of  "  goods  shipped  on 
board  the  Great  Western  Steamship  Company  "  covers  a  ship- 
ment on  a  vessel  chartered  by  the  company  though  not  owned 
by  it.2  Otherwise  if  the  charter  is  only  one  of  affreightment, 
and  the  ship  remains  in  the  possession  and  control  of  others.^ 
When  the  insurance  was  on  goods  on  the  hrig  Aheona  and  the 
vessel  lost  on  which  the  goods  were  was  the  schooner  Aheona, 
no  insurance  was  held  to  have  attached,  in  the  absence  of 
proof  that  the  parties  really  contemplated  the  vessel  on  which 
the  goods  were  and  not  the  vessel  described,*  An  insurance 
company  may  bind  themselves  in  a  policy  on  goods  already 
lost,  if  they  express  such  an  intention,  as  by  the  words  "  lost 
or  not  lost."  ^  The  insurance  company  may  avoid  liability  for 
goods  included  in  the  policy  by  mistake ;  but  the  evidence 
must  be  very  clear.^  Neither  party  has  a  right  to  change  the 
subject-matter  of  a  policy.''  Where  the  insured  took  out  a 
policy  on  certain  goods  he  expected  to  be  shipped  to  him,  and 
instead  other  goods  were  shipped  and  lost,  the  insured  could 
recoveries  premium,  for  the  risk  that  never  attached,  but  could 
not  apply  his  policy  to  the  new  goods.  Where  an  open  pol- 
icy provides  that  the  specific  goods  insured  shall  be  indorsed 
on  its  back,  the  secretary  of  the  company  has  no  authority  to 
waive  this  precedent  condition,  and  a  failure  to  comply  with 
it  will  render  the  policy  invalid.^  A  mutual  company  of  New 
York  may  insure  residents  of  Canada,  and  property  situated 
there.^] 

1  [Liebenstein  v.  Baltic  Fire  Ins.  Co.,  45  111.  301  at  302.] 

2  [Croswell  v  Mercantile  Mut.  Ins.  Co.,  19  Fed.  Rep.  24,  8th  Cir.  (Minn.)  1884. 

3  [Red  Wing  Mills  v.  Mercantile  Mut.  Ins.  Co.,  19  Fed.  Rep  115,  S.  Dist.  of 
N.  Y.  1884.] 

4  [Sea  Ins.  Co.  v  Fowler,  21  Wend.  600  at  603.] 

6  [Arkansas  Ins.  Co.  v.  Bostiek,  27  Ark.  530  at  544] 

6  [Woodruff  f.  Columbus  Ins.  Co.,  5  La.  Ann.  697  at  699  ] 

"?  [Toppan  V.  Atkinson,  2  Mass.  365  at  370.] 

8  [Plahto  V.  Merchants,  &c.  Ins.  Co.,  38  Mo.  248  at  258 ;  Schaeferr.  Baltimore 
Mar.  Ins.  Co.,  33  Md.  109  at  117.] 

9  [Western  v.  Genesee  Mut.  Ins.  Co  ,  12  N.  Y.  258  at  263.] 

960 


CH.  XXI.]       OP    THE    RISK,    ITS   DURATION    AND    EXTENT,  [§  421 

§  421.  Risk:  Property  included;  Goods  in  Trust;  For  whom 
it  may  concern.  —  The  words  "  held  in  trust "  applied  to  goods 
insured  mean  goods  with  which  the  assured  is  intrusted, 
not  goods  held  in  trust  in  the  strict  technical  sense,  —  so 
held  that  there  is  only  an  equitable  obligation  in  the  assured, 
enforceable  by  subpojiia  in  cliancery,  but  goods  with  which 
they  are  intrusted  in  the  ordinary  sense  of  the  word  ;  ^  and 
the  risk  covers  the  merchandise  itself,  and  not  merely  the 
trustee's  interest.^  Such  insurance  without  restriction  will 
cover  a  consignor's  interests.^  But  where  a  general  policy 
upon  goods  in  trust  was  taken  out,  and  it  was  represented  by 
the  applicant  that  he  desired  insurance  upon  such  goods  as  he 
should  receive  from  time  to  time  to  secure  him  for  advances, 
it  was  held  that  the  policy  covered  only  such  goods  as  at  the 
time  of  the  loss  he  had  made  advances  upon.^ 

Whether  the  goods  insured  are  held  in  trust  is  sometimes 
a  question  of  not  a  little  difficulty.  The  following  case  is  of 
importance  upon  this  point,  and  well  illustrates  the  distinction 
between  a  sale  and  a  bailment :  The  respondents,  who  were 
millers,  received  wheat  from  different  farmers.  The  wheat, 
on  receipt,  was,  with  the  consent  of  the  farmers,  mixed  with 
other  wheat,  and  became  part  of  the  millers'  current  stock. 
The  millers  could  at  any  time  grind  or  sell  the  wheat  so  re- 
ceived. The  farmers  could  at  any  time  claim  the  price  of  the 
wheat  delivered  by  each,  according  to  the  market  price  for 
wheat  of  like  quality,  at  the  time  of  payment  claimed.  There 
was  also  some  evidence  that  the  farmers  had  the  option  of 
claiming  an  equal  quantity  of  wheat  of  like  quality,  instead 
of  the  value  in  money.  The  millers  often  made  advances  to 
the  farmers  on  the  wheat  received  from  them.  The  farmers, 
after  a  certain  time,  paid  a  storage-charge  to  the  millers. 

The  respondents  insured  the  current  stock  of  wheat  in 
their  mill  with  the  appellants.     In  the  proposal  for.  insurance 

1  Hough  et  al.  v.  People's  Ins.  Co.,  36  Md.  398  ;  Home  Ins.  Co.  v.  Favorite,  46 
111.  263. 

2  Home  Ins.  Co.  v.  Baltimore  "Warehouse  Co.,  93  U.  S,  527. 

3  Johnson  v.  Campbell,  120  Mass.  449. 

•*  Parks  V.  Gen  Interest  Ass.  Co ,  5  Pick.  (Mass.)  33. 

961 


§  421]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.        [CH.  XXI. 

the  respondents  answered  the  question  whether  the  insurance 
was  "  lor  self  or  in  trust,  and  if  in  trust,  on  account  of 
wliom?"  in  these  words,  —  "for  selves." 

A  condition  of  the  policy  was,  that  goods  held  in  trust 
must  be  insured  as  such,  otherwise  tlie  policy  would  not  cover 
them.  The  mill  and  stock  were  destroyed  by  lire.  To  an 
action  on  the  policy,  the  appellants  pleaded  that  the  state- 
ment in  the  proposal  was  a  misrepresentation,  the  stock  hav- 
ing been  held  by  the  respondents  "  in  trust  for  other  persons." 
On  these  facts  it  was  held  (affirming  the  judgment  of  the 
Supreme  Court  of  South  Australia)  that  the  description  of 
the  subject  of  insurance  was  correct,  for  that  this  was  not  a 
case  of  possession  given  subject  to  a  trust,  but  of  property 
transferred  for  value  upon  special  terms  of  settlement. 

A  bailment  on  trust  implies  that  there  is  reserved  to  the 
bailor  the  riglit  to  claim  a  redelivery  of  the  property  deposited 
in  bailment ;  but  wherever  there  is  a  delivery  of  property  on 
a  contract  for  an  equivalent  in  monej",  or  some  other  valuable 
commodity,  and  not  for  a  return  of  the  identical  subject-mat- 
ter in  its  original  or  an  altered  form,  this  is  a  transfer  of  prop- 
erty for  value, —  a  sale,  not  a  bailment.^ 

1  South  Australian  Ins.  Co.  v.  Kandell,  22  L.  T.  n.  s.  843. 

962 


CH.   XXII.]  OF    THE    LOSS    AND    ITS    ADJUSTMENT. 

CHAPTER   XXII. 

OF   THE   LOSS   AND    ITS   ADJUSTMENT. 

Analysis. 

1. 

§  421  a.  Total  loss  of  a  building  is  destruction  not  of  the  materials  but  of 

their  specific  character  as  a  building.  If  cost  of  removal  of 
ruins,  preparatory  to  rebuilding,  is  more  than  their  value,  or 
cost  of  repairs  more  than  value  when  repaired,  there  is  a  total 
loss.  Broken  leg  necessitating  destruction  of  horse,  total  loss. 
Plaintiff  may  recover  for  partial  loss  proved,  though  he  sued 
for  a  total  loss.  Loss  occurs  at  the  time  of  the  fire.  Sub- 
merging vessel  to  extinguish  fire. 
§  422.  a  life  policy  the  estimate  of  the  value  of  what  is  lost  is  made 

by  the  parties  beforehand.     In  case  of  a  creditor  the  estimate 
should  coincide  substantially  with  the  debt. 
§  422  A.  Valued  policies.      If  ouly  part  of  property  put  at  risk  recovery  is 

only  pro  rata. 
§  422  B.  Statutes  making  conclusive  as  to  real  estate  the  value  named  in 

the  policy. 
§§  423-423  C.  In  a  fire  policy  unvalued  the  object  is  indemnification,  and  the 
measure  of  damages  is  the  value  of  the  property  lost,  not  the 
cost  of  replacement.  (See  also  §  424. )  The  latter  must  often 
be  referred  to,  however,  in  determining  the  true  value  lost. 
Eemote  damages  from  interruption  of  business,  loss  of  prospec- 
tive rent,  «&c.,  cannot  be  recovered  unless  specifically  insured. 
§  423  A.  Method  of  estimating  value  and  loss.     Cost,    statements   in  ap- 

plication, proofs,  &c. 
§  423  B.  Evidence  as  to  amount  of  loss.     Witnesses,  admissions,  &c. 

§  423  C.  Evidence  of  fraud. 

Burden  of  proof  on  amount  of  loss. 

Temporary  depression  of  value  not  to  be  taken  into  account, 
§  424. 
§  424.  Amount  recoverable,  Lessee,  Mortgagor  and  Mortgagee. 

Impost  and  excise  duties. 

Creditor's  recovery  not  limited  to  amount  of  debt. 
Goods  in  trust.     Bailment.     Goods  sold  but  not  removed. 

Partner.     Part  owner. 
Person  having  several  interests.     Policy  running  with  the 
property. 
§  424  A.  Extent  of  damage,  not  extent  of  title,  the  test.     Insured  may  re- 

cover for  all  interests  represented  by  him.  Am- 
biguity resolved  against  the  company. 
Rent,  Usage.  Plaintiff  not  estopped  by  proofs  repudiated 
by  company.  Insurance  on  one  itein  cannot  be  di- 
verted to  another.  If  the  interest  has  diminished  the 
insured  can  in  general  only  recover  for  the  interest 
he  still  has. 

963 


INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.       [CH.  XXII. 

§  425.  Limitation  hj  special  provision. 

Partial  loss  below  the  proportion  necessary  to  bring  the  pol- 
icy into  action.  That  liability  is  incurred  beyond  char- 
ter limit  no  defence  to  company.  See,  however,  §  430. 
Pro  rating  "  without  reference  to  liability  of  other 
companies."  Company  only  to  be  liable  for  what  prior 
insurance  does  not  cover. 

§  426.  Repeated  losses.     Transfer  of  claim  for  damages. 

§  427.  Apportionment  of  loss  and  expenses. 

§  428.  Interest.     Mode  of  Payment.     Evidence.     Set-off. 

§  429.  For  improper  refusal  to  receive  premiums,  or  renew,  or  to  pay  a 

loss,  damages  may  be  had. 

2. 

§§  430-433  A,  Rebuilding,  or  replacement.  Sometimes  there  is  a  provision  for 
rebuilding  in  the  option  of  the  company,  §  430,  or  for 
paying  a  portion  of  the  expense  of  rebuilding,  §§  423, 
426.  Ko  right  to  replace  exists  unless  expressly  pro- 
vided for,  §  430.  The  election  must  be  within  a  reason- 
able time,  §  430.  Company  cannot  replace  in  part  and 
pay  in  part,  §  430,  Tlie  additional  value  of  the  new 
over  the  old  is  to  be  deducted,  for  the  insurers  are  under 
no  obligation  to  give  more  than  an  indemnity,  nor  to 
pay  for  repairs  on  the  old  building,  §  431.  Removal. 
Equity.  Refusal  to  permit,  §  432,  433.  Company 
may  have  to  replace  more  than  once,  §  426.  Partial 
rebuilding.  If  public  authorities  interfere  so  that 
company  cannot  rebuild,  it  must  pay  the  loss,  §  433. 
Measure  of  damages  for  failure  to  replace  properly,  §§  432, 
433,  433  A.  Depreciation  of  property  before  fire, 
§§  433  A,  431.  Right  of  reversioner  or  life  tenant  to 
have  insurance  applied  to  repair,  §  433  A.  Order  of 
incumbrances  not  changed  by  using  insurance  to 
repair,  §  433  A. 
Assent  to  an  order  to  pay  to  assignee  in  case  of  loss  does  not 
deprive  the  company  of  the  option  to  rebuild,  §  447. 

3. 

R  434,  CONTRIBUTIOX.     "Wliere  several  insurers  protect  the  same  interest 

in  the  same  property,  as  there  is  only  one  loss  and  can 
be  but  one  indemnity,  they  must  share  proportionally 
up  to  the  limit  of  liability,  434.  If  one  company  has 
restricted  its  liability  and  another  has  not,  the  latter 
may  have  to  pay  more  than  its  proportional  share  ac- 
cording to  the  rates  specified  for  apportionment  in  the 
policies,  §§  435,  438. 

s  435.  Double  insurance.     Identity  of  risk.    See  also  §§  436  a,  437. 

§§  436-436  a.  Floating  policy,  specific  insurance. 

§  438.  Average. 

K  439.  Reinsurance.    Void  policy. 

R  440.  Generally  a  life  may  be  insured  any  number  of  times,  but 

where  the  interest  in  it  has  an  ascertainable  value  the 
above  rules  apply. 

964 


CH.  XXII.]  OF   THE   LOSS   AND   ITS   ADJUSTMENT. 

§  441.  Life  and  accident  insurance  combined. 

§  442.  Payment  of  life  policy  in  mistaken  belief  of  death  may  be  recovered. 

§  443.  Fraudulent  overvaluation  of  property  is  a  complete  defence. 

§  414.  Lost  policy.    No  bond  of  indemnity  can  be  required  by  the  company. 

4. 

§§  445-452.      Who  may  sue. 

Nominal  and  real  claimants.  A.  insuring  in  his  own  name 
the  property  of  P>.  for  B.'s  benefit.  Extrinsic  evidence 
as  to  where  proceeds  should  go,  §  445.  Heir,  §  445. 
Administrator,  §§  445,  448.  Unless  the  heirs  are 
named,  only  the  executor  can  sue,  §  447  B. 

Payable  in  case  of  loss  to  B,  §§  446-447.  Beneficiary  sue 
in  his  own  name,  §  446. 

In  case  of  assignment,  §§  447,  448. 

Agent.  Policy  on  goods  "  in  trust  "  or  "  for  whom  it  may  con- 
cern." Real  i^arty  in  interest  must  sue  in  Iowa,  §  448. 

Mortgagor  and  mortgagee.  Claim  on  proceeds,  and  which 
may  sue,  §  449. 

Creditor  cannot  sue  on  policy  payable  to  him  "  as  his  in- 
terest may  apjiear,"  §  447  A,  unless  his  interest  is 
more  than  the  insurance,  §  449,  for  the  action  cannot 
be  split. 

Too  many  plaintiffs.  Policy  to  A.  and  B.,  real  interest  all 
in  A,  §  447  A. 

Only  the  person  named  in  the  policy  can  sue,  unless  it 
imports  the  assurance  of  others,  as  by  the  phrase, 
"  whom  it  may  concern,"  &c.,  §  447  B. 

Only  the  covenantee  can  sue  on  a  jiolicy  under  seal,  §  447  B. 

Dismissal  of  suit  because  in  wrong  name  no  bar  to  an- 
other, §  447  B. 
Suit  against  president  and  secretary  suiBcient,  §  447  B. 

5. 

§§  449-452  B.     To  whom  the  proceeds  belong.     See  chap.  xx. 

General  Rule.  Only  nominal  assured  or  assignee  after  loss 
can  claim  any  part  of  proceeds  from  company,  or  per- 
.son  receiving  fund  unless  by  agreement,  or  policy 
covered  property  in  which  he  had  an  interest,  and 
it  was  affected  with  his  benefit  in  view,  and  at  his 
expense.  See  middle  of  §  456. 
Creditor  must  account  for  proceeds  beyond  debt  and  ex- 
penses, if  premiums  came  out  of  debtor,  §  449.  See 
§  456,  near  end.  (He  ought  to  account  any  way,  and 
on  payment  of  debt  and  expenses  of  the  jiolicy,  the 
debtor  ought  always  to  be  able  to  demand  its  assign- 
ment to  himself. ) 
Vendor  and  vendee,  §§  450,  456. 

Mortgagor   and    mortgagee,    §§   449,    452  B-452  D,    456, 
457  C.     See  chap,  xxiii.  and  anal.  A  (4). 
mortgagee  no  claim  on  mortgagor's  insurance  except 
by  agreement,  or  an  instrumentality  in  procur- 
ing it,  §  449. 

965 


INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.       [CH.  XXII. 

covenant  to  insure  for  mortgagee's  benefit,  §  452  C. 
policy  payable  to  mortgagee,  how  affected  by  acts  of 
mortgagor,  §  452  D.   See  §§  378  A,  379,  381,  386. 
insurance  by  mortgagee  is  for  indevmity,  and  after 
debt  is  satisfied  the  excess  goes  to  the  mort- 
gagor, §  452  B. 

Contra,  §  449. 
unless  there  is  an  agreement  to  that  effect, 
or  the  mortgagor  was  concerned  in  the 
insuring, 
the  doctrine  of  §  452  B  is  just,  but  the  fact  that  pre- 
miums have  been  paid  must  be  taken  into  ac- 
count in  determining  what  is  an  indemnity. 
Landlord  and  tenant,  §  450. 
Lessor  and  lessee,  §  456. 
Carrier's  right  to  claim  proceeds,  §  457  A,  457  B.     See  ch. 

xxiii.  and  anal.  A  (4). 
"Wife  insuring  her  life  for  husband,  or  children,  §  451. 
Endowment  policy  payable  in  alternative,  §  452. 
Payment  of  premiums  gives  no  right  to  proceeds,  §  452  A. 
Insured  is  to  retain  no  more  of  the  fund  than  covers  his 

interest,  §  452  A. 
Loss  after  succession  goes  to  heir  or  devisee. 

Administrator  recovers  as  trustee,  §  452  A. 
Wife's  life  estate  by  man-iage  contract  not  a  "  succession," 

§  452  A. 
Equitable    owner   against    garnishment    of    legal    owner, 

§  452  A. 
One  interested  may  recover  from  another  who  has  received 
the  whole  fund,  unless  it  is  primarily  for  the  latter's 
benefit  and   no  more   than  covers  his  own  interest, 
§  452  A. 
Holder  of  mechanic's  lien,  §  456,  n. 
Builder  no  claim  on  buildee's  insurance  before  house  is 

complete,  §  452  A. 
Equity  will    secure  vendor   the   purchase-money  out   of 

vendee's  insurance,  §  452  A. 
Vendee's  claim,  on  completing  purchase  after  fire,  §  450. 
Tenant  in  common,  §  452  A. 
Legatee  no  claim,  where  testator  and  goods  perish  at  sea, 

it  being  unknown  which  went  first,  §  452  A. 
"  For  owners,"  or 

"  Whom  it  may  concern,"  lets  in  all  really  interested  at 
the  time  of  insurance  and  of  loss,  who  were  intended 
to  be  insured  by  the  person  procuring  the  policy,  and 
who  gave  authority  for  the  insurance  or  ratified  it, 
and  parol  is  admissible  to  show  who  are  the  owners, 
§  452  E. 
§  452  F.  Adjusting  Claim.,  Compromise,  d-c. 

adjustment  fairly  made  conclusive,  if  the  facts  were  actu- 
ally known  (English  case  contra),  though  the  parties 
mistook  their  legal  rights. 

966 


CH.  XXII.]  OF   THE    LOSS   AND    ITS   ADJUSTMENT.  [§  421  a 

facts  not  considered  may  afterward  avail,  unless  merely 
cumulative  in  an  unimportant  degree. 

if  the  assured  knowing  his  rights  is  frightened  into  an  un- 
just settlement,  there  is  no  help  for  him. 

yielding  part  of  claim  is  sufficient  consideration  for  promise 
to  pay  the  rest,  but  is  not  binding  on  the  assured  un- 
less the  claim  is  doubtful,  or  tliere  is  some  considera- 
tion for  reducing  his  claim. 

performing  conditions  prescribed  is  a  good  consideration  for 
the  promise  attached  to  them. 

fraud  vitiates  the  adjustment. 

§  421  a.  Total  Loss;  When  it  occurs.  —  "  Total  loss,"  as  ap- 
plicable to  a  building:,  means  not  that  the  materials  of  which 
it  is  composed  were  annihilated,  but  that  the  building,  though 
some  part  of  it  may  remain  standing,  has  lost  its  identity  and 
specific  character  as  a  building,  and  instead  thereof  has  be- 
come a  disintegrated  mass,  or  so  far  disintegrated  that  it  can- 
not be  properly  designated  as  a  building.^  [A  total  loss  does 
not  mean  an  absolute  extinction,  but  only  a  destruction  of  a 
thing  in  the  character  in  which  it  is  insured.  If  a  building 
ceases  by  fire  to  be  such,  losing  its  identity  and  character  as  a 
building,  the  whole  sum  insured  is  due  although  the  materials 
may  not  have  been  absolutely  destroyed.^  When  no  portion 
of  the  brick  walls  of  a  house  could  be  used  in  rebuilding  after 
a  fire,  when  the  foundations  were  not  sufficient  to  support  a 
building  of  the  weight  and  dimensions  of  the  one  burned, 
when  the  expense  of  removing  the  fragments  of  the  old  build- 
ing would  at  least  equal  the  value  of  all  the  materials  left 
after  the  fire,  —  it  was  held  a  "  total  loss  "  within  the  meaning 
of  such  a  policy .3  So  where  the  insurers  were  to  pay  only  the 
absolute  damages,  and  the  cost  of  repairing,  the  ship  was 
proved  to  be  more  than  it  would  be  worth  when  repaired,  the 
company  was  liable  as  for  a  total  loss.*     Annihilation  of  the 

1  Williams  v.  Hartford  Fire  Ins.  Co.  (Cal.),  9  Ins.  L.  J.  447  ;  Nave  v.  Home 
Mut  Ins.  Co  ,  37  Mo.  430.  See  also  Walker  v.  Queen  Ins.  Co  ,  127  Mass.  306; 
Judah  V.  Randall,  2  Caines,  Cases,  324  ;  Insurance  Co.  v.  Fogarty,  19  Wall. 
(U.  S)  640,  644 ;  Globe  Ins.  Co.  v.  Sherlock,  25  Ohio  St.  50. 

■^  LH.  &  B.  Ins.  Co.  V.  Garlington,  66  Tex.  103  J 

3  [Harriman  i.  Queen  Ins.  Co..  49  Wis.  71  at  85;  Seyk  v.  Millers'  Nat.  Ins. 
Co.,  74  Wis.  67  (walls  useless  as  such  and  most  of  the  bricks  spoiled).] 

*  [Forwood  V.  North  Wales  Ins.  Co.,  9  Q.  B.  D-  732;  Troop  v.  Jones,  5  Russ. 
&  Geld.  (Nova  Sco.)  230  J 

967 


§  422]         insurance:  fiee,  life,  accident,  etc.     [ch.  xxii. 

vessel  is  not  necessary  to  constitute  a  total  loss  ;  it  is  sufficient 
if  the  owner  lose  his  rights  in  the  vessel  by  sale  under  a  de- 
cree of  a  court  of  competent  jurisdiction  in  consequence  of  a 
peril  insured  against,  and  in  such  a  case  no  notice  of  abandon- 
ment is  necessary.^  If  a  competent  veterinary  surgeon  or- 
ders the  destruction  of  a  horse  that  has  broken  his  leg,  the 
company  is  liable  for  a  total  loss.^] 

The  doctrines,  which  have  obtained  in  marine  insurance  of 
constructive  total  loss  and  abandonment,^  salvage,  and  general 
average,  are  not  applicable  in  fire  insurance.  Though  a  vessel 
insured  against  fire  be  submerged  to  extinguish  the  fire,  the 
insurer  is  not  liable  for  any  portion  of  the  expense  of  sub- 
merging, raising,  discharging,  and  reloading  cargo,  and  dam- 
ages to  property  not  insured,  but  only  to  such  damages  as 
result  from  the  fire  to  the  subject-matter  insured.^  [When  a 
total  loss  is  claimed  on  a  marine  policy,  extinction  either 
physical  or  of  value  must  be  proved.^  In  another  case  it  was 
said  that  to  constitute  a  total  loss  there  must  be  a  destruction 
of  the  article  in  specie,  not  merely  in  value.^  Insurance  against 
a  "  total  loss  only  "  does  not  cover  a  case  where  the  ship  was 
repaired  and  a  part  of  the  cargo  saved.'] 

Loss  occurs  at  the  time  of  the  fire,  and  not  when  an  award 
is  made,  or  when  the  time  has  expired  within  which  payment 
is  to  be  made.^  [In  an  action  for  a  total  loss  the  plaintiff 
may  nevertheless  recover  for  a  partial  loss.^] 

§  422.  Amount  of  Loss  recoverable  ;  Life.  —  Under  the  usual 
contract  of  life  insurance,  the  loss  being  total  and  the  policy 

1  [Cossman  v.  West,  13  App.  Cas.  160-] 

-  [Shiells  V.  Scot.  Ass.  Corp.,  26  Scot.  L.  R.  702.] 

3  [A  contract  of  insurance  is  only  one  of  indemnity  for  actual  loss,  and  the 
consignee  of  goods  in  transit  has  no  right  to  abandon  them  to  the  insurance  com- 
pany, and  claim  the  whole  insurance  e.xcept  in  case  of  total  loss.  Hicks,  Lightle 
&  Co.  V.  Me  Gehee,  39  Ark.  264.] 

4  Merchants',  &c.  Transportation  Co.  v.  Associated  Firemen's  Ins.  Co.  (Md.), 
9  Ins.  L.  J.  461.     See  also  post,  §§  423,  428,  431,  435. 

6  [Young  V.  Pacific  Mut.  Ins.  Co.,  2  Jones  &  Sp.  321  at  331.] 

6  (Huggy.  Augusta  Ins.  &o.  Co.,  7  How  (TlOj  695  at  606,  Marine  Ins,  (U.S.)] 

^  [Murray  i'.  Hatch,  6  i\Iass.  465  at  477.] 

8  Johnson  v.  Humboldt  Ins.  Co.,  91  111.  92. 

9  [Gardiner  v.  Croasdale,  2  Burr.  904  at  907 ;  King  v.  Walker,  2  H.  &  C  364, 
399] 

968 


CH.  XXII.]  OF    THE    LOSS    AND    ITS    ADJUSTMENT.  [§  422  B 

valued,  the  question  of  the  amount  payable  is  not  open  to 
debate,  the  amount  being  fixed  by  the  contract.  And  the 
amount  -to  be  paid  in  case  of  loss  may  be  any  sum  which  the 
])arties  may  agree  upon,  as  the  value  of  a  life  may  be  fixed  at 
any  sum,  unless,  perhaps,  it  be  so  large  and  so  disproportional 
to  any  possible  interest  as  to  raise  the  presumption  that  the 
transaction  is  not  in  good  faith,  but  in  reality  is  a  gambling 
speculation.  When  the  insurance  is  upon  one's  own  life,  as 
the  future  earnings  may  be  indefinitely  large,  the  insurance 
may  be  to  an  unlin;iited  amount,  except  as  above  stated. 
Though  where  the  insurance  is  by  a  creditor  on  the  life  of  a 
debtor,  the  amount  should  doubtless  coincide  substantially 
with  the  amount  of  the  indebtedness.^ 

[§  422  A.  Valued  Policy.  —  In  a  valued  policy  the  stip- 
ulated value  must  always  be  the  amount  of  recovery  in  case 
of  total  loss,2  though  it  exceed  their  market  value  at  the  place 
of  destination.^  But  if  by  mistake  or  design  the  assured 
should  put  on  board  a  ship  only  a  part  of  the  goods  to  which 
he  intended  the  valuation  to  apply,  he  cannot  recover  as  if  the 
whole  subject-matter  of  the  valuation  had  been  put  on  board, 
but  only  such  a  proportion  of  the  valuation  as  the  goods  which 
were  on  board,  and  at  risk,  should  bear  to  the  whole  valua- 
tion.* And  wherever  a  part  of  the  property  covered  by  the 
valuation  is  not  put  at  risk  and  covered  by  the  policy,  the  re- 
covery will  be  proportional,  not  entire.^] 

[§  422  B.  statutes  making  Value  named  in  Policy  conclusive. 
—  In  Wisconsin  the  law  makes  the  value  of  real  estate  writ- 
ten in  the  policy  conclusive  as  to  the  amount  of  loss,  and  no 
evidence  that  the  figures  were  knowingly  too  high  is  admis- 
sible as  a  defence  to  an  action  on  the  policy.^     In  the  case  of 

1  See  Mitchell  v.  Union  Life  Ins.  Co.,  45  Me.  104. 

2  [Lovering  v.  Mercantile  Mar.  Ins.  Co.,  12  Pick.  348  at  3fi7 ;  Whitney  v. 
Amer.  Ins  Co.,  3  Cowen,  210  at  219 ;  Davy  v.  Hallett,  3  Caines  (N.  Y.),  16  at 
20.] 

3  [Forbes  v.  Manufacturers'  Ins.  Co.,  1  Gray,  371  at  375.] 

*  [Wolcott  V.  Eagle  Ins.  Co.,  4  Pick.  429  at  436.] 

*  [Patrick  v.  Eames,  3  Camp.  441  at  442;  Le  Pyre  v.  Farr,  2  Vernon,  716  at 
716  ,  Tobin  v.  Hartford.  17  C.  B.  n.  s.  527  at  532.] 

•*  [§  1943  11.  S.;  Cayon  v.  Dwelling-House  Ins.  Co.,  68  Wis.  510;  Seyk  v. 
Miller's  Nat.  Ins.  Co ,  74  Wis.  67.] 

969 


§  423]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXII. 

several  policies  in  different  companies  the  aggregate  of  the 
insurance  is  the  value.^  This  provision  of  the  law  cannot  be 
changed  by  stipulations  in  the  policy,''^  nor  by  an  award  of 
arbitrators  for  a  less  amount.^  By  statute  in  Texas  also 
a  stipulation  that  only  a  proportion  of  the  amount  insured 
shall  be  paid  by  each  company  is  of  no  effect  as  to  real  estate. 
The  whole  sum  insured  must  be  paid  by  each  company.*] 

§  423.  Amount  of  Loss  recoverable  ;  Fire  ;  Salvage.  —  The 
general  rule  of  damages  in  fire  insurance,  the  policy  not  being 
a  vahied  one,  is  indemnification  of  the  insured  if  the  loss  be 
less  than,  or  only  equal  to,  the  amount  of  insurance  specified 
in  the  policy,  without  reference  to  the  relation  of  the  amount 
insured  to  the  whole  value  of  the  property  insured ;  and  in 
this  loss  is  included  all  the  loss  immediately  caused  by  the 
fire,  and  notwithstanding  the  insurance  is  in  excess  of  the 
proportion  allowed  by  the  by-laws  of  the  company,^  so  that 
the  insured  may  be  paid  for  whatever  he  had  before  the  fire 
and  was  destroyed  thereby.  If  there  be  successive  losses, 
the  payment  on  a  prior  loss  is  to  be  deducted  from  the 
amount  insured,  and  the  balance,  or  so  much  as  will  indem- 
nify, is  to  be  paid  on  the  subsequent  loss.*^  The  rule  of  dam- 
ages is  the  value  of  the  property  lost,  and  not  the  cost  of 
replacement."  A  stipulation  that  after  the  fire  the  insured 
shall  put  the  partially  damaged  goods  in  as  good  condition 
as  the  case  will  allow,  has  no  application  where  the  value  of 
goods  totally  destroyed  amounts  to  the  sum  insured.^  Re- 
mote and  consequential  damages,  however,  such  as  are  caused 
by  an  interruption  of  business,  —  as  the  loss  of  custom  to  an 

1  [Oshkosh  G.  L.  Co.  v.  Germania  Firo  Ins.  Co.,  71  Wis.  454.] 

2  [Keilly  v.  Franklin  Ins.  Co.,  43  Wis.  449  at  456.] 

3  [Thompson  v.  Citizens'  Ins.  Co.,  45  Wis.  388  at  389.] 
*  [Queen  Ins.  Co.  v.  Jefferson  Ice  Co.,  64  Tex.  578.] 

5  Underliill  v.  Agawam  Mut.  Ins.  Co.,  6  Cush.  (Mass.)  440  ;  Cumberland,  &c. 
Ins.  Co.  V.  Scheli,  29  Pa.  St.  31  ;  Peddie  v.  Quebec  Fire  Ins.  Co.,  1  Stuart  (L.  C), 
174;  New  York  Gas  Light  Co.  v.  Mechanics'  Mut.  Fire  Ins.  Co.,  2  Hall  (N.  Y. 
Superior  Ct.),  108. 

6  Curry  v.  Com.  Ins.  Co.,  10  Pick.  (Mass  )  535 ,  post,  §  426. 

7  Steward  v.  PlicEnix  Ins.  Co.,  Sup.  Ct.  (N.  Y  ),  8  Alb.  L.  J  285  ,  s.  c.  5  Hun, 
261. 

8  Williamson  v.  Hand-in-Hand  Mut.  Fire  Ins  Co.,  26  U.  C.  (C.  P.)  266. 

970 


CH.  XXII.]  OF    THE    LOSS    AND    ITS    ADJUSTMENT.  [§  423 

inn,i  or  the  loss  of  use  of  a  grist-mill,  or  the  profits  of  its 
business,  or  the  expenses  of  keeping  his  employees  while  re- 
building, though  in  consequence  of  the  fire  no  retui-n  can  be 
had  for  the  wages,  —  are  not  recoverable  as  damages.^  And 
this  was  held  upon  general  principles,  following  the  authority 
of  Wright  and  Pole.  But  in  both  cases  there  was  a  clause 
which  permitted  the  insurers  to  make  good  the  loss  by  re- 
pairing if  tliey  should  so  choose,  which  in  the  opinion  of  the 
court  conclusively  showed  that  nothing  more  than  the  ex- 
pense of  repairing  could  be  recovered.  Neither  is  the  loss 
of  prospective  rent  recoverable  as  damages  by  fire."^  But  all 
these  several  subjects  may  be  specifically  insured  when,  of 
course,  their  loss  becomes  an  element  of  damage.*  The  ex- 
pense of  repairing  or  rebuilding,  it  has  been  said,  however, 
is  not  the  measure  of  damages,  since  that  would  give  the 
insured  more  than  he  would  be  entitled  to,  as  having  new  in- 
stead of  old.  And  as  there  is  not  in  fire  insurance,  as  in  ma- 
rine, a  rule  of  allowing  one-third  for  the  difference  between 
new  and  old,  it  is  for  the  jury  to  determine  how  much  money 
will  make  good  to  the  insured  his  loss.*^  And  this  is  recover- 
able if  within  the  amount  insured,  although  the  value  of  the 
property  insured  is  much  greater  than  the  loss.  The  propor- 
tion of  the  loss  to  the  whole  amount  insured  is  not  in  fire,  as 
in  marine,  insurance  an  element  in  the  calculation  of  the 
amount  to  be  paid.^  If  the  insured  is  "  to  contribute  a  cer- 
tain proportion  of  the  expense  of  rebuilding,"  the  proportion 
is  of  the  value  to  the  estate,  not  the  cost  of  rebuilding.'  The 
fact  that  the  article  to  be  replaced  is  patented  is  not  to  en- 
hance its  value  above  the  cost  of  replacing.*^     In   Morrell  v. 

1  Wright  &  Pole,  1  AJ.  &  El.  021 ;  s.  c.  3  Nev.  &  Man.  819,  under  the  nnme 
of  Sun  Fire  Office  v.  Wriglit. 

^  Menzies  c  Nortli  Bnt.  Ins.  Co.,  9  Ct.  Sess.  Cas.  2(1  series  (Scotch),  694; 
Niblo  V.  N.  A.  Fire  Ins.  Co..  1  Sandf.  (Superior  Ct.  N.  Y.)  551. 

^  Leonarda  o.  Fiioenix  Ass.  Co.,  2  Rob.  (La.)  131. 

*  See  all  the  above  authorities. 

*  Brinley  u.  Nat.  Ins.  Co  ,  11  Met.  (Mass.)  195;  post,  §  431. 

•^  Miss.  Mut.  Ins  Co.  v.  Ingram,  34  Miss.  215 ;  Liscom  v.  Boston  Mut.  Ins.  Co., 
9  Met.  (Mass  )  205. 

^  Commonwealth  Ins.  Co.  v-  Sennett,  37  Pa.  St.  205. 
8  Ibid. 

971 


§  423  A]       INSURANCE  :    fire,    life,    accident,    etc.       [cH.  XXII. 

Irving  Fire  Insurance  Company ,i  it  is  said  that  the  exercise 
of  the  option  to  rebuild  converts  the  insurance  contract  into 
a  contract  to  rebuild,  and  in  a  suit  for  damages  for  the  im- 
perfect performance  of  the  new  contract,  the  amount  of  in- 
surance is  no  criterion  of  damages.  And  in  such  case  an 
action  on  the  policy  cannot  be  maintained  to  recover  the  loss.^ 
A  stipulation  that  "  in  case  of  the  removal  of  property  to 
escape  conflagration  the  company  will  contribute  ratably  with 
the  insured  and  other  companies  interested  to  the  loss  and 
expense  of  such  act  of  salvage,"  does  not  affect  the  question 
of  loss  by  fire.  The  insured  is  still  to  recover  his  whole  loss 
if  the  insurance  amounts  to  so  much,  and  this  provision  ap- 
plies only  to  the  loss  and  expense  of  removal. ^  But  if  such 
loss  is  to  be  borne  by  insurers  and  insured  in  such  proportion 
as  the  whole  sum  insured  bears  to  the  whole  value  ot  the 
property  insured,  then  each  bears  the  same  proportion  of  the 
loss  that  his  interest  bears  to  the  whole  value  of  the  property 
insured.'^ 

[§  423  A.  Estimating  Value.  — The  valuation  in  the  policy 
does  not  control,  nor  the  cost  of  rebuilding,  but  the  money 
value  at  the  time  of  the  fire."  The  value  assigned  by  the 
plaintiff  and  another  person  for  the  purposes  of  insurance  is 
not  evidence  of  the  cash  value  of  the  pictures  insured.*^  Nor 
is  the  assured  limited  by  the  valuation  j)ut  upon  the  i:)roperty 
by  the  magistrate's  certificate.  He  may  prove  by  witnesses 
the  true  value.  Even  the  sworn  statement  of  the  assured 
himself  has  been  held  not  to  estop  him.''  Preliminary  proofs 
are  not  competent  evidence  of  value,  but  mere  ex  parte  state- 
ments.^    The  "  actual  cash  value  "  of  goods  is  the  fair  and 


1  33  N.  Y.  420. 

2  Beals  V.  Home  Ins.  Co.,  36  N.  Y.  522,  affirming  s.  c.  30  Barb.  (N.  Y.)  614. 
But  see  poM,  §  432. 

3  Tliompson  v.  Montreal  Ins.  Co.,  6  U.  C.  (Q.  B.)  319. 
*  Peoria,  &c.  Ins.  Co.  v.  Wilson,  5  Minn.  53. 

s  [Waynesboro  Fire  Ins.  Co.  v.  Creaton,  98  Pa.  St.  451  ;  Standard  Fire  Ins. 
Co.  V.  Wren.  11  Brad.  243 ;  Scliroeder  v.  Trade  Ins.  Co.,  12  Brad.  G51.] 
e  [Linde  v.  Republic  Fire  Ins.  Co.,  50  N.  Y.  Super.  362.] 
'   [Birmingham  Fire  Ins.  Co.  c  Pulver,  126  111.  329-] 
8  [Farrell  v.  .(Etna  Fire  Ins.  Co  ,  7  Baxt,  (Tenn.),  542  at  544.] 
972 


CH.  XXII.]  OF    THE    LOSS    AND    ITS    ADJUSTMENT,  [§  423  B 

reasonable  price  for  which  they  can  be  sold  in  the  market.^ 
One  of  the  facts  the  jury  may  consider  in  estimating  the 
value  of  articles  that  have  no  market  value  is  the  cost  of 
them  to  the  party  claiming  the  valuc.^  Such  a  price  is  in  the 
nature  of  an  admission  by  the  plaintiff.  Where  the  plaintiff 
testified  that  she  paid  $3500  for  certain  property,  and  its 
value  was  so  stated  in  the  application,  the  jury  are  warranted, 
in  the  absence  of  other  evidence,  in  finding  its  value  at  that 
figure."^  When  the  insured  property  (as  a  horse,  sold  first 
for  $500,  and  then  for  $1200)  has  no  distinctly  recognized 
market  value,  the  jury  will  be  instructed  to  find  the  fair 
value.*  The  prime  cost  of  a  vessel  is  not  conclusive  of  her 
real  value  against  the  assured.^  The  measure  of  damages  on 
grain  lost  while  in  charge  of  a  common  carrier  is  to  be  deter- 
mined according  to  its  price  at  the  place  of  disaster,  when  the 
policy  provided  that  damage  was  to  be  estimated  according 
to  the  value  of  the  property  at  the  time  of  loss.^  The  assured 
should  receive  for  a  lost  building  "  the  value  of  it  as  it  stood 
on  the  day  it  was  destroyed,  as  compared  with  a  new  building 
of  the  same  kind  and  dimensions."  It  is  not  proper  to  ask 
witnesses  what  the  whole  property  was  worth,  and  what  the 
land  without  the  buildings  is  worth,  for  the  circumstances 
may  be  such  that  the  land  is  worth  as  much  without  any 
building  as  with  the  old  oneJ  Although  the  insured  has  sold 
the  land  under  the  buildings,  retaining  the  right  of  removal, 
he  is  entitled  to  recover  their  full  value  at  the  time  of  loss, 
and  not  merely  their  value  for  purposes  of  removal.^] 

[§  423  B.  Evidence  of  Value;  Wit}iesses;  Admission,  ^c. 
—  Upon  a  question  of  value  the  opinion  of  a  witness,  who  has 
seen  the  thing  in  question  and  is  acquainted  with  the  value  of 

'  [Birmingham  Fire  Ins.  Co.  v.  Pulver,  126  111.  320.] 

2  [Sturm  V.  Williams,  6  J.  &  S.  (N.  Y.  Super.)  325  at  344.] 

^  [Siltz  V.  Hawkeye  Ins.  Co.,  71  Iowa.  710.] 

*  [Gere  v.  Council  Bluffs  Ins.  Co.,  67  Iowa,  272  ] 

*  [Snell  V.  Delaware  Ins.  Co.,  4  Dallas  (U.  S  ),  4.30  at  4.32.] 
«  [Savage  v.  Corn  Exchange  Ins.  Co.,  86  N.  Y.  6.5.5  at  659.] 
^  [^tna  Ins.  Co.  v.  Johnson,  11  Bush,  587  at  591.] 

^  [Washington  Mills  E  Manuf .  Co.  v.  Commercial  Fire  Ins.  Co.,  13  Fed.  Rep. 
646,  1st  Cir.  (Mass.),  12  Ins.  L.  J.  181  ] 

973 


§  424]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXIT. 

similar  things,  is  not  incompetent  to  be  submitted  to  a  jury.^ 
But  opinions  of  witnesses  not  experts,  as  to  the  probable 
amount  of  damages  are  not  admissible.^  A  farmer  who  has 
been  in  the  insured  store  several  times  and  was  there  the 
day  before  the  fire,  cannot  be  asked  "  what  amount  of  goods 
were  in  the  store  at  the  time  of  the  fire  according  to  his  es- 
timate." He  had  had  no  experience  in  the  business,  and  a 
witness  can  only  testify  to  a  question  of  value  when  he  is 
shown  to  be  competent  to  form  an  opinion.^  Manufacturers 
familiar  with  the  plaintiff's  factory  before  the  fire  may  testify 
to  its  value.*  The  testimony  of  persons  experienced  in  selling 
and  estimating  the  value  of  such  goods  as  the  plaintiff  sold, 
will  be  received  on  the  question  of  loss,  in  corroboration  of 
the  plaintiff  whose  books  and  papers  have  all  been  burnt.^ 
A  daughter  of  the  assured  who  bought  many  of  the  articles 
destroyed  and  who  was  present  when  the  rest  were  bought, 
is  a  good  witness  to  prove  their  value.^  The  admission  of  the 
insured  and  the  testimony  of  a  drayman  familiar  with  the 
stock  are  competent."] 

[§  423  C.  Evidence  of  Fraud ;  Burden  of  Proof  as  to 
amount  of  Loss.  —  The  facts  that  the  property  was  bought  at 
a  bankrupt  sale,  for  $3600,  and  that  various  witnesses  esti- 
mate its  value  at  from  -112,000  to  $20,000,  do  not  show 
fraud  in  a  claim  for  $15,000.^  An  instruction  putting  the 
burden  of  proof  on  the  defendant  to  show  that  the  loss  is  less 
than  the  full  amount  of  the  policy  is  wrong.  It  is  incumbent 
on  the  plaintiff  to  aver  and  prove  his  loss.^] 

§  424.  Loss  ;  Amount  recoverable  ;  Lessee  ,  Mortgagor  ,  Im- 
post  and    Excise   Duties  ,    Mortgagee  .•  Goods  in  Trust  ;   Partner. 

—  Where  a   building  which    stood   on   leased   land  was  de- 

1  [Clark  V.  Bainl,  9  N.  Y.  183  at  106.] 

2  [Norman  v.  Wells,  17  Wend.  136  at  164.] 

3  [Teerpenning  v.  Corn  Exch.  Ins.  Co.,  43  N  Y.  279  at  283.] 

4  [Reed  ;■   Washington  Ins.  Co.,  138  Mass.  572] 

6  [Insurance  Co.  v.  Braden,  96  Pa.  St.  81] 

G  [ContHicntal  Ins.  Co.  v-  Horton,  28  Mich,  173  at  175.] 

7  I  Livings  r   Home  Mut   Fire  Ins.  Co.,  50  Mich   207.] 

8  (McGibbon  i;  Imperial  Fire  Ins.  Co..  2  Rnss   &  Geld.  (Nova  Scotia)  6  ] 

®  [German  Fire  Ins.  Co.  v.  Gunten.  13  Brad.  593 ;  Carlwitz  v.  Germania  Fire 
Ins.  Co.,  12  Ins.  L.  J.  127,  3d  Cir.  (N.  J.).  1883  ] 
974 


CH.  XXII.]  OF   THE   LOSS    AND    ITS   ADJUSTMENT.  [§  424 

stroyed,  and  the  lease  expired  within  a  few  days,  so  tliat  the 
building  must  be  removed  or  forfeited,  or  a  new  lease  entered 
into,  it  was  held  that  the  intrinsic  value  of  the  building  was 
the  amount  recoverable,  without  reference  to  the  special  cir- 
cumstances.^ So  where  lessees  held  machinery,  <fec.,  which 
they  were  to  return  in  good  order  and  condition  at  the  end 
of  the  lease,  and  their  "  working  interest  "  therein  was  in- 
sured, their  interest  is  not  the  value  of  the  use  from  the  time 
of  the  fire  to  the  expiration  of  the  lease,  bat  the  value  of  the 
property  they  were  bound  to  replace.^  Where  a  mortgagee 
insured  had  agreed  to  sell  and  assign  certain  mortgages, 
and  had  received  certain  payments  from  the  assignee,  before 
the  loss  by  fire,  he  was  held,  nevertheless,  to  be  entitled  to 
recover  from  the  insurers  the  actual  loss  without  deduction 
on  account  of  these  payments.^  So  where  property  has  been 
taken  for  public  use  by  the  public  authorities,  or  sold  under 
a  binding  contract  for  a  conveyance,  no  actual  conveyance 
having  been  made.*  So  where  one  who  holds  a  power 
of  attorney  to  sell  for  advances  made,  though  the  legal  title 
be  in  another.^  So  a  mortgagor  whose  equity  has  been 
seized  on  execution  recovers  according  to  the  value  of  the 
property  lost,  without  reference  to  this  circumstance.^  But 
where  a  leasehold  mterest  is  insured,  the  value  of  the  unex- 
pired lease  is  the  measure  of  damages.'  Goods  in  store  or  in 
the  custom-house  are  to  be  estimated  at  their  market  value, 
without  reference  to  the  cost,  or  to  the  fact  that  the  duties 
may  not  have  been  paid.^  The  measure  of  damages  is  neither 
the  value  of  convenience  nor  of  affection  nor  the  cost  price, 
but  its  fair  cash  value  in  the  market,  to  be  determined  by  what 

1  Laurent  v.  Chatham  Fire  Ins.  Co.,  1  Hall  (N.  Y.  Superior  Ct),  41. 

2  Imperial  Fire  Ins.  Co.  (■.  Murray,  7-3  Pa.  St.  L3. 

3  Haley  v.  Manuf.  Fire  Ins.  Co.,  120  Mass.  292 

*  Collingridge  v.  Royal,  &c.  Ins.  Co.,  L.  H.  3  Q.  B.  D.  173;  Clinton  v.  Hope 
Ins.  Co.,  45  N.  Y.  454. 

5  Brugger  v.  State,  &c.  Ins.  Co.,  C  Ct.  (Oregon),  8  Ins.  L.  J.  293. 

8  Strong  V.  Manufacturers 'Ins.  Co.,  10  Pick.  (Mass.)  40. 

'  Niblo  V.  N.  A.  Ins.  Co.,  1  Sandf.  (N.  Y.  Superior  Ct.)  551. 

8  Wolfe  V.  Howard  Ins.  Co.,  1  Sandf.  (N.  Y.  Superior  Ct.)  124;  s.  c  affirmed, 
3Seld.  (N.  Y.)  58.3. 

VOL.  II.  — 18  975 


§  424]  INSURANCE  :    FIRE,    LIFE,   ACCIDENT,    ETC.       [CH.  XXII, 

similar  property  at  the  same  time,  and  in  the  same  or  similar 
places  and  under  the  like  circumstances,  would  ordinarily 
bring  in  the  general  market,  without  regard  to  an  extraordi- 
naiy  price,  whether  higher  or  lower,  which  might  be  obtained 
in  special  cases  or  under  special  circumstances.^  It  is  a  sum 
equal  to  the  value  of  the  property  which  has  been  lost,  not 
what  it  would  cost  the  insured  to  replace,  repair,  or  rebuild, 
as  that  might  be  more  or  less  than  the  actual  loss,  from  the 
peculiar  facilities  or  disadvantages  of  the  insured.^  And  it 
has  been  held  that  a  depression  in  value  caused  by  special 
circumstances,  which  may  be  temporary  only,  is  not  to  be 
taken  into  account.^  Where  distilled  liquors  ready  for  mar- 
ket, but  upon  which  the  internal  revenue  tax  was  not  paid, 
were  destroyed,  it  was  held  that  as  the  duty  had  not  been  ))aid, 
and  the  destruction  left  the  owner  without  any  personal  lia- 
bility to  the  government  for  the  tax,  though  while  the  prop- 
erty was  in  existence  there  was  a  lien  upon  it  in  favor  of  the 
government,  the  insured  could  only  recover  the  value  of  the 
property  destroyed,  less  the  tax.*  A  moi'tgagee  insuring  his 
own  interest,  at  his  own  expense  and  on  his  own  indem- 
nity, recovers  according  to  his  interest  at  the  time  when  he 
commences  his  suit,^  or  perhaps  more  accurately  at  the  time 
of  the  loss.  That  after  the  loss  the  mortgagor  replaces  the 
property  in  as  good  condition  as  it  was  before,  or  the  mortga- 
gee, by  selling  other  securities  which  he  holds,  reduces  his 
debt,  however  it  may  affect  the  equities  between  him  and 
the  mortgagor,  does  not  affect  the  terms  of  the  contract  be- 
tween the  mortgagee  and  the  insurers.  The  contingency  hav- 
ing arrived  upon  which  the  loss  was  payable,  it  must  be  paid 

1  Mack  V.  Lancashire  Ins,  Co.,  C.  Ct.  (Mo),  9  Ins.  L.  J.  G8I  ;  Equitable  Fire 
Ins.  Co.  V.  Quinn,  11  L.  C.  170 ;  post,  §  428 ;  Fowler  v.  Old  North  State  Ins.  Co., 
74  N.  C.  89;  Wynne  v.  Liverpool,  &c.  Ins   Co.,  71  N.  C.  121. 

^  Rousseau  c.  La  Confiance,  Dalloz,  Jur.  Gen.,  1870,  1,  280. 

3  McCraig  r.  Quaker  City  Ins.  Co.,  18  U.  C.  (Q.  13.)  130.  But  a  later  case 
in  Lower  Canada  would  seem  to  be  to  the  contrary.  Grant  v.  yEtna  Ins.  Co., 
11  L.  C.  128. 

*  Security  Ins.  Co.  v.  Farrell,  Sup.  Ct.  (Ill),  2  Ins.  L.J.  302;  Bobbitt  y.  Liv., 
&c.  Ins.  Co.,  66  N.  C.  70. 

^  Sussex  County  Mut.  Ins.  Co.  v.  Woodruff,  2  Dutch.  (N.  J.)  541. 
976 


CH.  XXII.]  OF   THE    LOSS    AND    ITS    ADJUSTMENT.  [§  424 

according  to  the  status  of  the  interest  at  the  time  when  the 
contingency  happened  ;  nor  can  the  insurers  require  the  mort- 
gaoee  first  to  exhaust  his  remedy  against  the  mortgagor  before 
calling  upon  them  for  indemnity.^  To  indemnify  the  mort- 
o-a<'ee  for  all  loss  to  property  means  to  the  amount  of  his 
interest ;  '^  but  to  make  good  to  the  assured  all  loss  to  proj)- 
erty  gives  the  right  to  recover  the  full  amount  of  loss.^  But 
a  morfo-agee  can  only  recover  on  an  insurance  of  his  own  in- 
terest the  amount  due  on  the  mortgage  when  the  insurance 
was  effected.  He  cannot  include  subsequent  advances,  al- 
though the  insurance  before  such  loss  as  may  happen  not  ex- 
ceeding a  certain  sum,  and  the  amount  of  advances,  be  within 
that  sum.^  So  where  an  insured  vendor  has  received  part  of 
his  purchase-money  before  the  loss,^  the  insurers  have  no  claim 
either  against  the  vendee,  or  rights  against  the  property  sold.^ 
And  that  the  property  still  held  by  the  mortgagee  is  ample 
security  for  the  debt  is  of  no  avail  to  the  insurers.^  Nor, 
where  the  policy  is  assigned  for  the  benefit  of  creditors,  is 
the  amount  recoverable  limited  to  the  amount  of  the  dcbts.^ 
And  a  commission-merchant  or  bailee  insuring  goods,  his  own 
as  well  as  in  trust  or  on  commission,  the  insurers  agreeing  to 
pay  the  "  actual  value  "  or  "  all  damage,"  may  recover  the  full 


1  Foster  v.  Eq.  Mut.  Fire  Ins.  Co.,  2  Gray  (Mass  ),  216;  Carpenter  v.  "Wash- 
ington Ins.  Co.,  1(3  Pet.  (U.  S.)  405;  PLxcelsior  Ins.  Co.  v.  Royal  Ins.  Co.,  55 
N.  Y.  343,  criticising  and  denying  Flanders  on  Insurance,  p.  360,  Angell  on  In- 
surance, §  59,  and  Smith  v.  Columbia  Ins.  Co.,  17  Pa.  St.  258;  .^tna  Ins.  Co.  v. 
Tyler,  16  Wend.  (N.  Y.)  385,  and  dictum  in  Carpenter  v.  Providence  Ins  Co.,  16 
Peters  (U.  S.),  495,  per  Story,  J.,  apparently  to  tlie  contrary;  Bank  of  New 
South  Wales  v.  Royal  Ins.  Co.,  9  Ins.  L.  J.  930.  Contra,  Mathewson  v.  Western 
Ass.  Co.,  10  L.  C.  8.     See  also  Honore  v.  Lamar  Ins.  Co.,  51  111.  409. 

2  Sliarswood,  J.,  in  Thornton  v.  Enterprise  Ins.  Co.,  Sup.  Ct.  (Pa.),  Legal 
Int.,  p   170,  June  14,  1872.     The  soundness  of  this  distinction  is  doubtful. 

3  Insurance  Co.  v.  Updegraff,  21  Pa.  St.  51.1 

4  Ogden  r.  Montreal  Ins   Co  ,  3  U.  C.  (C  P.)  497. 

&  Insurance  Co.  v.  Updegraff,  21  Pa.  St.  513  ;  Boston  &  Salem  Ice  Co.  v.  Royal 
Ins.  Co.,  12  Allen  (Mass  ),  381. 

6  Ibid. 

'  Kernochan  v.  New  York  Bowery  Ins.  Co.,  5  Duer  (N.  Y.  Superior  Ct.),  1 ; 
s.  c.  affirmed,  17  N  Y.  428 ;  Rex  v.  Insurance  Co  ,  2  Phila.  Rep.  (Pa.)  357  ;  post, 
§§  456,  457 

>»  Eureka  Ins.  Co.  v  Robinson,  .56  Pa.  St  256,  266. 

977 


§  424]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.   XXI I. 

amount  of  loss,i  but  not  unless  they  are  so  insured,  if  the 
policy  require  it.^  So  may  a  warehouseman  insuring  goods 
"•  in  trust "  recover  the  whole  amount  of  loss  on  goods  on 
storage.^  A  person  having  goods  in  his  possession  as  con- 
signee, or  on  commission,  may  insure  them  in  his  own  name, 
and  in  the  event  of  loss  recover  the  full  amount  of  the  insur- 
ance, and,  after  satisfying  his  own  claim,  hold  the  balance  as 
trustee  for  the  owner.*  [But  where  one  obtained  a  policy  on 
goods  in  his  store  and  "  by  him  held  in  trust,"  he  representing 
that  he  was  in  the  habit  of  receiving  goods  for  sale  and  mak- 
ing advances  upon  them,  the  insurance  being  intended  to 
secure  his  advances,  it  was  held  that  it  only  covered  his  and 
not  the  consignor's  interest  in  the  goods.^  A  part  ownar 
insuring  in  his  own  name  only,  not  mentioning  any  other 
interested  persons,  can  recover  only  the  amount  of  his 
own  interest.^  A  person  having  two  interests  in  tlie  same 
property  may  recover  according  to  both  or  either,  when  the 


1  De  Forest  v.  Fulton  Fire  Ins.  Co.,  1  Hall  (N.  Y.  Superior  Ct.),  84;  Lee  v. 
Howard  Fire  Ins.  Co.,  11  Cusli.  (Mass.)  324;  Millaudon  v.  Atlantic  Ins.  Co.,  8 
La.  557. 

■2  Brichta  v.  New  York  Lafayette  Ins.  Co  ,  2  Hall  (N.  Y.  Superior  Ct.),  374; 
Keely  v.  Insurance  Co.,  1  Pliila  (Pa.)  175;  Getcliell  v.  JFAna.  Ins.  Co.,  14  Allen 
(Mass.),  325,  In  Franklin  Fire  Ins.  Co.  v.  Hewitt,  3  B.  Mon.  (Ky. )  231,  it  was 
held  that  a  description  of  the  property  insured  by  commission-merchants  as 
"  theirs,"  if  known  by  the  insured  to  bo  held  by  them  on  commission,  was  suffi- 
cient within  the  condition  that  goods  on  commission  must  be  insured  as  such. 

3  Waters  v.  Monarch  Fire  &  Life  Ins.  Co.,  5  E.  &  B.  870  ;  Hough  v.  People's 
Ins.  Co.,  36  Md.  398;  London,  &c.  Railway  Co.  v.  Glyn,  1  E.  &  E.  652;  Siter  v. 
Morrs,  13  Pa.  St.  218. 

*  Hough  et  al.  v.  People's  Ins.  Co.,  .36  Md  398.  [In  case  of  a  policy  cover- 
ing pianos,  &c.,  owned  or  "  held  in  trust,"  a  piano  stored  with  the  insured  may 
be  recovered  for  to  its  full  value,  and  the  bailee  after  satisfying  ins  own  charges 
would  hold  the  remainder  for  the  true  owner  of  the  instrument.  Lucas  v.  Insur- 
ance Co.,  23  W.  Va.  258.]  Property  held  "in  trust,"  witiiin  tlie  meaning  of  a 
policy  of  insurance,  unless  specially  defined,  as  was  the  case  in  Ay  res  v.  Hart- 
ford Ins  Co.,  17  Iowa,  176,  includes  everything  in  which  the  insured  has  only 
a  qualified  interest  with  the  possession,  while  the  ownership  is  in  another. 
Turner  v.  Stetts,  28  Ala.  420;  StiUwell  v.  Staples,  19  N.  Y,  401;  ante.  §  78, 
note,  sub  finem,  and  §  421 

5  I  Parks  V.  Gen.  Interest  Ins.  Co.,  5  Pick   34  at  35,  .38  ] 

c  [Finney  v.  Warren  Ins  Co.,  1  Met.  16  at  18  Dumas  v.  Jones,  4  Mass  647 
at  651. 1 

978 


CH.  XXII.]  OF    THE    LOSS    AND    ITS    ADJUSTMENT.  [§  424  A 

interest  insured  is  not  indicated  in  the  contract.^  Where  the 
interest  of  the  insured  has  diminished  he  can  recover  only  in- 
demnity for  the  loss  of  the  interest  he  still  has.-] 

Under  a  policy  which  insures  goods  "sold  but  not  re- 
moved," the  insurer  may  recover  for  the  benefit  of  the  real 
owners,  although  the  goods  after  the  p(jlicy  is  issued  are  sold 
and  delivered,  and  the  title  and  right  of  possession  have 
passed,  if  the  location  of  the  property  has  not  been  changed. 
Such  a  policy  must  intend  that  the  risk  taken  should  cover 
and  adhere  to  the  same  property,  after  it  had  left  the  owner- 
ship of  the  insured  named  therein,  and  follow  it  while  in  the 
ownership  of  the  vendee  of  the  original  owner,  so  long  as  it  is 
not  removed.  The  law  does  not  forbid  that  a  policy  should 
be  so  framed  as  that  the  insurance  shall  be  inseparably  at- 
tached to  the  property  covered  thereby,  so  that  successive 
owners,  if  it  appear  that  such  successive  owners  were  within 
the  intentions  of  the  contracting  parties  during  the  continuance 
of  the  risk,  shall  become  in  turn  the  parties  really  insured.^ 
The  survivor  of  a  partnership  dissolved  by  the  death  of  one  of  the 
firm,  can  recover  only  the  balance  of  the  goods  that  belonged  to 
the  firm  at  the  time  of  dissolution,  and  were  in  his  hands  as 
survivor  at  the  time  of  the  loss.  Goods  bought  after  the  disso- 
lution are  not  covered  by  the  policy, unless  by  special  agreement.* 

[§  424  A.  The  amount  recovered  may  be  more  than  the  dam- 
age to  the  interest  of  the  insured.  If,  for  example,  a  policy  to 
a  husband  on  property  owned  by  his  wife  covers  the  entire 
ownership,  the  whole  loss  up  to  the  amount  of  the  policy  may 
be  recovered.  The  assured  may  recover  for  damage  to  all  in- 
terests, so  far  as  insured,  represented  by  him,  whether  by  pre- 
cedent authority  or  subsequent  ratification  of  others.^  In  the 
absence  of  fraud,  mistake,  or  agreement  to  the  contrary,  if  the  as- 
sured has  an  insurable  interest  at  the  time  the  policy  is  obtained, 

1  [White  V.  Hudson  River  Ins.  Co.,  7  How.  Pr.  350] 

2  IMonroe  v   Southern  Mut.  Ins.  Co.,  63  G.a.  669] 
8  Wanng  v   Indemnity  Fire  Ins  Co.,  45  N.  Y.  606. 

<  Wood  L'  Rutland  Ins  Co  ,  31  Vt.  (2  Shaw)  552.  In  Macarty  v.  Com  Ins. 
Co  ,  17  La.  365,  it  was  said  that  a  donor  niter  vicos,  reserving  rents  and  profits 
during  life,  could  not  recover  anything,  having  no  interest      But  see  ante,  §  85. 

'"  [Trade  Ins   Co  v   Barracliff.  45  N.  J.  543  ] 

979 


§  424  A]        INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXII, 

and  also  at  the  time  of  the  loss,  he  may  recover,  (whether 
that  interest  is  a  title  in  fee  for  life  or  merely  equitable) 
the  whole  amount  of  damage  done  to  the  property  not  exceed- 
ing the  amount  for  which  he  is  insured.'  The  construction 
most  favorable  to  indemnity  will  be  adopted.^  In  this  case  the 
mortgagee  was  to  be  paid  ''  such  proportion  of  the  sum  in- 
sured as  the  damages  by  fire  to  the  premises  mortgaged  shall 
bear  to  their  value  immediately  before  the  fire,"  and  it  was 
held  that  "  premises  mortgaged  "  referred  to  so  much  of  the 
mortgaged  premises  as  was  insured,  that  is,  the  main  building, 
and  did  not  refer  to  the  entire  lot  mortgaged  and  other  build- 
ings thereon.  Wherefore  as  the  main  building  was  totally  de- 
stroyed, and  was  equal  in  value  to  the  whole  sum  insured,  this 
should  be  paid  to  the  mortgagee.  A  policy  stipulated  to  pay 
$150  on  proof  of  death,  "  one-third  only  of  the  above  sum  paya- 
ble if  death  occur  after  three  months  and  within  six  months 
from  date,  two-thirds  only  if  death  occur  after  six  months 
and  within  a  year ;  and  the  full  amount  only  if  death  occur 
after  one  year."  The  insured  died  within  three  months,  and 
the  company  was  held  liable  for  the  full  amount,  on  the  prin- 
ciple that  an  ambiguous  policy  is  to  be  construed  against  the 
company.'^  Three  judges  dissented  without  stating  reasons, 
which  indeed  it  was  hardly  necessary  to  do,  they  are  so  clear. 
The  ])olicy  states  as  clearly  as  words  can  be  put  together  that 
the  company  is  to  be  liable  for  the  full  amount  only  if  death 
occur  after  a  year  has  passed.  The  company  should  not  have 
been  held  for  more  than  one-third  of  the  amount,  at  any  rate. 
A  lessee  who  has  insured  his  interest  may  recover  the  amount 
of  rents  which  would  have  come  to  him  on  sub-leases  but 
for  a  fire.*  Insurance  on  specific  items  not  absorbed  cannot 
be  diverted  to  other  items  where  the  loss  is  not  fully  covered.^ 

1  [Andes  Ins.  Co.  v.  Fish,  71  III.  620  at  625,  and  cases  cited;  Caldwell  v. 
Stadacona  Fire  &  Life  Ins.  Co.,  11  Can.  Supr  Ct.  212  (life  tenant,  full  value  so 
far  as  insurance  will  cover  it).] 

2  [Teutonia  Ins.  Co.  v.  Mund,  102  Pa  St.  80] 

3  [Metropolitan  Life  Ins.  Co   v.  Drach,  101  Pa.  St.  278  ] 

*  [Carey  v.  London  Provincial  Fire  Ins.  Co.,  33  Hun,  315.] 
5  [Carlwitz  v.  Germania  Fire  Ins.  Co,  12  Ins.  L   J.  127,   .3rd  Cir    (N  J.) 
1883.] 

980 


CH.  XXII.]  OP    THE    LOSS    AND    ITS    ADJUSTMENT.  [§  425 

The  plaintiff  is  not  estopped  by  the  proofs  of  hjss  from  reeover- 
ing  a  larger  amount,  if  the  company  has  repudiated  the 
liability  and  refused  to  act  on  the  proofs.^  The  general  law 
regulating  the  assessment  of  damages  under  a  policy  must 
give  way  to  a  special  custom  of  the  city  shown  to  have  been 
in  the  minds  of  the  contracting  parties.^] 

[§  425.  Loss;  Limitation  by  special  Provision;  Partial  Loss. — 
By  special  provision  of  the  policy  or  charter,the  amount  of  loss 
for  which  the  insurers  are  to  be  responsible  may  be,  and  often 
is,  limited  to  a  certain  percentage  or  proportion  of  the  value 
of  the  property  insured.  But  in  such  case,  if  the  policy  be  a 
valued  one,  that  is,  if  the  value  of  the  property  insured  be 
fixed  in  the  policy,  that  value  will  be  conclusive.^  Restriction 
is  also  sometimes  made  to  a  certain  proportion  of  the  value  of 
the  property  at  the  time  of  the  loss.*  In  such  a  case  the 
value  at  the  time  of  loss  is  open  to  inquiry  though  the  policy 
be  a  valued  one.  The  value  at  the  time  of  insurance  may  be 
more  or  less  than  at  the  fire.^  And  where  the  insurers  were 
to  pay  "  all  loss  or  damage,"  not  exceeding  the  sum  insured, 
"  the  said  loss  'or  damage  to  be  estimated  according  to  the 
true  and  actual  value  of  the  property  at  the  time  the  same 
shall  happen,  and  to  be  paid  at  the  rate  of  two-thirds  of  its 
actual  cash  value,"  it  was  held  that  the  two  clauses,  con- 
strued together,  meant  that  the  insurers  should  pay  two- 
thirds  of  the  actual  value  of  the  property  on  hand  at  the  time 
of  the  fire,  not  exceeding  the  sum  insured.*'  But  when  total 
losses  were  to  be  paid  to  the  amount  of  two-thirds,  and  par- 
tial losses  in  full,  and  out  of  a  stock  of  $3929  only  about  170 

1  [Sibley  v.  Prescott  Ins.  Co.,  57  Mich.  14] 

2  [Fulton  Ins.  Co.  v.  Milner,  23  Ala.  420  at  427.] 

3  Borden  v.  Ilingliam  Mut.  Fire  Ins.  Co.,  18  Pick.  (Mass.)  523;  Fuller  v. 
Boston  Mut.  Fire  Ins.  Co.,  4  Met.  (Mass.)  206;  Holmes  y.  Cliarlestown  Mut. 
Ins.  Co.,  10  id.  211  ;  Phillips  v.  Merrimack  Mut.  Ins.  Co.,  10  Cush.  (Mass.)  350; 
Brown  v.  Quincy  Ins.  Co.,  105  Mass.  396. 

*  Brinley  t'.  National  Ins.  Co.,  11  Met.  (Mass.)  195;  Iluckins  v.  People's 
Mut.  Fire  Ins.  Co.,  11  Fost.  (N.  H.)  238;  ante,  §  31. 

5  Ibid.  ;  Post  V.  Hampshire  Mut.  Fire  Ins.  Co.,  12  Met.  (Mass.)  555;  Epan  v. 
Mut.  Ins.  Co.,  5  Denio  (N.  Y.),  326;  Atwood  v.  Union  Mut.  Ins.  Co.,  8  Fost. 
(N.  H.)  234. 

6  Ashland  Mut.  Fire  Ins.  Co.  v.  Housinger,  10  Ohio  St.  10. 

981 


§  425]  INSURANCE  :    FIRE,    LIFE,   ACCIDENT,    ETC.       [CH.  XXIT. 

was  saved,  the  court  held  that  this  insignificant  salvage  could 
not  be  considered  as  making  the  case  one  of  partial  loss, 
whereby  the  insured  would  be  entitled  to  recover  much  more 
on  partial  than  on  total  loss.  Literally  construed,  the  court 
said  such  must  be  the  result.  But  such  could  not  have  been 
the  intent  of  the  parties.^  When  several  properties  are  in- 
sured, subject  to  the  restriction  as  to  amount  of  loss  payable 
on  each,  it  is  tantamount  to  a  separate  insurance  on  each.^ 
And  where  grain  was  insured,  the  insurers  not  to  be  liable  for 
partial  loss  unless  it  amounted  to  twenty  per  cent,  and  was 
shipped  in  three  barges,  one  of  which  was  damaged,  but  not 
to  the  amount  of  twenty  per  cent  of  the  whole  shipment,  it 
was  held  that  no  recovery  could  be  had.^  And  under  a  re- 
striction of  recovery  to  two-thirds  the  value  of  the  property  a 
mortgagee  may  recover  the  full  value  of  his  interest,  if  it  does 
not  exceed  two-thirds  of  the  value  of  the  property  insured.* 
The  fact  that  the  property  is  overvalued,  so  that  the  insurers 
become  liable  for  more  than  is  permissible  by  their  by-laws, 
will  not  excuse  the  company.  The  violation  of  the  charter 
is  no  defence  against  the  insured,  there  being  no  fraud.^  [If  a 
policy  provides  for  pro-rating  "  without  reference  to  the  sol- 
vency or  liahility  of  the  other  msurers,''^  the  company  will  be 
liable  only  for  its  pro-rata  share  of  the  loss  notwithstanding 
another  company  repudiates  its  policy.^  If  a  policy  states 
that  in  case  there  is  prior  insurance  the  company  will  only  be 
liable  to  the  extent  that  the  plaintiff  is  not  indemnified  by  the 
prior  policies,  and  it  appears  that  he  is  thus  fully  indemnified, 
the  company  is  not  liable  at  all,  and  a  verdict  against  it  will  be 
set  aside.'^  And  when  a  marine  policy  declared  that  if  prior 
insurance  had  been  made  the  new  policy  should  only  attach 

1  Singleton  v.  Boone  County  Ins.  Co.,  45 'Mo.  250. 

2  Kinpr  V.  Prince  Edward  Ins.  Co.,  19  U.  C.  (C.P.)  134;  McCulloch  v.  Gore, 
&c.  Ins.  Co.,  32  U.  C.  (Q.  B.)  61 

2  Haenschen  v.  Franklin  Ins.  Co.,  67  Mo.  156. 
*  Sanders  v.  Hillsborough  Ins.  Co.,  44  N.  H.  238. 

5  Williams  v.  N.  E.  Mut.  Ins.  Co.,  31  Me.  219;  Cumb.  Val.  Mut.  Prot.  Co.  v 
Schell,  29  Pa.  St.  31.     See,  however,  §  430. 

6  [Cassity  v.  New  Orleans  Ins.  Ass.,  65  Miss.  49.] 

">  [Kenny  r.  Union  Mar.  Ins.  Co.,  1  Russ.  &  Geld.  (Nova  Sco.)  313.] 

982 


CH.  XXII.]  OF    THE    LOSS    AND    ITS    ADJUSTMENT.  [§  426 

SO  far  as  the  prior  one  was  insufficient  to  cover  the  loss 
and  when  the  same  property  was  fully  insured  previously, 
the  policy  never  attached  and  the  premium  must  be  retui-ned, 
notwithstanding  the  fact  that  a  part  of  the  prior  insurance 
was  in  companies  which  since  making  it  had  become  insolvent 
and  dissolved.^  But  when  the  policy  provides  that  "  in  case 
there  be  any  insurance  in  any  other  office  extending  to  the 
l)roperty  hereby  insured,  then  this  company,  in  case  of  a  loss, 
will  only  be  liable  to  pay  its  ratable  proportion  of  the  dam- 
age," the  clause  has  reference  to  other  insurance  existing  at 
the  time  of  loss,  and  does  not  bind  the  insured  to  keep  alive 
an  insurance  existing  when  the  said  policy  was  issued.^  Nor 
does  it  refer  to  other  insurance  invalid  in  its  inception.^] 

§  426.  Loss;  Rebuilding  ;  Repeated  Losses  ;  Transfer  of  Claim 
for  Damages.  —  As  this  rebuilding  is  but  one  mode  of  payment 
of  the  loss,  the  acceptance  of  an  order  to  pay  the  loss  to  a  per- 
son other  than  the  assured  does  not  deprive  the  insurers  of 
their  right  to  make  the  election.  The  acceptance  is  but  an 
assignment  of  the  claim  of  the  insured,  without  in  any  way 
affecting  the  mode  of  payment.  It  is  but  a  substitution  of 
the  assignee  for  the  assured,  and  giving  him  the  right  to  de- 
mand what  the  assured  might  have  demanded.*  And  if  the 
insurance  be  for  a  specific  amount  for  a  given  period,  and  the 
cost  of  once  repairing  be  less  than  the  amount  insured,  the  pol- 
icy will  remain  good  for  the  miexpended  balance  during  the 
period  covered  by  the  policy.^  And  it  seems  that  but  for  the 
express  limitation  of  the  amount  for  which  the  insurers  might 
become  liable,  they  would  have  to  replace  as  often  as  the 
])roperty  should  be  destroyed  during  the  period  of  insurance.^ 
If  goods  are  replaced,  the  insured  is  to  be  made  good  for  his 
loss,  and  only  that,  and  any  arrangement  between  the  parties 

1  [Ryder  v.  Phoenix  Ins.  Co.,  98  Mass.  185  at  193.] 

2  ILattan  v.  Royal  Ins.  Co..  45  N.  J.  453.1 

3  [.Jersey  City  Ins.  Co.  v.  Nichol,35  N.  J.  Eq.  291.] 

*  [Tolman  c.  Manufacturers'  Ins.  Co  ,  1  Cusli.  (Mass  )  73.] 
6  Curry  v.  Commonwealth  Ins.  Co.,  10  Pick.  (Mass. )  535,  Crombie  v.  Ports- 
mouth Mat.  Ins  Co,  6  Fost.  (N.  H.)  389;  Trull  v.  Roxbury  Mut  Ins.  Co.,  3 
Cush.  (Mass.)  263. 

6  Ibid. ;  New  Hampshire  Ins.  Co  v.  Rand,  4  Fost.  (N.  H.)  428. 

983 


§  428]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXII. 

for  an  extension  of  the  time  within  which  to  replace  or  reuair 
would  control  the  original  contract  in  this  particular.^ 

§  427.  Loss;  Apportionment,  Several  Parcels. — An  agree- 
ment is  sometimes  inserted  in  the  policy,'^  and  will  sometimes 
be  inferred  from  the  circumstances  of  the  case,  for  an  ajipor- 
tionment  of  the  loss  and  expenses  of  removal  and  protection 
of  the  goods  during  a  fire ;  and  in  the  absence  of  an  express 
agreement,  the  proportion  to  be  borne  by  each  will  be  accord- 
ing to  his  interest.  If,  for  example,  the  property  is  insured 
for  one-half  its  value,  each  will  bear  one-half  of  such  expense  ; 
if  for  three-quarters,  then  the  insurer  pays  three-fourths  and 
the  insured  one-fourth .^  But  insurance  in  a  gross  sum  on 
property  situated  in  different  and  distinct  buildings  covers  all 
that  may  be  destroyed  in  either  building,  to  the  amount  of 
the  insurance.^  Where  A.  had  deposited  a  large  amount  of 
cotton  on  storage  with  a  warehouse  company,  and  had  effected, 
among  others,  an  insurance  against  fire  on  two  particular 
lots,  —  at  one  time  on  fifteen  bales,  and  at  another  on  thir- 
teen bales,  —  and  the  warehouse  containing  the  cotton  of  A., 
with  that  of  others,  was  destroyed  by  fire,  and  a  portion  of  the 
cotton  was  saved  and  sold  at  auction,  by  instruction  of  a  com- 
mittee of  the  insurance  companies  interested,  the  net  proceeds 
of  which  sale  were  distributed,  under  the  direction  of  the 
committee,  among  the  assured ;  in  an  action  by  A.  to  recover 
on  his  two  policies,  it  was  held  that,  in  ascertaining  the 
amount  of  loss  or  damage  which  the  plaintiff  should  recover, 
the  jury  ought  to  deduct  such  sum  as  they  might  find  from  the 
evidence  was  the  proportion  due  to  twenty-eight  bales  in  the 
distribution  of  the  i)roceeds  of  sale  of  the  cotton  saved. '^ 

§  428.  Loss;  Interest ;  Mode  of  Payment;  Evidence  ;  Set-off. — 
If  there  be  no  provision  in  the  policy  regulating  the  payment  of 
the  loss,  it  will  be  due  on  notice  and  proof,  and  interest  will  be 
reckoned  from  that  date.^     But  if  a  time  is  lixed  for  the  pay- 

1  Franklin    Fire  Ins.  Co.  v.  Hamill,  5  Md.  170.     See  also  jwst,  §  430  el  seq. 

2  Peoria  Fire  &  Mar.  Ins.  Co.  v.  Wilson,  5  Minn  53. 

3  Wells  V.  Boston  Ins.  Co  ,  6  Pick   (Mass  )  182. 

4  Nicolet  i).  Insurance  Co  ,  3  La  371  ;  Rix  v.  Mut  Ins  Co.,  20  N.  H.  198. 
&  Hough  V.  Peojile's  Ins  Co.,  36  Md.  398. 

^  [Interest  cannot  be  recovered  in  an  action  to  recover  the  amount  of  an  iu 

984 


CH.  XXII.]        OF  the:  loss  and  its  adjustment.  [§  428 

ment,  then  interest  will  run  from  the  time  so  fixed,'  unless  the 
defective  nature  of  the  i)roof  leaves  the  amount  fairly  ojM-n 
to  dispute,^  it  being  then  in  the  nature  of  unliijuidated  dam- 
ages, on  which  as  a  rule  no  interest  is  recoverable,  or  unless 
by  trustee  process,  want  of  authoi'ity  to  receipt  for  it,  or 
otherwise,  the  insurers  be  prevented  or  excused  from  paying 
at  that  time.3  Payment  of  loss  in  gold,  if  agreed  upon,  is 
compulsory ;  but  this  does  not  carry  with  it  an  obligation  to 
pay  dividends  of  profits  also  in  gold.*  Where  the  insurance 
was  on  corn  shipped  from  Chicago  to  Montreal,  and  the  loss 
was  payable  to  the  bank  of  Montreal,  in  funds  current  in  the 
city  of  New  York,  it  was  held  that,  in  estimating  the  amoimt 
of  the  liability  of  the  insurers,  the  premium  in  gold  should  not 
be  allowed  in  favor  of  the  insurers.^  The  fact  that  the  loss  is 
in  a  foreign  country  does  not  add  the  expense  of  transmission 
of  the  amount  due  to  the  amount  of  the  loss.^  The  market 
value  at  the  time  of  the  loss,  and  when  the  property  is  but 
partially  destroyed  and  only  damaged,  the  difference  between 
the  value  of  the  property  as  it  is  and  as  it  was,  ascertained  by 
a    sale  at  auction,  with  notice  to  the  parties  interested,  are 

surance  policy.  Higgins  i\  Sargent,  2  B,  &  C.  348  at  350.  But  contra,  if  a  dis- 
tinct demand  on  the  insurer  iias  been  made  and  notification  of  tlie  ground  of 
such  demand.     Bain  v.  Case,  3  C.  &  P.  490  at  498.] 

^  [When  a  policy  provided  for  a  paj-ment  of  the  loss  within  sixty  daj's  after 
satisfactory  proofs  of  the  same,  and  when  proofs  were  furnished  and  the  com- 
pany within  that  time  offered  a  part  payment  only,  it  was  held  tliat  interest 
began  to  run  from  the  demand,  the  time  limit  being  waived.  Baltimore  Fire 
Ins.  Co.  V.  Loney,  20  Md.  20  at  40.  On  the  other  hand,  if  the  company  makes 
reasonable  efforts  for  an  adjustment,  interest  is  not  chargeable  frotn  tiie  expira- 
tion of  the  sixty  days,  but  only  from  judicial  demand.  Gettwerth  v.  Teutonia 
Ins.  Co.,  29  La.  Ann.  .':'.0  at  32.] 

2  McLaugldin  v.  Wash.  County  Mut.  Ins.  Co.,  23  Wend.  (N.  Y.)  52.5;  Bridge 
V.  Niagara  Ins   Co.,  1  Hall  (N.  Y.  Superior  Ct.),  247,  2(il. 

3  Ncvins  V.  Rockingliam  Fire  Ins.  Co.,  5  Fost.  (N.  II.)  22  ;  Oriental  Bank  v. 
Tremnnt  Ins.  Co.,  4  Met.  (Mass.)  1 ;  Webster  v.  British,  &c.  In.s.  Co.  (Eng.),  Ct. 
of  App.  15  Ch.  D.  109.  See  also  post,  §  479  ;  Howell  v.  Hartford  Ins  Co.,  C. 
Ct,  3  Ins.  L.  J.  049  ;  Tooley  v.  Railway,  &c,  Ins.  Co.,  C.  Ct.  (III.),  2  Ins.  L.  J. 
275;  Delonguemere  v.  Traders'  Ins.  Co.,  2  Hall  (N.  Y.  Superior  Ct.),  589;  Brown 
V.  Railway  Pass.  Ass.  Co  ,  45  Mo.  221. 

*  Luling  V.  Atlantic  Mut.  Ins.  Co.,  50  Barb.  520. 

5  Lamar  Ins.  Co.  v.  McGIashen,  54  111.  513. 

6  Burgess  v.  Alliance  Ins.  Co ,  10  Allen  (Mass.),  221. 

985 


§  429]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XXII. 

data  upon  which  to  find  the  value.^  And  there  is  no  right  of 
abandonment,  as  in  marine  insurance.^  And  it  seems  that  the 
difference  between  a  wholesale  and  a  retail  market  value  may 
be  taken  into  account.^  An  insurance  company  cannot  pay 
a  loss  by  a  set-off  of  outstanding  claims  against  the  insured, 
purchased  for  that  purpose.  The  act  of  purchase  is  ultra 
vires^ 

§  429.  Damages  for  Improper  Refusal  to  renew.  — If  a  life 
insurance  company  improperly  refuse  to  accept  the  premiums, 
under  a  plea  that  the  policy  is  void,  an  action  may  be  main- 
tained against  them  for  damages  ;  and  it  seems  that  the  rule 
of  damages  would  not  be  confined  to  the  amount  of  the  pre- 
miums paid  with  interest.  If  the  person  whose  life  is  insured, 
though  alive,  should  be  laboring  under  a  disease  that  must 
speedily  result  in  death,  the  insurers  ought  not  to  be  per- 
mitted to  escape  the  payment  of  the  amount  for  which  the 
life  was  insured  by  putting  an  end  to  the  contract.^  So  in 
Missouri  the  insured  may,  by  statute,  recover  damages  for  a 
vexatious  refusal  to  pay  a  loss.^  [If  the  company  refuse  to  pay 
what  is  due,  and  endeavor  by  fraudulent  accusations  to  in- 
timidate the  plaintiff  and  drive  him  to  settle  for  a  small 
amount,  the  jury  may  give  the  plaintiff  damages  and  attorney's 
fees  for  refusal  to  pay  in  bad  faith."  If  the  policy  provides  for 
payment  of  loss  on  surrender  of  the  policy,  and  the  insurer 
refuses  positively  to  pay,  the  insured  may  sue  without  show- 
ing tender  of  the  policy.^] 

1  Hoffman  v.  West.  Mar.  &  Fire  Ins.  Co.,  1  La.  Ann.  216 ;  Henderson  v.  West 
Mar.  &  Fire  Ins.  Co.,  10  Kob.  (La.)  164.  These  cases  must  be  considered  as  in- 
consistent with  Marchesseau  v.  Mercliants'  Ins.  Co  ,  1  Hob.  (La.)  436,  which 
holds  tliat  the  market  value  at  the  time  of  the  risk  is  the  "  best,  thougli  not  con- 
clusive" criterion  of  value. 

2  Ibid. ;  ante,  §  421  a. 

3  Hoffman  v.  JEtna.  Ins.  Co.,  1  Robt.  (N  Y  Superior  Ct.)  501. 
*  Kansas  Ins.  Co.  v.  Craft,  18  Kans.  283.     But  see  post,  §  592. 

5  McKce  V.  PhcEnix  Ins.  Co.,  28  Mo.  (7  Jones)  383;  Union  Central  Ins.  Co.  v. 
Poettker  (Superior  Ct.  Cincinnati),  5  Big.  Life  &  Ace.  Ins.  Cas.  449;  8.  c.  4 
Am.  Law  Record,  109. 

6  Brown  v.  Railway  Pass  Ass.  Co.,  45  Mo.  221 ;  post,  §  568. 
''  [Watertown  Fire  Ins.  Co.  v.  Grehan,  74  Ga.  642.] 

8  [Schwarzbach  v.  Protective  Union,  25  W.  Va.  622,  648.] 

986 


CH.  XXII.]  OF   THE   LOSS   AND    ITS   ADJUSTMENT.  [§  430 

§  430.  Loss  ;  Payment ;  Rebuilding.  —  As  one  means  of  pro- 
tecting themselves  against  extravagant  claims  for  losses,  in- 
surance companies  frequently  reserve  the  right  to  rebuild  a 
building,  or  to  replace  the  property  destroyed,  as  one  mode 
of  arriving  at  the  amount  of  loss  which  shall  be  \yd\d.  This 
right,  however,  is  not  one  which  inhei-es  in  the  nature  of  the 
contract,  and  can  only  exist  where  there  is  a  special  stipula- 
tion therefor,  and  then  is  optional.^  If  no  time  be  fixed  be- 
fore which  an  election  shall  be  made,  it  must  be  made  within 
a  reasonable  time.^  And  if  it  be  provided  that  the  company 
shall  have  a  right  to  rebuild  or  replace  within  a  reasonable 
time,  and  where  they  elect  so  to  do,  the  insured  shall  give 
security  to  pay  one-third  of  the  cost,  and  that  "the  insured 
shall  have  no  right  of  action  unless  the  insurers  neglect  for 
thirty  days  after  the  giving  such  security  to  proceed  to  re- 
build," &c.,  the  right  of  action  is  only  suspended  during  the 
time  within  which  the  company  has  a  right  to  rebuild ;  and 
if  the  rebuilding  duly  commenced  has  not  been  finished  in  a 
"reasonable  time,"  an  action  may  be  brought,  —  the  ques- 
tion of  reasonable  time  being  for  the  jury.^  And  if  the  in- 
surers give  notice  of  an  election  to  repair,  and  subsequently 
refuse,  they  will  be  liable  for  damages  intervening  between 
the  fire  and  the  refusal,  by  reason  of  exposure  to  the  weather.* 
An  election  to  repair,  after  fruitless  negotiations  to  settle, 
and  a  month  after  the  proofs  of  loss  had  been  furnished,  was 
held  to  have  been  within  reasonable  time.^  And  in  the  re- 
pairing, if  the  company  be  a  mutual  one,  and  restricted  by  its 
charter  to  a  certain  amount  of  expenditure,  this  becomes  part 


1  Wallace  v.  Insurance  Co.,  4  La.  289 ;  Commonwealth  Ins.  Co.  v.  Sennett, 
37  Pa.  St.  205 ;   Home  Mut.  Fire  Ins.  Co.  v.  Garfield,  60  111.  VIl. 

2  [The  condition  allowing  the  company  to  rebuild  cannot  be  invoked  against 
a  suit  for  pecuniary  indemnity  unless  the  company  liave  within  a  reasonable 
time  distinctly  elected  to  rebuild,  and  put  the  plaintiff  in  fault  for  refusing  to 
permit  such  rebuilding.     Daul  v.  Firemen's  Ins.  Co.,  35  La.  Ann.  98.] 

8  Haskins  v.  Hamilton  Mut.  Ins.  Co.,  5  Gray  (Mass.),  432.  But  see  a»te, 
§423. 

*  Am.  Central  Ins.  Co   v.  McLanathan,  11  Kans.  533. 

s  Sutherland  v.  Soc.  of  Sun  Fire  Office,  14  Ct.  of  Sess.  Cas.  n.  s.  (Scotch) 
775. 

987 


§  431]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CII.  XXII. 

of  the  contract,  and  the  amount  cannot  be  exceeded. ^  And 
a  consent  after  loss  to  pay  it  to  a  third  person  does  not  de- 
prive the  insui-ers  of  the  right  to  pay  by  rebuilding.^  When 
the  option  is  to  pay  or  repair,  it  must  doubtless  be  exercised 
as  to  the  whole  loss.  It  would  not  be  permissible  to  pay  in 
part  and  repair  in  part. 

§  431.  Loss;  Rebuilding;  Damages;  New  for  old.  — In  Brin- 
ley  V.  National  Insurance  Company ,3  the  insurance  company, 
under  the  right  to  rebuild,  had  erected  a  new  building  upon 
a  somewhat  different  plan  from  the  old  one,  which  had  been 
totally  destroyed.  And  the  question  arose,  on  a  suit  to  re- 
cover for  the  loss,  What  was  the  rule  of  damages  ?  whether 
the  insurers,  as  the  plaintiff  contended,  should  pay  the  actual 
cost  of  restoration,  or  whether,  as  the  defendant  contended, 
they  should  be  allowed  a  deduction  on  account  of  the  addi- 
tional value  of  the  new  building.  And  hereupon  the  court 
(Wilde,  J.)  observed  :  — 

"  At  the  trial,  the  defendants  contended  that,  as  a  new  store 
of  similar  dimension  and  plan  as  the  old  one  had  been  built,  a 
deduction  ought  to  be  made  from  the  estimated  cost  of  a  new 
store,  for  the  difference  in  value  between  the  old  store  and 
the  new  one ;  analogous  to  the  deduction  of  new  for  old  in  the 
adjustment  of  losses  on  marine  policies.  This  claim  of  deduc- 
tion was  not  sustained  by  the  judge  at  the  trial  ;  and  we  are 
not  aware  of  any  authority  or  principle  by  which  it  can  be 
supported.  The  rule  in  adjusting  marine  losses  is  arbitrary, 
and  operates  in  some  cases  unjustly,  giving  to  the  insured 
more  or  less  than  a  full  indemnity,  to  which  he  is  entitled  by 
the  policy,  and  to  no  more.  The  rule  originated  from  the 
usages  among  merchants  and  underwriters,  probably  from  the 
great  difficulty  of  ascertaining  the  actual  loss,  without  first 
repairing  the  damage  done,  or  estimating  the  cost  of  repairs. 
The  rule  is  applicable  only  to  cases  of  a  partial  or  a  con- 
structive total  loss.  It  depends  on  usage,  sanctioned  by  judi- 
cial decisions ;  and  in  some  cases  this  rule  of  estimating  the 

1  Home  Mut.  Ins.  Co.  v.  Garfield,  60  111.  121.  124      But  see  §  425. 

2  Tolman  v   Manufacturers'  Ins.  Co  ,  1  Cush.  (Mass  )  73. 

3  11  Met.  (Mass.)  195. 

988 


CH.  XXII.]  OP   THE   LOSS    AND    ITS   ADJUSTMENT.  [§431 

loss  is  expressly  provided  for  by  the  terms  of  the  policy. 
Such  has  been  the  stipulation  in  the  marine  policies  in  IJos- 
ton  for  many  years.  But  the  rule  has  never  been  adajited  to 
policies  of  insurance  and  other  property  against  fire.  The 
question  then  is,  What  is  the  rule  of  damages,  if  any  there 
be,  in  cases  like  the  present?  Tlie  plaintiff's  counsel  con- 
tends that  the  actual  loss  is  to  be  ascertained  by  the  expense 
of  restoring  the  property  without  any  deduction  for  the  differ- 
ence of  value  between  the  new  and  old  materials  ;  and  so  the 
rule  is  laid  down  by  Professor  Greenleaf.^  But  the  only  adju- 
dicated case  he  cites  which  has  any  distinct  bearing  on  the 
question,  is  that  of  Vance  v.  Forster,^  in  which  Mr.  Baron 
Pennefather  laid  down  a  very  different  rule.  He  says,  as  is 
reported  in  3  Stevens,^  that  '  the  jury  arc  to  say  what  state 
of  repair  the  machinery  was  in,  what  it  would  cost  to  replace 
it  by  new  machinery,  and  how  much  better  (if  at  all)  the 
mill,'  in  which  the  machinery  was  placed,  '  would  be  with 
the  new  machinery  than  it  was  at  the  time  of  the  fire  ;  and 
the  difference  is  to  be  deducted  from  the  entire  expense  of 
placing  there  such  new  machinery.'  This  rule,  in  all  cases 
where  the  cost  of  repairs  is  one  of  the  elements  by  which  the 
jury  are  to  estimate  the  actual  loss,  seems  to  be  founded  on 
the  principles  of  justice,  as  it  will  give  to  the  assured  a  full 
indemnity,  and  no  more,  to  which  he  is  entitled  by  the  con- 
tract. But  by  the  rule  contended  for  by  the  plaintiff's  coun- 
sel, the  assured  in  most  cases  would  recover  more  than  an 
indemnity  ;  and  much  more  when  the  building  insured  is  di- 
lapidated and  much  out  of  repair.  Such  rule  is  not  supported 
by  any  principle  of  justice,  nor  by  the  authority  of  any  ad- 
judged case.  It  is  founded  on  an  erroneous  construction  of 
the  contract.  It  supposes  that  the  insurers  are  bound  to  re- 
pair the  building,  or  to  pay  the  expenses  of  the  repairs.  But 
no  such  obligation  is  imposed  on  them  by  the  policy.  They 
have  the  privilege  to  make  the  requisite  repairs,  if  they  see  fit 
to  protect  themselves  against  the  recovery  of  excessive  dam- 
ages, or  for  any  other  reason.     But  if  they  elect  not  to  make 

1  2  Greenl.  on  Ev  §  407.  2  i  Irish  Circuit  Cases,  47,  61. 

8  N.  P.  2084. 

989 


§432]  insurance:  fire,  life,  accident,  etc.     [ch.  xxii. 

the  repairs,  tliej  are  liable  only  to  pay  a  fair  indemnity  for  the 
loss.  But  whatever  may  be  the  rule  when  the  building  in- 
sured is  partially  injured  by  the  peril  insured  against,  it  has 
no  application  to  cases  like  the  present,  where  the  building  is 
totally  destroyed  and  is  to  be  replaced  by  a  new  one.  The 
rule  of  damages  in  cases  on  marine  policies  would  not  apply 
to  a  case  where  the  ship  had  been  totally  destroyed.  In  the 
present  case,  the  building  was  destroyed  by  fire,  and  a  new 
building  was  erected  upon  a  different  plan ;  so  that  the  cost 
of  a  new  building  could  not  be  certainly  ascertained.  If  the 
rule  laid  down  in  Vance  v.  Forster  were  applied,  the  jury  must 
ascertain,  by  the  estimates  and  opinions  of  witnesses,  the 
amount  of  the  expense  of  a  new  building,  and  they  must 
estimate  the  value  of  the  old  building,  in  order  to  ascertain 
the  difference,  if  any  there  be,  between  the  new  and  the  old. 
We  can  perceive  no  use  in  requiring  this  douljle  estimate ; 
for  where  the  plaintiff  is  only  entitled  to  recover  the  amount 
of  the  value  of  the  building  destroyed,  the  estimate  of  the 
cost  of  a  new  building  is  useless."  It  seems  to  have  been 
held,  in  Franklin  Fire  Insurance  Company  v.  Hamil,  that 
where  partial  repairs  had  been  made,  but  only  partial,  these 
could  not  be  taken  into  account  in  the  estimation  of  the 
loss.^ 

§  432.  Loss ;  Rebuilding ;  Refusal  to  permit.  —  If  before  the 
time  expires  within  which  the  insurers  may  elect  to  rebuild 
or  replace,  the  insured  proceeds  to  remove  the  goods,  so  that 
the  insured  cannot  determine  the  amount  to  be  replaced,  or  to 
rebuild  the  building  so  that  the  insurers  cannot  rebuild  with- 
out undoing  what  has  been  done,  or  availing  themselves  of 
what  has  been  done,  a  court  of  equity  will  not  interfere  to 
restrain  the  insured.  The  fact  of  removal  might  be  an  impor- 
tant question  in  determining  the  question  of  damages,  and 
might  authorize  them  to  find  bad  faith  on  the  part  of  the  in- 
sured as  to  the  amount  of  his  claim.     And  as  in  the  other 

1  Ante,  §  426.  In  Woodruff  v.  Imperial  Ins  Co  (N.  Y.),  10  Ins  L.  J  125, 
where  the  pohcy  requirerl  a  particular  award,  showing  the  actual  cash  value, 
which  was  not  to  exceed  the  cost  of  replacement,  evidence  was  held  admissible 
as  to  the  cost  of  replacement. 

990 


CH.  XXII.]  OF   THE   LOSS    AND    ITS   ADJUSTMENT.  [§  433 

case  the  contract  of  insurance  having  been  substantially  con- 
verted into  a  building  contract,  the  rule  of  damages  under, 
such  contract  will  obtain.^  If  the  election  be  not  made,  in- 
demnity for  the  loss,  and  not  the  cost  to  replace,  is  the  test  of 
damages.^  If,  on  the  other  hand,  the  insurance  company  elect 
to  rebuild,  and  are  proceeding  to  do  it  m  an  im])roper  manner, 
a  court  of  equity  will  not  interfere  to  compel  them  to  do  it  as 
they  ought,  but  will  leave  the  insured  to  his  suit  at  law  for 
damages,  as  if  he  had  contracted  with  any  third  person  ;^  and 
he  may  refuse  to  accept,  unless  the  rebuilding  is  according  to 
the  conditions  of  the  contract.*  If  the  insurer  neglect  to 
exercise  his  option  to  rebuild  within  the  specified  time,  the 
insured,  and  he  alone,  may  waive  the  right,  and  allow  the 
insurers  to  rebuild  ;  nor  can  the  mortgagor  or  creditor  inter- 
vene to  prevent.^'' 

§  433.  Loss  ;  Partial  Rebuilding:  Interference  of  Public  Au- 
thorities. —  If  the  insurers  intending  to  perform  their  duty  in 
good  faith  make  repairs  of  substantial  benefit,  though  not  to  the 
amount  of  the  loss,  in  the  estimate  of  damages  they  are  to  be 
charged  with  the  difference  between  the  value  of  the  building 

1  New  York  Fire  Ins.  Co.  v.  Delavan,  8  Paige  (N.  Y  ),  419;  Beals  v.  Home 
Ins.  Co.,  36  N.  Y.  522.  That  the  contract  by  an  election  to  rebuild  becomes  a 
new  contract  is  accepted  as  law,  only  in  a  very  qualified  sense,  ;;os<,  §  433 ; 
though  the  doctrine  is  adhered  to  in  New  York  :  Heilmann  v.  Westchester  Fire 
Ins.  Co.  (N,  Y.),  19  Alb.  L.  J.  131,  where  it  was  also  iield  that  the  insurers  hav 
ing  given  notice  of  tlieir  intention  to  rebuild,  and  subsequently  refused  so  to  do, 
action  must  be  brought  in  the  name  ot  the  mortgagor,  he  being  the  insured, 
loss  payable  to  the  mortgagee;  that  neither  the  amount  of  loss  nor  the  amount 
of  insurance  would  be  controlling  on  the  question  of  damages;  that  the  mort- 
gagee's right  was  limited  to  the  receipt  of  payment  in  case  the  option  to  rebuild 
was  not  exercised,  with  perhaps  an  equitable  remedy  to  prevent  the  misappro- 
priation of  the  money.  But  it  is  elsewhere  held,  with  great  force  of  reason, 
that  the  election  to  rebuild  does  not  convert  a  contract  of  insurance  into  a  new 
contract  to  rebuild,  but  is  only  a  mode  of  performance  of  the  old  one.  Bank 
of  New  South  Wales  v.  Royal  Ins.  Co.,  9  Ins.  L.  J.  930,  citing  and  explain- 
ing Brown  v.  Royal  Ins.  Co.,  1  E.  &  B.  (Q.  B.  Eng.)  853;  Home  Ins.  Co.  v. 
Garfield,  60  111.  124. 

2  Com.  Ins.  Co.  v.  Sennett,  37  Pa.  St.  205. 

3  Home  Ins.  Co.  v.  Thompson,  1  U   C  (Err.  &  App.)  247. 

<  Alleyn  v.  Quebec  Ins.  Co.,  11  L.  C.  394  ,  Ryder  v.  Commonwealth  Ins.  Co., 
52  Barb.  (N.  Y  )  447. 

5  Stamps  V.  Commercial  Ins.  Co.,  77  N.  C-  209. 
VOL.    11.  —  19  991 


§  433  A]        INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.   XXII. 

as  repaired  and  what  it  would  liave  been  if  it  had  been  fully- 
repaired.^  And  such,  it  has  been  held  in  New  York,  would 
be  the  rule  of  damages  where  the  insurers,  having  com- 
menced to  rebuild,  desisted  before  the  work  was  complete.^ 
If  after  reinstatement  the  work  proves  to  have  been  imper- 
fectly done,  the  insured  will  have  his  action  against  the  in- 
surers for  not  having  duly  reinstated  the  property.^  And  if 
after  he  has  commenced  to  rebuild  he  is  interfered  with  by  the 
public  authorities,  and  prevented  from  completing  his  work, 
or  the  building  is  ordered  to  be  taken  down  as  dangerous,  even 
though  its  dangerous  character  was  not  attributable  to  the 
fire,  the  loss  will  be  his.  Nor  will  he  be  excused  from  paying 
the  insured  the  entire  amount  of  his  loss,  according  to  the 
agreement  to  rebuild  or  pay.*  So,  if  the  consent  of  the  pub- 
lic authorities  to  the  rebuilding  be  required,  and  refused.^ 
But  if  the  insured  refuse  permission  to  rebuild,  he  loses  his 
right  of  action.^ 

[§  433  A.  Repairing.  —  If  the  company  elects  to  repair  in- 
stead of  paying  the  loss,  all  provisions  of  the  policy  relating 
to  payment,  estimate  of  loss,  &c.,  become  thenceforth  inopera- 
tive, and  the  only  question  is  that  of  repairing  in  a  proper 
manner.'  But  the  option  to  repair  does  not  release  from  all 
liability  on  the  policy.  When  the  policy  provides  for  deduc- 
tion from  the  cost  of  repairing  on  account  of  depreciation,  the 
measure  of  damages  is  the  cost  of  repairs  if  the  property  is 
made  as  valuable  as  before  the  fire  ;  if  less  valuable  than  be- 
fore, the  difference  must  be  added  to  the  cost  to  find  the  total 
for  which  the  company  is  liable  ;  if  more  valuable,  the  differ- 

1  Parker  v.  Eagle  Ins.  Co.,  9  Gray  (Mass  ),  152;  St.  Paul  Ins  Co  i-  Johnson, 
77  111.  598. 

-  Morrell  v.  Irving  Fire  Ins.  Co.,  33  N  Y.  429.  In  this  case  there  were  two 
policies  by  different  companies,  both  containing  the  provision  about  the  right  to 
rebuild.  It  was  held  that  both  might  be  sued  jointly  or  severally.  And  if  one 
only  was  sued  and  compelled  to  pay,  this  one  would  have  an  action  over  against 
the  other  for  contribution.     But 'see  ante,  §  423. 

3  Times  Fire  Ins.  Co.  v.  Hawke,  5  H.  &  N.  (Exch.)  935. 

*  Brown  v.  Royal  Ins.  Co.,  1  E.  &  E.  (Q.  B.)  853. 

5  Brady  v.  Northwestern  Ins.  Co.,  11  Mich.  425. 

6  Beals  V.  Home  Ins.  Co.,  36  Barb.  (N.  Y.)  611. 

^  [Wynkoop  v.  Niagara  Fire  Ins.  Co.,  91  N.  Y.  478  ] 

992 


en.  XXII.]  OF    THE   LOSS    AND    ITS    ADJUSTMENT.  [§  -1.^4 

ence  is  to  be  subtracted  from  the  cost.^  In  deciding  the  de- 
duction from  the  cost  of  replacing  the  property,  to  be  made 
on  account  of  its  depreciation  before  the  lire,  the  proper  ques- 
tion to  a  witness  is  not  to  inquire  his  opinion  of  the  amount 
of  depreciation,  but  what  was  the  condition  and  value  of  the 
building  at  the  time  of  the  fire.^  The  election  to  rebuild  or 
repair  once  made  is  irrevocable,  and  is  deemed  to  be  made 
with  knowledge  of  existing  ordinances.  A  law  preventing 
the  erection  of  a  frame  building  is  no  excuse  for  failure  to 
rebuild,  since  the  company  might  have  used  brick,  and  if  the 
insured  builds  of  brick  after  failure  of  the  company  to  do  so, 
he  may  recover  the  cost  and  damages  for  delay .^  Where  the 
company  has  an  option,  within  fifteen  days  after  statement 
of  loss,  to  notify  the  insured  of  its  intention  to  repair,  the 
insured  does  not  lose  his  right  to  recover  by  making  within 
the  fifteen  days  repairs  necessary  to  preserve  the  property  from 
further  damage.*  When  a  building  in  which  one  of  the  heirs 
of  the  deceased  owner  who  insured  it  has  a  life  estate  and 
another  a  reversion,  is  injured  by  fire,  it  is  the  right  of  each  or 
either  of  them  to  have  the  indemnity  resulting  from  the  insur- 
ance applied  to  repairing  the  building.^  If  a  policy  is  given  to 
a  first  mortgagee  as  collateral,  and  the  insurance  money  used 
to  make  repairs,  the  order  of  the  incumbrancers  is  not  changed 
thereby.  The  funds  so  used  do  not  operate  to  pay  the  first 
mortgage.^] 

§  434.  Loss  :  Contribution.  —  We  have  already  seen  tliat  in 
cases  of  double  insurance,  that  is,  where  several  policies  in 
different  ofhces  insure  the  same  party  upon  the  same  subject- 
matter  against  the  same  risk,  as  there  can  be  but  one  loss  and 
one  indemnity,  the  several  offices,  as  between  themselves, 
must  contribute  proportionably  to  the  loss,  though  each  is  lia- 
ble to  the  insured  for  the  entire  loss,  unless  there  is  a  special 
agreement  that  each  shall  be  liable  only  for  its  proportional 

1  [Commercial  Fire  Ins.  Co.  v.  Allen,  80  Ala.  571] 

2  IHegard  v.  Cal.  Ins.  Co.,  72  Cal.  535.] 

3  [Fire  Assurance  o.  Rosentlial,  108  Pa.  St.  474.] 

*  [Eliot  Five  Cents'  Savings  Bank  r.  Commercial  Ass.  Co.,  142  Mass.  142.] 

s  [Brough  0.  Higgins,  2  Grat.  408  at  4i:].] 

6  [Seybold  i',  Garceau,  31  L.  C.  Jur.  159,  32  id.  olC] 

993 


§434]  insurance:  fire,  life,  accident,  etc.     [ch.  xxii. 

part.^  The  several  insurers  are  regarded  as  if  they  were  one,^ 
each  standing  as  co-surety  with  the  other,  according  to  the 
amount  which  he  undertakes,  just  as  if  all  had  underwritten 
the  same  pohcy.  To  avoid  circuity  of  action,  the  jjro  rata 
limitation  was  introduced.-^  And  if  an  office  having  in  its 
l)olicy  the  provision  for  the  proportional  liability  pay  more 
than  its  share,  it  can  have  no  remedy  for  contribution  against 
the  other  offices,  since  its  own  negligence  can  give  it  no  right 
of  action  against  others.'*  It  may,  however,  have  a  remedy 
agamst  the  assured.^  [When  the  loss  was  greater  than  the 
whole  amount  insured,  it  was  held  that  the  various  underwriters 
must  pay  their  whole  insurance  respectively.^  A  policy  pro- 
vided for  apportionment,  and  also  that  "  the  company  shall  only 
be  obliged  to  pay  as  it  they  had  insured  two-thirds  of  the  actual 
cash  value  of  the  property,"  which  was  $6000.  There  was 
double  insurance,  one  policy  for  $4000,  and  one  for  $1998. 
It  was  held  that  the  two-thirds  provision  simply  defined  the 
maximum  liability,  and  did  not  entitle  the  company  to  pro-rate 
on  a  two-thirds  basis,  and  that   as  the  loss  was  total  and 

1  [If  there  are  several  insurances  on  the  same  property,  tlie  companies  must 
contribute  pro  rata.  Tliurston  v.  Koch,  4  Dall.  348,  3d  Cir.  (Pa.)  1880.  Persons 
insuring  pohcies  on  the  same  property  are  co  insurers,  and  are  not  jointly  lia- 
ble, but  only  in  proportion  to  the  amoimt  which  each  insures.  Chesbrou^h  v. 
Home  Ins.  Co  ,  61  Mich.  333.  The  plaintiff  is  entitled  only  to  one  indemnity. 
Add,  therefore,  the  amounts  insured  in  the  various  companies  to  find  a  total 
amount.  Find  what  percentage  of  this  total  the  amount  of  the  A.  policy  is,  and 
you  have  the  percentage  of  the  loss  that  the  A.  company  is  to  bear.  Barnes  v. 
kartford  Fire  Ins  Co.,  9  Fed.  Rep.  813;  3  McCrary,  22G,  8tli  Cir.  (Minn.)  1882. 
Where  the  insurance  exceeds  the  loss,  the  adjustment  among  the  companies 
should  be;  as  the  total  insurance  is  to  the  total  loss,  so  is  the  first  company's  pol- 
icy to  the  first  company's  liability.  Robbins  v.  People's  Ins.  Co.,  2  N.  J.  L.  J. 
213,  3d  Cir.  (N.  Y.)  1879.  In  a  case  of  double  insurance,  the  assured  may  elect 
to  sue  one  company,  and  that  may  then  liave  contribution  against  the  other. 
Wiggin  V.  Suffolk  Ins.  Co.,  18  Pick.  145  at  153] 

-  Ante,  §  13.  See  also,  in  addition  to  the  authorities  therein  cited,  Harris  v. 
Prot.  Ins.  Co.,  Wright  (Ohio),  548  ;  Hough  i'.  People's  Ins.  Co  ,  36  Md.  398;  Me- 
chanics' Fire  Ins.  Co.  v.  Nichols.  1  Ilarr.  (N.  J.)  410;  Liverpool,  &c.  Ins.  Co.  v. 
Verdier,  33  ^Mich.  138;  Baltimore  Fire  Ins  Co.  i-.  Loney,  20  Md.  20'  Tuck  v. 
Hartford  Fire  Ins   Co  ,  56  N.  H.  320. 

3  Howard  Ins.  Co.  i-.  Scribner,  5  Hill  (N.  Y.),  298. 

4  Lucas  f.  JeflTerson  Ins.  Co..  6  Cowen  (N    Y.),  G35. 
6  Fitzsimmons  v.  City  Fire  Ins.  Co  ,  18  Wis.  234. 

6  [Phillips  c.  Perry  Co.  Ins.  Co.,  7  Phda.  G73  at  675.] 

994 


CH.  XXII.]  OF   THE   LOSS   AND    ITS   ADJUSTMENT.  [§  434 

exceeded  the  total  insurance,  each  company  must  pay  the  whole 
amount  of  its  policy  without  any  apportionment.^  Where 
several  agents  of  different  companies  joined  to  insure  for 
1)12,000,  specifying  the  company,  and  it  was  not  shown  that 
the  companies  did  business  together,  or  that  the  agents  were 
agents  for  them  jointly,  it  was  held  that  the  agreement  bound 
each  company  for  its  proportion  of  loss,  and  not  all  jointly  for 
the  whole.2  Where  several  companies  concerned  agree  jointly 
to  resist  a  claim,  and  one  of  them,  A.,  is  afterward  sued  by  X., 
for  services  in  that  defence,  and  is  compelled  to  pay  the  whole 
amount,  it  may  sue  B.  for  contribution,  and  B.  cannot  defend 
on  the  ground  that  A.  did  not  plead  non-joinder  against  X.,  B. 
having  knowledge  of  the  suit  by  X.,  and  not  requesting  such 
plea.  Other  companies  in  the  agreement,  but  non-insolvent, 
are  to  be  laid  out  of  the  account.  As  B.  was  the  only  com- 
pany within  the  jurisdiction  of  the  court,  and  as  its  policy  was 
of  the  same  amount  as  A.'s,  B.  was  made  to  pay  one-half  the 
amount  recovered  from  A.  by  X.^  Where  several  companies 
interested  in  a  loss  give  notice  of  intent  to  rebuild,  thus  turn- 
ing the  policies  into  building  contracts,  the  insured  may  settle 
with  some  of  the  companies,  and  sue  others  severally  for  their 
proportion  of  the  loss,  which  is  to  be  calculated  without  regard 
to  tlie  facts  that  some  of  the  companies  were  released  for  less 
than  they  were  liable  for  or  were  insolvent.*  Contribution 
will  take  effect  only  among  policies  upon  the  same  interest 
in  the  same  property.  Even  though  it  is  agreed  that  "  any 
policy  attaching  to  the  property  covered  by  this  policy  "  shall 
be  considered  as  contributing  insurance,  yet  a  policy  on  that 
property  running  to  another  person  to  secure  his  interest,  or 
running  to  the  plaintiff  to  secure,  not  his  own  interest,  but 
that  of  another  for  whom  he  is  trustee,  will  not  contribute, 
and  is  not  within  the  fair  contemplation  of  the  contributing 
clause.^] 

1  [Lebanon  Mut.  Ins.  Co.  v.  Kepler,  106  Pa.  St.  28] 

2  [Fitton  V.  Phoenix  Ass.  Co.,  25  Fetl.  Rep.  880  ( Vt  ),  1885;  23  id.  3.] 

3  [Security  Ins.  Co.  v.  St.  Paul  Ins.  Co.,  50  Conn.  233.1 

*  [Good  V.  Buckeye  Mut  Fire  Ins.  Co  ,  43  Ohio  St.  394.] 

^  [Lowell  Manuf.  Co.  v.  Safeguard  Fire  Ins.  Co.,  88  N.  Y.  591.] 

995 


§  435]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXII. 

§  435.  Loss  ;  Contribution  ;  Double  Insurance  ;  Identity  of 
Risk.  —  In  the  case  of  Howard  Insurance  Company  v.  Scrib- 
ner,^  it  was  held  that  double  insurance  occurred  only  when  the 
subsequent  insurance  was  upon  the  same  precise  property  as 
that  covered  by  the  first ;  and  that  insurance  in  one  policy  on 
fixtures  for  -11 000,  and  on  stock  for  S^oOOO,  and  in  another 
policy  for  $5000  on  stock  and  fixtures  as  one  parcel,  was  not 
a  double  insurance.  As  a  consequence,  the  rule  of  appoi'tion- 
ment  in  case  of  other  insurance  did  not  apply,  and  recovery 
might  be  had  on  the  first  policy,  without  regard  to  the  second. 
But  this  doctrine  has  been  repudiated  in  a  ver}'  recent  case.^ 
In  considering  the  case,  the  court  said  :  — 

"  The  clause  now  usual  in  policies  of  insurance  which  pro- 
vides for  an  apportionment  of  the  loss,  in  case  of  other  insur- 
ance on  the  property,  is  a  part  of  the  contract,  and  must 
receive  a  reasonable  construction.  We  have  no  right  to  en- 
graft upon  it  the  rules  governing  suits  for  contribution  among 
insurers,  or  to  restrict  its  operation  to  cases  where  such  suits 
could  be  maintained,  but  must  look  at  the  language  of  the 
clause  itself,  and  construe  it  as  we  would  any  other  stipula- 
tion between  the  insurer  and  the  insured. 

"  We  cannot  adopt  the  view  taken  of  this  clause  in  the  case 
of  Howard  Insurance  Company  v.  Scribner,  where  it  was  held, 
in  analogy  to  the  rule  in  actions  for  contribution,  that  where 
a  specific  parcel  of  property  is  insured  by  one  policy,  and  the 
same  property  is  covered  by  another  policy,  which  also  in- 
cludes other  property,  the  latter  policy  is  to  be  thrown  wholly 
out  of  view,  and  does  not  constitute  other  insurance  within 
the  meaning  of  the  clause  ;  in  either  case,  the  whole  sum 
insured  by  the  more  comprehensive  policy  is  to  be  considered 
as  so  much  additional  insurance  upon  the  parcel  separately 
insured. 

"  Where  several  parcels  of  property  are  insured  together 
for  an  entire  sum,  it  is  impossible  to  say,  as  to  either  of  the 
parcels,  that  there  is  no  insurance  upon  it,  neither  is  it  reason- 
able to  assume  that  any  of  the  parcels  is  insured  for  more  than 

1  5  Hill  (N.  Y.),  298. 

2  Ogden  V  East  Eivcr  Ins.  Co.,  50  N.  Y.  388. 

996 


CIJ.  XXII.]  OF    THE    LOSS    AND    ITS    ADJUSTMENT.  [§  435 

its  value,  when  the  whole  sum  insured  is  less  than  the  aggre- 
gate value  of  all  the  parcels  covered  by  the  policy.  The  diffi- 
culty lies  in  determining  what  part  of  the  whole  sum  insured 
is  to  be  deemed  a})plicable  to  either  parcel,  when  the  policy 
itself  makes  no  separation. 

••'  If  the  entire  j)roperty  is  destroyed,  as  in  this  case,  the  rule 
laid  down  in  2  Phillips  on  Insurance,^  and  in  131ake  v.  Ex- 
change Mutual  Insurance  Company,^  carries  out  the  intent  of 
the  clause,  and  works  entire  equity  between  the  insurers  and 
the  insured  as  well  as  between  the  several  insurers.  That 
rule  is,  in  sul)stance,  that  for  the  purpose  of  apportioning  the 
loss,  in  case  of  over-insurance,  where  several  parcels  are  insured 
together  by  one  policy  for  an  entii-e  sum,  and  one  of  the  parcels 
is  insured  separately  by  another  policy,  the  sum  insured  by  the 
first-mentioned  policy  is  to  be  distributed  among  the  several 
parcels  in  the  proportion  which  the  sura  insured  by  the  policy 
bears  to  the  total  value  of  all  the  parcels.  Thus,  in  round 
numbers,  the  sum  insured  in  this  case  l)y  the'  policies  other 
than  the  defendants'  on  the  property  as  an  entirety,  was 
$47,000.  Tlie  total  value  of  the  property  covered  by  these 
policies  was  ;t*88,000.  In  case  of  a  total  loss,  each  parcel 
should  be  deemed  insured  thereby  for  y  of  its  value.  The 
parcel  separately  insured  by  the  defendant  was  worth  $16,000, 
and  was  insured  by  the  defendant  for  $3000,  which  was  equal 
to  A  of  its  value.  It  is  manifest  that  there  was  no  over- 
Insurance,  and  that  consequently  there  is  no  occasion  for  any 
apportionment." 

And  substantially  this  rule  has  been  followed  in  Kentucky  ^ 
and  in  Missouri. ^  In  another  case  in  Massachusetts,  a  policy 
was  taken  for  $3000,  "  additional  to  $9000  insured  in  other 
offices,  and  -$8000  to  be  insured  in  other  offices."  There  was 
in  fact  at  the  time  of  loss  but  $11,000  additional  insurance. 

1  Page  36,  No.  1263  a. 

2  12  Gray,  205. 

''  Cromie  /;.  Ken.  &  Lou.  Mut.  Ins.  Co,,  15  B.  Mon.  (Ky.)  432. 

*  Angelrodt  v.  Delaware  Ins.  Co.,  31  Mo.  593.  15ul  Scribner's  case  has  been 
followeJ  in  Tennsylvania.  Sloat  r.  Royal  Ins  Co.,  49  Pa.  St.  14 ,  see  also  Royal 
Ins.  Co.  I'  Roedel,  78  I'a.  St.  19, —  cases,  however,  hardly  reconcilable  with 
Merrick's  case,  cited  ui  §  4']G,  post. 

997 


§  436]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH    XXII. 

It  was  held  that  the  insurers  must  pay  in  proportion  to  the 
amount  of  actual,  and  not  of  contemj)lated,  insurance. ^  Nor 
is  the  insured  bound  towards  one  company  to  keep  up  the 
amount  of  his  insurance  in  other  companies.^ 

When  two  policies  coexist,  each  providing  that  the  com- 
pany shall  be  liable  only  for  its  proportionate  amount  of  the 
whole  insurance,  and  the  former  becomes  invalid  by  reason 
of  the  subsequent  valid  insurance,  the  latter,  not  requiring 
notice  of  prior  insurance,  is  good  for  the  whole  amount 
payable,  in  case  of  loss.^ 

The  insured  is  entitled  to  his  indemnity,  and  no  more.* 
But  the  adjustment  must  be  so  made  as  to  give  full  indem- 
nity ,  and  if  one  company  has  restricted  its  liability,  and  the 
other  has  not,  it  may  happen  that  the  latter  will  have  to 
pay  more  than  its  proportion  of  the  whole  loss.  Thus,  where 
A.  insured  on  live-stock  *1500,  B.  on  live-stock  1^1667,  "not 
to  exceed  $500  on  any  one  animal,"  and  C.  on  live-stock 
$1667,  no  one  "animal  to  be  valued  at  more  than  $500  ;  and 
steers  valued  at  $336,  and  a  bull  valued  at  $2000,  were  lost, 
the  rate  'was  held  to  be  limited  in  favor  of  B.  and  C,  while 
A.  was  held  to  make  up  the  balance,  being  more  than  its  pro- 
portion but  for  the  restriction  of  the  liability  in  the  other 
policies,  sufficient  to  give  the  insured  his  full  indemnity.^ 
Otherwise  if  the  liability  be  restricted  by  charter.^ 

§  436.  Loss  ;  Contribution  ;  Floating  Policy  ;  Specific  Insur- 
ance. —  But  under  a  general  or  floating  policy,  intended  to 
cover  property  which  cannot  well  be  covered  by  specific 
insurance,  from  the  circumstance  that  it  is  changing  in  quan- 
tity or  location,  as  where  the  policy,  as  a  "  condition  of  aver- 
age," provides  that  if  the  merchandise  should  at  the  time  of 

1  Richmond ville  f.  Hamilton  Mut.  Ins.  Co.,  14  Gray  (Mass  ),  459.  See  also 
Haley  i-.  Dorchester  Mut.  Ins.  Co.,  1  Allen  (Mass.),  536;  Tuck  y.  Hartford  Fire 
Ins.  Co.,  56  N.  H.  326. 

-  Quarrier  v.  Insurance  Companies,  10  W.  Va.  507. 

3  Hand  v.  Williamsburgh,  &c.  Ins.  Co.,  57  N.  Y.  41. 

1  Croraie  v.  Kentucky,  &c.  Ins.  Co.,  supra. 

^  Sherman  v.  Madison  Ins.  Co.,.  39  Wis.  101.  See  also  Royal  Ins.  Co-  v. 
Roedel,  78  Pa.  St   19. 

6  Bardwell  v.  Conway  Mut.  Ins.  Co  ,  122  Mass.  90. 

998 


CH.  XXII.]  OF   THE   LOSS   AND    ITS    ADJUSTMENT.  [§  436 

any  fire  be  insured  by  any  specific  insurance,  then  the  policy 
should  not  extend  to  cover  such  merchandise,  excepting  only 
so  far  as  relates  to  any  excess  of  value  beyond  the  amount  of 
the  specific  insurance,  which  excess,  however,  the  policy  will 
protect,  no  claim  can  be  made  under  the  floating  policy,  if  the 
specific  insurance  exceeds  the  amount  of  the  value  of  the 
goods  insured  by  it  and  destroyed.^ 

Where,  however,  four  policies  provided  that  "  if  at  the  hap- 
pening of  any  fire  the  assured  shall  have  insurance  under  a 
floating  policy  or  policies  not  specific,  but  covering  goods 
generally  in  various  places  not  designated,  and  yet  within 
limits  which  include  the  premises  or  property  herein  in- 
sured, such  policy,  as  between  the  insured  and  this  company, 
shall  be  considered  as  covering  any  excess  of  sound  value  of 
the  subject  insured  beyond  the  amount  covered  by  the  spe- 
cific insurances  thereon ;  and  to  determine  the  amount  for 
which  this  company  is  liable  in  case  of  loss  such  floating  pol- 
icy shall  be  considered  an  insurance  on  the  property  to  the 
extent  of  such  excess,"  and  other  companies  insured  on  spe- 
cific property  in  the  same  enclosure,  it  was  held  that  the  lia- 
bility on  the  four  policies  was  not  confined  to  the  excess 
of  loss  above  that  covered  by  the  specific  insurance,  but 
they  must  contribute  ratably  on  the  property  insured  iu 
the  specific  policies  which  was  covered  by  their  general 
policies.^ 

In  the  following  case  certain  policies  were  held  to  be  spe- 
cific :  Between  the  5th  of  February,  1870,  and  the  loth  of 
July,  1870,  both  days  inclusive,  the  appellants  deposited  on 
storage  in  a  certain  warehouse,  occupied  by  the  Baltimore 
Warehouse  Company,  sundry  lots  of  cotton  in  bales.  For 
each  lot  deposited  the  appellants  received  from  the  warehouse 
company  a  receipt,  warrant,  or  certificate,  which  si)Ccifiod  the 
number  of  bales,  and  the  date  of  the  deposit,  and  also  the 
mark  on  the  bales,  —  the  letters  X.  Q.  being  marked  on  each 
bale  so  deposited.  These  receipts  or  certificates  were  all 
numbered.     On  the   20th  of  June,  1870,  the  appellants  de- 

1  Fairchild  v.  Liv.  &  Lon.  Fire  &  Life  Ins.  Co.,  51  N.  Y.  05. 

2  Merrick  v.  Germania  Ins.  Co.,  54  Fa.  St.  277,  Woodward,  J.,  dissenting. 

999 


§  436  a]         INSURANCE  :    fire,    life,    accident,    etc.       [CII.   XXII. 

posited  fifteen  bales  and  took  a  receipt  therefor,  numbered 
1221,  and  on  the  following  day  a  policy  of  insurance  was 
taken  out  to  cover  the  particular  number  of  bales  thus  de- 
posited. On  the  27th  of  June  the  appellants  deposited  thir- 
teen bales,  and  took  a  like  receipt  therefor,  numbered  1238, 
and  on  the  same  day  effected  an  insurance  for  the  parti- 
cular number  of  bales  thus  dejjosited.  On  the  face  of  each 
policy  the  loss,  if  any,  was  made  payable  to  the  warehouse 
comj)any  ;  and  the  policies  and  receipts  were  delivered  to  the 
warehouse  company  to  secure  advances  made  by  it.  On  the 
policy  on  the  fifteen  bales  there  was  indorsed  in  pencil  in  fig- 
ures the  number  1221,  corresponding  with  the  number  of  the 
warehouse  receipt  given  therefor ;  and  on  the  policy  on  the  thir- 
teen bales  there  was  indorsed,  also  in  pencil,  1238,  correspond- 
ing with  the  number  of  the  receipt  for  the  cotton.  At  the  time 
of  each  deposit  the  depositor  reserved  a  sample  of  the  particu- 
lar lot  deposited.  The  warehouse  company  held  at  the  same 
time  a  general  policy  on  goods  held  by  them  in  trust.  On 
these  facts  it  was  held  that  the  policies  were  specific  and  not 
general :  that  each  covered,  and  was  intended  to  cover,  the 
specific  number  of  bales  in  each  deposit,  and  the  insurance  on 
which  was  effected  at  the  time  of  the  deposit,  —  the  policy  of 
the  21st  of  June,  1870,  covering  only  the  fifteen  bales  depos- 
ited on  the  day  previous,  and  the  policy  of  the  27th  of  June 
the  thirteen  bales  deposited  on  that  day.^  Under  a  floating 
policy,  where  the  title  to  the  property  has  actually  passed, 
and  the  seller  only  holds  the  written  title  for  the  convenience 
of  delivery  to  the  purchaser,  it  is  not  covered  by  a  policy 
which  insures  property  for  which  the  insured  may  be  respon- 
sible ;2  nor  will  the  insured,  in  a  policy  which  may  cover 
both  his  goods  and  the  purchaser's,  in  such  case  be  obliged  to 
account  for  any  insurance  collected  not  in  excess  of  the  loss 
on  his  own  goods.^ 

§  436  a.  Contribution  ;    Identity  of  Interest ;    Floating  Policy. 
—  Contribution  has  no  more  place,  however,  under  a  floating 

•      1  Houprh  r.  People's  Ins.  Co.,  36  Md   398. 

2  North  British,  &c.  Ins.  Co.  v.  Moffatt,  7  L.  R.  C.  P.  25. 

3  Martineau  v.  Kitching,  7  L.  R.  Q.  B.  436. 
1000 


CH.  XXII.]  OF    THE    LOSS    ^ND    ITS    ADJUSTiMENT.  [§  437 

policy  than  any  other,  unless  all  the  insurance  called  upon 
to  contribute  is  for  the  benefit  of  the  same  person,  on  the  same 
subject  or  interest,  and  aganist  the  same  risks.  Thus  float- 
ing policies  were  issued  to  B.,  a  wharfinger,  on  goods,  his 
own  and  such  for  which  he  was  responsible,  subject  to  the 
condition  that  "  if  at  the  time  of  any  loss  or  damage  happening 
to  the  insured  property  there  be  any  other  subsisting  insur- 
ance effected  by  insured  or  another  person  on  same  i)roperty, 
the  insurer  shall  be  liable  only  for  its  ratable  proportion  of 
loss."  While  these  policies  were  in  force,  a  quantity  of  grain 
stored  with  B.  was  destroyed,  part  of  which  belonged  to  D., 
who  had  also  other  policies,  called  merchants'  policies,  on  the 
grain  destroyed,  including  also  other  grain,  which  contained 
the  same  condition  as  the  wharfinger's  policy.  B.  was  paid 
in  full.  In  a  suit  between  the  companies,  it  was  held  that 
the  grantors  of  the  merchants'  policies  were  not  liable  to  con- 
tribute to  the  loss,  and  that  the  grantors  of  the  wharfinger's 
policy  were  ultimately  liable  for  the  whole,  though  B.  was 
primarily  liable.^ 

§  437.  Loss ;  Contribution ;  Double  Insurance  ;  Identity  of 
Risk.  —  A  warehouse  company  which  received  goods  on  stor- 
age, and  gave  receipts  therefor,  effected  insurance  in  one 
company  for  $10,000,  against  loss  by  fire  for  a  year, "  on  mer- 
chandise generally  held  by  them  or  in  trust,"  contained  in  a 
particular  warehouse.  They  also  took  out  a  policy  from  another 
company  for  820,000,  "  on  merchandise,  their  own,  or  held  by 
them  in  trust,  or  in  which  they  held  an  interest  or  liability." 
The  plaintiff,  on  the  20th  and  27th  days  of  June  respectively 
of  the  year  covered  by  the  above  policies  deposited  cotton 
with  the  warehouse  company,  and  took  receipts ;  and  in 
each  case  took  out  policies  from  the  defendants  upon  the 
respective  lots  of  cotton  deposited.  Under  these  policies 
issued  to  the  j)laintiff,  the  loss,  if  any,  was  made  payable  to 
the  warehouse  company,  with  whom  the  plaintiff  had  other 
large  amounts  of  cotton  stored.  In  the  policies  to  the  plain- 
tiff, as  well  as  in   those  to  the  warehouse    company,  it  was 

1  North  British,  &c.  Ins.  Co.  v.  Liverpool,  &e.  Ins.  Co.,  5  Ch.  D.  569.  See 
also  Royal  Ins.  Co.  v.  Roedel,  78  Pa.  St.  19 ;  Sloat  v.  Royal  Ins.  Co.,  49  id.  14. 

1001 


§  438]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXII. 

stipulated  that  in  case  of  loss  the  assured  should  not  be  enti- 
tled to  recover  on  such  policy  any  greater  proportion  of  the 
loss  or  damage  sustained  to  the  subject  insured  than  the 
amount  thereby  insured.  July  18,  1870,  and  during  the  cur- 
rency of  all  the  policies,  the  warehouse  was  burned,  and 
some  of  the  bales  of  cotton  destroyed,  and  others  only  dam- 
aged. Upon  these  facts  it  was  held  that  the  plaintiff's  policies 
being  made  payable  to  the  warehouse  company  inured  to  the 
benefit  of  the  company,  and  were  to  be  considered  as  in  favor 
of  the  same  assured  on  the  same  interest,  in  the  same  subject, 
and  against  the  same  risks  as  the  jjolicies  which  were  issued 
directly  to  the  company  ;  that  with  the  latter  policies  they 
constituted  a  double  insurance,  and  the  companies  therefore 
issuing  the  policies  were  bound  to  contribute  their  respective 
proportions  of  the  loss.^  But  a  mortgagee  who  insures  his 
interest  subject  to  the  usual  provision  for  an  apportionment 
of  the  amount  to  be  paid  in  case  of  loss,  is  not  to  have  the 
amount  recoverable  by  him  reduced  by  the  fact  that  a  subse- 
quent mortgagee  has  insured  his  interest  in  another  company. 
The  interests  are  separate  and  distinct.^ 

§  438.  Loss  ;  Contribution  :  Restricted  Liability  ;  Av^erage.  — 
Insurers  who  restrict  their  liability  to  a  certain  proportion  of 
the  loss,  will  liave  the  benefit  of  the  restriction  in  case  they 
are  called  upon  for  contribution.  Thus,  where  the  restriction 
is  to  two-thirds  of  the  value  of  the  property,  and  there  is 
other  insurance,  and  the  whole  loss  is  more  than  the  two- 
thirds,  the  first  insurers  will  be  liable  only  for  such  a  propor- 
tion of  the  loss,  within  the  two-thirds,  as  the  amount  of  their 
insurance  bears  to  the  amount  of  the  second  insurance.^  If 
the  first  insurance  be  three-fourths  on  82000,  and  other  in- 
surance exist  to  the  amount  of  $3000,  in  case  of  loss  the  first 
insurers  will  be  liable  only  for  two-fifths  of  three-fourths  of 
the  value  of  the  property  at  the  time  of  the  loss.*  The  pro- 
visions of  the  policy  in  the  case  just  cited  were,  that  "  when 

2  Ibid. ;  Home  Ins.  Co.  v.  Baltimore  Warehouse  Co.,  93  U.  S.  527. 

2  Fox  V.  Plioenix  Ins.  Co.,  52  Me.  333. 

8  Goodall  V.  N.  E.  Mut.  Fire  Ins.  Co.,  5  Fost.  (N.  H.)  169. 

*  Haley  v.  Dorchester  Mut.  Fire  Ins.  Co.,  12  Gray  (Mass.),  545. 

1002 


CH.  XXII.]  OF   THE   LOSS    AND    ITS    ADJUSTMENT.  [§  438 

property  is  insured  by  this  company  solely,  three-fourths  only 
of  the  value  will  be  taken,  and  in  case  of  loss  the  company 
will  be  liable  to  pay  only  three-fourths  of  the  value  at  the 
time  of  the  loss,"  and  that  "  in  case  of  loss  or  damage  of 
property  upon  which  double  insurance  exists,  the  company 
shall  be  liable  to  pay  only  such  proportion  thereof  as  the 
sum  insured  by  this  company  bears  to  the  whole  amount  in- 
sured thereon,— such  amount  not  to  exceed  three-fourths  of 
the  actual  value  at  the  time  of  the  loss  ;  "  and  their  effect  was 
thus  stated  by  Bigelow,  J. :  — 

"  The  defendants  did  not  assume  a  liability  in  case  of  the 
existence  of  other  insurance  on  the  property,  to  be  ascertained 
solely  by  calculating  the  proportion  which  the  sum  insured 
by  them  bore  to  the  whole  amount  insured  on  the  property. 
The  basis  of  calculation  was  in  all  cases  to  be  the  value  of 
the  property  insured,  after  deducting  one-fourth  of  such 
value.  Of  this  sum  the  defendants  were  to  pay  such  pro- 
portion as  the  sum  insured  by  the  policy  issued  by  them 
should  bear  to  the  whole  sum  insured  by  all  the  policies 
existing  on  the  property  at  the  time  of  the  loss.  In  other 
words,  the  defendants  were  to  be  liable  only  for  their  propor- 
tion of  three-fourths  of  the  value  of  the  property  insured; 
and  this  proportion  was  to  be  ascertained  by  calculating  the 
ratio  which  the  sum  insured  in  the  policy  declared  on  bore  to 
the  whole  sum  insured  by  all  the  policies  existing  on  the 
property.  Thus,  if  the  whole  property  at  the  time  of  the  loss 
amounted  to  ten  thousand  dollars,  the  sum  on  which  the 
liability  of  the  defendants  must  be  reckoned  would  be  three- 
fourths  of  ten  thousand,  or  seven  thousand  five  hundred  dol- 
lars ;  and  of  this  last  sum  the  defendants  would  be  held  to 
pay  only  the  proportion  which  the  amount  insured  by  them, 
viz.  two  thousand  dollars,  bore  to  the  whole  sum  insured,  viz. 
five  thousand  ;  or  two-fifths  of  seven  thousand  five  hundred  dol- 
lars, which  would  be  three  thousand  dollars.  But  as  this  last 
sum  exceeds  the  whole  amount  insured  by  the  defendants,  it 
would  be  cut  down  to  that  amount,  and  the  plaintiff  could 
recover  only  two  thousand  dollars."  A  stipulation  that  the 
insured  shall  "  recover  three-fourths  of  the  actual  loss,  pro- 

1003 


§   441]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXII. 

vided  three-fourths  of  the  amount  as  aforesaid  does  not  amount 
to  more  than  three-fourths  of  the  sum  insured,"  is  inapplicable 
in  case  of  total  loss,  and  in  such  case  the  insured  is  entitled 
to  recover  three-fourths  of  the  actual  value  of  the  property 
insured.^ 

§  439.  Loss  ;  Contribution  ;  Reinsurance  ;  Void  Policy.  —  If 
a  policy  of  reinsurance  provide  that  "  lu  case  there  were 
other  insurance,  prior  or  subsequent,  the  reiusured  should  be 
entitled  to  recover  only  a  proportionate  part ; "  the  other  in- 
surance spoken  of  refers  to  other  reinsurance,  and  unless  this 
exist  the  reinsurer  can  claim  no  proportionate  reduction.^  And 
so,  if  for  any  cause  the  other  policies  be  invalid,  there  can 
be  no  contribution,  as  there  is  no  other  insurance.^  But 
the  policy  may  provide  for  a  pro  rata  liability,  notwithstand- 
ing the  invalidity  of  other  policies,'*  or  the  insolvency  of  other 
companies.^ 

§  440.  Loss  ;  Life  Insurance  ;  Contribution  ;  Double  Insurance. 
• —  Generally,  in  life  insurance,  the  questions  of  double  insur- 
ance do  not  arise,  as  there  is  no  fixed  value  to  the  life,  and 
the  person  in  each  case  is  to  pay  a  fixed  sum,  without  regard 
to  other  insurance.  But  where  the  insurable  interest  has  an 
ascertainable  value  the  question  may  arise,  as  where  two  pol- 
icies are  taken  out  in  different  offices,  by  a  creditor,  on  the 
life  of  a  debtor,  and  for  the  same  debt.  Then  only  the  value 
of  the  interest  can  be  recovered,  and  the  amount  recovered 
on  the  first  policy  i^  to  be  deducted  from  the  amount  payable 
on  the  second.^ 

§  441.  Loss  ;  Alternative  Damages.  —  Under  a  policy  of  in- 
surance in  the  sum  of  two  thousand  dollars  against  loss  of 
life  from  accidental  injuries,  occasioning  death  within  ninety 

1  Farmers' Mut.  Ins.  Co.  i-.  Greybill,  74  Pa.  St.  17. 

2  Mutual  Safety  Ins.  Co.  i'.  Hone,  2  Corast.  (N.  Y.)  235. 

3  Hyguin  V.  M\.r\^  Ins.  Co.,  11  Iowa,  21. 

*  Liverpool,  &c.  Ins.  Co.  v.  Verdier,  35  Mich.  395. 

5  Tuck  V.  Hartford  Ins   Co.,  56  N.  H.  326. 

6  Hebdon  v.  West,  3  Best  &  Smith,  113  E.  C.  L.  580.  A  joint  jndpment  for 
tlie  wliole  loss  cannot  be  given  against  parties  severally  liable  each  for  a  por- 
tion, though  jointly  sued  by  consent.  Insurance  Cos.  v.  Boykin,  12  Wall. 
(U.  S.)  433. 

1004 


CH.  XXII.]  OF   THE  LOSS   AND    ITS   ADJUSTMENT.  [§  442 

days  from  the  accident,  and  in  the  sum  of  ten  dollars  a  week, 
for  a  period  not  exceedinti;  twenty-six  weeks,  against  personal 
injury  "  for  any  single  accident  by  which  the  insured  shall 
sustain  any  personal  mjury  which  shall  not  be  fatal,"  the 
weekly  sum  is  due  for  injury  by  an  accident  which  does 
not  occasion  death  within  ninety  days,  although  it  ulti- 
mately proves  fatal.  The  two  provisions  are  to  be  con- 
strued together,  and  the  intent  is  that  if  an  injury  hap[)ens, 
within  the  meaning  of  the  policy,  it  is  insured  against,  as 
coming  under  one  class  or  the  other.  If  it  were  otherwise 
construed,  an  injury  which  should  not  prove  fatal  within 
ninety  days  would  furnish  no  ground  of  action  till  it  should 
be  made  to  appear  that  it  would  never  prove  fatal, —  a  con- 
struction which  would  render  the  insurance  nugatory  in  such 
cases.^ 

§  442.  Loss  ;  Payment  by  Mistake  ;  Recovery  back.  —  The 
holder  of  a  life  policy,  on  proof  of  the  death  of  the  insured, 
recovered  the  amount  payable  in  such  an  event.  It  was  sub- 
sequently ascertained,  however,  that  the  insured  was  not 
dead  ;  and  thereupon  the  insurers  brought  suit  to  recover 
back  the  money  so  paid,  as  obtained  by  misrepresentation : 
and  it  was  held  that  it  appearing  there  was  no  want  of  good 
faith  on  the  part  of  the  holder  of  the  policy,  the  insurers 
might  recover  upon  condition,  and  only  upon  condition,  of 
redelivery  of  the  policy  as  a  subsisting  and  valid  contract.^ 
A  payment  of  the  loss,  or  even  an  adjustment  agreed  upon, 
is,  as  a  rule,  a  waiver  of  all  questions  as  to  liability  which 
might  have  arisen  on  a  trial.  That  such  adjustment  is  made 
without  knowledge  of  facts,  which  might  if  known  have  been 
effectual  to  defeat  any  claim,  is  of  no  avail,  if  the  insurer 
might  have  known  them  upon  inquiry,  and  Avas  not  fraudu- 
lently prevented  from  coming  to  their  knowledge  by  the  in- 
sured. Payment  under  such  circumstances  is  not  payment 
under  a  mistake  of  facts,  since  the  facts  might  have  been 
known  if  the  insurer  had  thought  it  worth  while  to  inquire 

^  Perry  v  Prov  Ins.  Co..  103  Mass.  242. 

2  North  Brit.  &  Mer.  Ins.  Co.  v.  Stewart,  9  Ct.  of  Sess.  Cas.,  3d  series,  534. 
And  see  post,  §  575. 

1005 


§  445]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.        [CH.  XXII. 

for  them.^  If  either  party  to  the  adjustment  has  been  led 
into  it  by  fraud,  it  may  be  set  aside  by  the  party  wronged, 
he  first  having  restored,  or  offered  to  restore,  any  payment  or 
advantage  he  may  have  received,^  An  adjustment,  however, 
"  subject  to  the  terms  and  conditions  of  several  policies," 
settles  nothing  but  the  amount  to  be  paid  bearing  upon  the 
question  of  liability.^ 

§443.  Loss;  Fraudulent  Overvaluation. — Fraudulent  over- 
valuation of  goods  destroyed  is  a  complete  defence  to  the 
claim  for  indemnity,  but  a  mistaken  or  exaggerated  over- 
valuation, not  fraudulent,  does  not  deprive  the  insured  of  the 
right  to  recover  an  amount  equal  to  the  actual  loss.* 

§  444.  Loss  ;  Evidence  of  Payment.  —  Where  the  policy  has 
been  lost,  and  the  court  decrees  the  payment  of  the  loss,  tlie 
insurance  company  has  no  right  to  demand  a  bond  of  indem- 
nity before  payment.  The  decree  of  the  court  is  the  com- 
pany's sufficient  protection.^ 

§  445.  Loss  ;  Nominal  and  Real  Claimants.  —  The  nominal 
and  real  claimants  are  frequently  not  the  same.  Owing  to 
the  form  of  the  contract  it  often  happens  that  one  party  is  to 
bring  suit  to  recover  the  loss,  while  after  recovery  it  is  to  be 
paid  over  to  others.  The  questions  often  therefore  arise, 
Who  is  to  sue  ?  and  who  is  to  receive  ultimately  the  amount 
recovered  ?  The  name  of  the  insured  may  not  be  stated  in 
the  policy,  as  it  need  not  be.     And  if  the  person  for  whose 

1  Smith  V.  Glen's  Falls  Ins.  Co  ,  62  N.  Y.  85;  National  Life  Ins  Co.  v.  Mincli, 
53  id.  144  ;  Beisecker  ;;.  ^tna  Ins.  Co.,  C.  C.  P.  (Pa.),  4  Ins  L.  J.  477.  See  also 
post,  §  575;  Untersinger  v.  Niagara  Ins.  Co.,  Hamilton  Co.  Dist.  Ct.  (Ohio),  10 
Ins.  L.  J.  237 ;  Northwestern  Ins.  Co.  v  Roth,  87  Pa.  St.  40'J ;  Dunn  v  Com- 
monwealth Ins.  Co.,C.  Ct.  (Ohio),  3  Ins.  L.J.  631  ;  Stache  v.  St.  Paul,  &c.  Ins. 
Co.,  49  Wis.  89;  Hanna  v.  Andes  Ins.  Co.,  Superior  Ct.  (Cincmnati),  4  Ins.  L.  J. 
396.  In  this  case  a  director  who  had  bought  up  several  claims  for  fifty  cents 
on  a  dollar,  attempted,  but  without  success,  to  collect  the  full  amount  of  the 
company. 

^  Potter  V.  Monmouth,  &c.  Ins.  Co  ,  63  Me.  440. 

3  Whipple  V.  North  British,  &c.  Ins.  Co.,   11  R.  I.  139. 

*  Chapman  v.  Pote,  22  L.  T.  306,  at  Nisi  Prius,  Cockburn,  C.  J.  And  see 
post,  §§  477,  584 ;  ante,  §  373  ;  Sibley  v.  St.  Paul,  &c.  Ins.  Co.,  C.  Ct.  (111.),  8  Ins. 
L.  J.  461  ;  Gerhauser  i-.  North  British,  &c.  Ins.  Co.,  6  Nev.  15 ;  Williams  v. 
Phoenix  Ins.  Co.,  61  Me.  67. 

^  England  v.  Tredegar,  1  Law  Reports,  Eq.  Cases,  344. 

1006 


CH.  XXII.]  OF    THE    LO.-;ri    AND    ITS    AD.IUSTMIONT.  [§  44o 

benefit  tlie  policy  is  made  docs  not  therein  appear,  or  if  tlic 
designation  is  applicable  to  several  persons,  or  if  the  descrip- 
tion of  the  insured  is  imperfect  or  ambiguous,  so  that  it  can- 
not be  understood  without  explanation,  —  extrinsic  evidence 
may  be  resorted  to,  to  show  for  whom  the  insurance  was  in- 
tended ;  and  those  will  be  included  within  the  benefits  of  the 
policy  who  shall  appear  to  have  been  within  the  intention  of 
the  parties.^  Where  loss  was  payable  to  "  heirs  and  repre- 
sentatives," it  was  held  that  extrinsic  evidence  was  admis- 
sible to  show  that  the  next  of  kin  was  intended. ^  A  person 
may  in  his  own  name  insure  the  property  of  another  for  the 
benefit  of  the  latter,  or  in  the  name  of  the  owner,  without 
the  knowledge  of  the  latter,  and  the  insurance  will  inure  to 
the  benefit  of  such  owner  if  the  proceeding  be  ratified  and 
adopted  by  him  even  after  loss.^  Insurance  for  the  benefit  of 
others  than  the  party  effecting  the  insurance  is  not  equivalent 
to  "  for  whom  it  may  concern,"  because  it  does  not  neces- 
sarily include  all  interests,  but  only  such  as  may  be  shown  to 
have  been  intended.*  An  insurance,  for  example,  is  effected 
upon  "  the  estate  of  Daniel  Ross,"  and  it  not  being  apparent 
who  were  intended  to  be  included  within  that  designation, 
evidence  is  admissible  to  show  that  both  parties  understood 
that  the  insurance  was  for  the  benefit  of  the  widow  and  heirs 
of  Ross.  That  the  personal  estate  is  represented  by  the  ad- 
ministrator, and  therefore  the  administrator  was  the  person 
designated,  is  too  strict  a  construction.  The  expression  is 
rather  used  to  designate  the  whole  estate  left  by  the  deceased 
and  held  by  those  who  have  the  legal  title.^     [If  the  agreement 

1  Waring  v.  Indemnity  Ins.  Co.,  45  N.  Y.  606 ;  Duncan  v.  Sun  Mut.  Fire  Ins. 
Co  ,  12  La  Ann.  486  ;  Herkimer  v.  Rice,  27  N.  Y.  163. 

2  Myers  v.  John  Hancock  Mut.  Life  Ins.  Co.,  41  Mo.  598.  But  tins  case  was 
disapproved  of  in  Wason  v.  Colburn,  19  Mass.  35,  where  it  was  held  to  the 
contrary. 

3  Giffard  v.  Queen  Ins.  Co.,  1  Ilannay  (N.  B.),  4.32;  ante,  §  191.  See  also 
Shawmut  Sugar  Co.  v.  Hampden  Ins.  Co.,  12  Gray  (Mass.),  540,  which  shows 
that  where  tlio  parties  interested  in  the  contract  are  not  designated  therein,  ex- 
cept indefinitely,  it  is  for  the  jury  to  determine  who  they  are. 

*  Lee  V.  Adsit,  37  N.  Y.  78. 

^  Clinton  v.  Hope  Ins.  Co.,  45  N.  Y.  454;  Matthews  v.  Queen  City  Ins.  Co., 
2  Cincinnati  Superior  Court  Reporter,  109;    Wash.  Mut.  Fire  Ins.  Co.  v.  St. 
VOL.  11. —  20  1007 


§  446]  INSUEANCE  ;    FIRE,    LIFE,    ACCIDENT,    ETC.        [CH.  XXII. 

is  with  the  insured  and  his  representatives  and  assigns,  his 
administrator  can  sue  in  his  own  name.^]  So  where  the  pol- 
icy was  issued  to  the  "  heirs  and  representatives  of  A.,"  the 
deceased,  his  executor,  with  power  to  sell  and  convey,  was 
entitled  to  claim  the  proceeds,  as  holding  the  title  in  trust.^ 

§  446.  The  general  rule  applicable  to  personal  contracts  is 
that,  if  assigned,  the  action  for  a  breach  must  be  brought  in 
the  name  of  the  assignor,  though  the  promise  be  to  him  and 
his  assigns,^  except  where  the  defendant  has  promised  the 
assignee  to  respond  to  him.  But  a  consent  to  the  assign- 
ment is  held  to  be  the  equivalent  of  this  promise.*  And  so, 
if  the  policy  is  made  "  payable,  in  case  of  loss,"  to  a  third 
party ,^  or  to  bearer.^     So  on  life  policies  not  under  seal,  the 

Mary's  Seminary,  52  Mo.  480;  Leavitt  v.  West.  Mar.  &  Fire  Ins.  Co.,  7  Rob. 
(La.)  351 ;  Globe  Ins.  Co.  v.  Boyle,  31  Ohio  St.  119;  ante,  §  390. 

1  [Tripp  &  Bailey  v.  Insurance  Co.,  55  Vt.  100.] 

2  Savage  v.  Howard  Ins.  Co.,  52  N.  Y.  502.  See  also  Portsmouth  Ins.  Co.  v. 
Reynolds  ( Va.),  9  Ins.  L.  J.  606  ;  Georgia  Home  Ins.  Co.  v.  Kinnier,  28  Grat.  88. 

3  Beemer  v.  Anchor  Ins.  Co.,  16  U.  C.  (Q.  B.)  485. 

*  Kingsley  v.  New  England  Mat.  Ins.  Co.,  8  Cush.  (Mass.)  393;  Phillips  v. 
Merrimack  Mut.  Fire  Ins.  Co.,  10  id.  350.  Contra,  Jessel  v.  Williamsburgh  Ins. 
Co.,  S.Hill  (N.  Y.),88. 

5  Motley  V.  Manufacturers'  Ins.  Co.,  29  Me.  337;  Westchester  Ins.  Co.  v. 
Foster,  90  111.  121;  Ripley  v.  ^tna  Fire  Ins.  Co.,  29  Barb.  (N.  Y.,  552  ;  Frink  v. 
Hampden  Ins.  Co.,  1  Abb.  (N.  Y.)  Pr.  Rep.  n.  s.  343;  Ennis  i'.  Harmony  Fire 
Ins.  Co.,  3  Bosw.  (N.  Y.  Superior  Ct.)  516 ;  Newman  i-.  Springfield  Fire  &  Mar- 
Ins.  Co.,  17  Minn  123  ;  Pitney  v.  Glen's  Falls  Ins.  Co.,  65  N.  Y.  6.  If  the  loss, 
however,  be  payable  in  part  only  to  a  third  person,  the  suit  must  be  in  the  name 
of  the  one  who  has  the  right  to  enforce  the  whole  contract,  flartford  Fire  Ins 
Co.  V.  Davenport,  37  Mich.  609 ;  Savings  Institution  v.  Commercial  Ins.  Co ,  68 
Me.  313;  s.  c.  and  note,  8  Ins.  L.  J.  120;  Hammel  v.  Queen  Ins.  Co.,  50  Wis.  240. 
But  in  Guernsey  v.  American  Ins.  Co.,  17  Minn.  104,  the  payee,  whose  claim 
was  more  than  the  whole  insurance,  was  allowed  to  maintain  the  action  So 
where  A.  sued  on  a  policy  for  $2500,  payable  '•  to  the  extent  of  .$1000  to  B. 
and  .$400  to  C,  as  their  interests  may  appear,"  and  recovered  a  verdict  for 
$1530,  it  was  suffered  to  stand,  B.  and  C.  executing  releases  to  the  defendants. 
Dear  v.  Western  Ass.  Co.,  41  U.  C.  (Q.  B  )  553.  Where  a  lessee  without  author- 
ity obtains  insurance,  loss  payable  to  the  lessor,  no  suit  can  be  maintained  by  the 
lessor,  nor,  it  seems,  bj'  the  lessee.  Hidden  v.  Slater  Ins.  Co.,  2  Cliff  (C  Ct.) 
266.  [The  clause  "  Loss  payable  to  A.  B,"  enables  the  company  to  pay  A.  B., 
but  an  action  for  breach  of  the  contract  must  be  brought  in  the  name  of  the 
person  with  whom  the  contract  was  made.  McQueen  v.  Phoenix  Mut.  Fire  Ins. 
Co.,  4  Can.  Supr.  Ct.  R.  fi60  ] 

«  Ellicott  V.  U.  S.  Ins.  Co  ,  8  G,  &  J.  (Md  J  166. 
1008 


CH.  XXII.]  OF    THE    LOSS    AND    ITS    ADJUSTMENT;  [§  447 

suit  may  be  brought  in  the  name  of  the  beneficiary  who  is 
the  insured ;  ^  and  this  is  so  notwithstanding  the  party  who 
effects  the  insurance  is  styled  a  trustee,  it  appearing  that  he 
is  merely  an  agent.''^ 

§  447.  Loss,  Who  may  claim.  —  And  Upon  an  order,  in- 
dorsed on  the  policy,  to  pay  in  case  of  loss  to  a  third  party, 
accepted  by  the  company,  or  assented  to  by  them,  the  payee 
may  maintain  an  action  in  his  own  name,  on  setting  out  the 
facts  in  his  declaration.^  And  an  assignee  of  a  life  policy 
may  recover  not  only  his  own  interest,  but  also  that  of  a 
third  person,  for  whom  he  will  be  held  a  trustee,  in  his 
own  name,  without  joining  the  cestui  que  trusts  Such  an 
assent,  however,  means  only  that  the  insurers  will  discharge 
the  obligations  of  the  contract  to  the  assignee  instead  of 
the  assignor ;  and  if  they,  by  the  terms  of  the  contract, 
had  a  right  to  replace  the  property,  an  assent  to  an  order 
to  "  pay  the  loss "  means  only  that  they  shall  discharge 
the  contract  as  agreed,  and  does  not  operate  to  change  the 
terms  of  the  contract  so  as  to  cut  them  off  from  the 
right  to  replace,  and  compel  them  to  pay  the  money  to 
the  assignee.  To  pay  is  to  discharge  an  obligation  by  a  per- 
formance according  to  its  terras  or  requirements.  If  the 
obligation  be  for  money,  the  payment  is  made  in  money  ;  if 
for  merchandise  or  labor,  a  delivery  of  merchandise  or  per- 
formance of  the  labor  is  payment;  or  if  for  the  erection  of  a 
building,  performance  according  to  the  terms  of  the  contract.^ 
In  New  Hampshire,  however,  in  mutual  companies,  the  action 

1  Hogle  V.  Guardian  Life  Ins.  Co.,  6  Robt.  (Superior  Ct.  N.  Y.)  567. 

2  Hiliyard  v.  Mut.  Ben.  Life  Ins.  Co.,  6  Vroom  (N.  J.),  415;  Flynu  w.  North 
Am.  Ins.  Co.,  115  Mass.  449. 

3  Barrett  v.  Union  Mut.  Fire  Ins.  Co.,  7  Cusli.  (Mass.)  175 ;  Lowell  v.  Middle- 
sex Mut.  Fire  Ins.  Co.,  8  id.  127  ;  Luring  r.  Manufacturers'  Ins.  Co.,  8  Gray 
(Mass.),  28;  ante,  §  379.  Tlie  action  may  also  be  brought  in  the  name  of  tlie 
insured.  Martin  y.  Franklin  Ins.  Co.,  38  N.  J.  (Law)  140;  Hand  v.  Williams- 
burgh  Ins.  Co.,  57  N.  Y.  41. 

*  St.  John  V.  Am.  Mut.  Life  Ins.  Co.,  2  Duer  (N.  Y.  Superior  Ct.),  419;  s.  c. 
affirmed,  13  N.  Y.  31 ;  McCord  v.  Noyes,  3  Brad.  (N.  Y.  Surrogate  Ct.)  139. 

^  Tolman  v.  Manufacturer.s'  Ins.  Co.,  1  Cusli.  (Mass.)  73.  And  such  a  per- 
son has  no  right  to  cancel  the  policy.  Marrin  v.  Stadacona  Ins.  Co.,  U.  C.  (Ct. 
of  App.),  15  Can.  L.  J.  191. 

1009 


§  447  A]       INSURANCE  :    fire,    life,    accident,    etc.       [cH.  XXII. 

must  be  brought  in  the  name  of  the  assignor,  although  the 
assignment  is  assented  to,  and  the  policy  is  made  payable  in 
case  of  loss  to  a  third  party,  unless  by  giving  a  new  premium 
note  the  assignee  becomes  substituted  for  the  insured,  and  a 
member  of  the  company,  when  the  action  must  be  brought  in. 
the  name  of  the  latter ;  ^  and  in  New  York.^  And  he  may 
sue,  in  New  Jersey,  even  on  a  parol  agreement  to  pay  the 
premium,  the  assignee  being  the  mortgagee  ;  ^  and  in  Maine  ;  * 
and  perhaps  in  Pennsylvania.^  But  as  such  consent  gives  to 
the  assignee  no  legal  interest  in  the  property,  which  remains 
still  in  the  assignor,  the  latter  may  bring  an  action  in  his  own 
name,  without  alleging  any  authority  from  the  assignee.^  The 
assent,  after  action  brought,  will  bo  sufficient,  though  in  that 
case  the  plaintiff  will  be  entitled  to  no  costs.'^ 

[§  447  A.  Who  may  sue.  —  Making  a  policy  payable  to  a 
creditor  "  as  his  interest  may  appear  "  does  not  authorize  him 
to  sue,  for  the  action  cannot  be  split  at  the  option  of  the  as- 
sured.^ Where  0.  being  indebted  to  T.  gave  him  a  trust  deed, 
and  then  insured  payable  to  T.  as  his  interest  might  appear, 
the  policy  including  other  property  not  mortgaged  to  T.,  it  was 
held  that  T.  could  not  sue  on  the  policy.  He  could  not  sue  for 
the  whole  loss,  there  could  be  no  splitting  of  the  action,  and 
he  could  not  sue  as  trustee  for  0.  0.  was  the  owner  of  the 
policy,  and  she  alone  must  sue.^  Where  the  owner  of  a  build- 
ing insures  payable  to  the  mortgagee  as  his  interest  may 
appear,  if  the  amount  of  insurance  in  case  of  loss  exceeds  the 

1  Nevins  v.  Rockingham  Mut.  Fire  Ins.  Co.,  5  Fost.  (N.  H.)  22  ;  Folsom  v. 
Belknap  County  Mut.  Fire  Ins.  Co.,  10  id.  231  ;  Rollins  i'.  Columbian  Fire  Ins. 
Co.,  5  id.  200 ;  Blanchard?'.  Atlantic  Mut.  Fire  Ins.  Co.,  33  N.  H.  9 ;  Cham- 
berlain V.  N.  H.  Fire  Ins.  Co.,  55  id.  249;  Baldwin  v.  Phoenix  Ins.  Co.,  10  Ins. 
L.  J.  32. 

2  Mann  v.  Herkimer  County  Mut.  Ins.  Co.,  4  Hill  (N.  Y.),  187. 

3  Flanagan  v.  Camden  Mut.  Ins.  Co.,  1  Dutch.  (N.  J.)  506. 
*  Stimpson  v.  Monmouth  Mut.  Fire  Ins.  Co.,  47  Me.  379. 

5  Lycoming  County  Mut.  Ins.  Co.  v.  Schreflfler,  44  Pa.  St.  269. 

6  Ketchuni  r.  Prot.  Ins.  Co.,  1  Allen  (New  Brunswick),  136. 
"!  Jackson  v.  Farmers'  Mut.  Fire  Ins.  Co.,  5  Gray  (Mass.),  52. 

8  [Thatch  V.  Metropole  Ins.  Co.,  11  Fed.  Rep.  29;  8th  Cir.  (Col.)  1882,3 
McCrary,  387  ;  11  Ins.  L.  .T.  199  ;  Hatch  r.  Metropole  Ins.  Co.,  13  Rep.  293.J 

9  [Thatch  V.  Metropole  Ins.  Co.,  3  McCrary,  387.] 

1010 


CH.  XXII.]  OF   THE   LOSS   AND    ITS   ADJUSTMENT.  [§  447  B 

amount  of  the  mortgage,  the  owner  and  mortgagee  may  sue 
jointly  and  get  a  judgment  fixing  their  respective  shares.^ 
On  a  policy  to  C.  payable  to  P.,  mortgagee,  C.  may,  with  the 
express  consent  of  P.,  sue  in  his  own  (C.'s)  name.^  A  contract 
made  by  one  person  for  the  benefit  of  another  may  be  sued  on 
by  the  latter.^  Both  the  assured  and.  he  to  whom  the  proceeds 
of  the  policy  are  payable  may  be  joined  as  plaintiffs  in  an 
action  thereon.^  When  A.  and  B.  join  as  plaintiffs  in  an  ac- 
tion against  an  insurance  company  on  a  policy  issued  to  one 
alone,  there  being  no  words  "  whom  it  may  concern,"  or  the 
like,  it  is  a  fatal  variance.^  When  the  policy  is  in  the  names 
of  A.  and  B.,  but  the  action  only  in  the  name  of  A.,  an  aver- 
ment in  the  declaration  of  sole  interest  in  A.  admits  evidence 
of  such  sole  interest.^] 

[§  447  B.  Who  may  sue.  —  If  a  policy  taken  out  by  a  part- 
owner  is  issued  for  whom  it  may  concern,  or  for  owners,  the 
other  proprietors  may  sue,  but  where  the  policy  does  not 
import  insurance  of  other  interests,  only  the  person  named 
can  sue  on  itJ  When  an  action  on  a  policy  of  goods  was 
brought  in  the  name  of  A.  as  owner,  and  it  appeared  that  A., 
who  had  bought  the  goods,  had  consigned  them  to  B.,  it  was 
left  to  the  jury  to  find  who  was  owner.s  In  a  policy  on  behalf 
of  owners  no  one  but  the  owners  can  sue,  while  the  phrase  for 
whom  it  may  concern  permits  suit  by  any  one  having  an 
interest  even  though  only  a  lien.  In  every  case  it  must 
appear  that  the  policy  was  made  and  intended  to  be  in  behalf 
of  the  one  seeking  to  recover.^  A.  may  insure  for  himself  and 
"  all  who  may  be  interested,"  and  may  sue  in  behalf  of  B.^ 
at  the  time  interested,  who  subsequently  becomes  privy  by 
adoption.^0     ^he  executors  are  the  only  ones  who  can  enforce 

1  [Home  Ins.  Co.  v.  Oilman,  112  Ind.  7.] 

2  [Coates  V.  Penn  Fire  Ins.  Co.,  58  Md.  172,  178.] 
2  [Chrisman  v.  State  Ins.  Co.,  16  Or.  289.] 

4  [Lasher  v.  N.  W.  Nat.  Ins.  Co.,  18  Hun,  98  at  101.] 

5  [Burgher  v.  Columbian  Ins.  Co.,  17  Barb.  274  at  274.J 

6  [Marsh  v.  Robinson,  4  Esp.  98  at  98.] 
*  [Turner  v.  Burrows,  5  Wend.  541.] 

8  [Fleming  v.  Insurance  Co.,  12  Pa.  St.  .391  at  396.] 
^  [Pacific  Ins.  Co.  v.  Catlett,  4  Wend.  7G.] 
1°  [Hagedorn  v.  Oliverson,  2  Maule  &  Selw.  485  at  490.] 

1011 


§  448]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXII. 

a  policy  unless  the  heirs  arc  named.  The  property  passes  to 
the  heirs,  but  the  policy  is  not  attached  to  and  does  not  run 
with  the  estate,  and  only  the  representatives  of  the  assured 
can  recover.^  A  suit  on  a  sealed  policy  must  be  brought  in 
the  name  of  the  covenantee,  whoever  may  be  the  interested 
person.^  Dismissal  or  failure  of  suit  because  brought  in  the 
wrong  name  is  no  bar  to  another  suit  in  the  proper  name.^ 
The  president  and  secretary  of  a  mutual  company  cannot  re- 
quire that  all  other  members  be  made  parties  to  a  bill  for  the 
payment  of  insurance.  They  are  competent  to  defend  the 
interests  of  the  company,  and  no  injustice  will  be  done  them 
by  ordering  them  to  pay  the  amount  out  of  association 
funds.4] 

I  448.  Loss  ;  Nominal  and  Real  Claimants  ;  Agent ;  Broker.  — 
If  the  policy  be  issued  in  the  name  of  an  agent  of  several 
parties,  the  suit  may  be  in  the  name  of  the  ageiit.^  So, 
if  issued  to  a  broker,  "  for  whom  it  may  concern  ; "  ^  or  to  a 
merchant,  upon  goods  "  in  trust  or  on  commission.  "  "^  But  if 
issued  to  a  tenant  in  common,  it  does  not  cover  the  inter- 
est of  another,  unless  specifically  so  stated.^  If  the  policy 
be  issued  and  made  payable  to  an  agent  for  the  benefit  of 
the  principal,  and  without  his  knowledge,  the  latter  may 
ratify  even  after  the  loss,  and  sue  in  his  own  name.^  Where 
an  agent  insured  for  a  named  principal,  payable  in  case  of 
loss  to  the  agent  by  name,  the  principal  was  allowed  to  sue  in 
Louisiana,  and  a  debt  due  from  the  agent  to  the  insurers  was 


1  [Wyman  v.  Prosser,  36  Barb.  368  at  3G9.] 

2  [American  Ins.  Co.  v.  Insley,  7  Pa.  St.  223  at  231 ;  De  BoUa  v.  Penn  Ins. 
Co.,  4  Whart.  68  at  72.] 

8  [Fleming  v.  Insurance  Co.,  12  Pa.  St.  391  ] 

4  [Van  Houten  v.  Pine,  36  N.  J.  Eq.  1-33;  38  N.  J.  Eq.  72,  78] 

5  Barnes  v.  Mut.  Fire  Ins.  Co.,  45  N.  H  21 ;  Goodall  v.  New  England  Mut. 
Fire  Ins.  Co.,  5  Fost.  (N.  H.)  22  ;  Waring  v.  Indemnity  Ins.  Co.,  45  N.  Y.  606  ; 
Graham  v.  Firemen's  Ins.  Co.,  2  Disney  (Oliio),  255.     And  see  a?tte,  §  446. 

6  Prot.  Ins.  Co.  v.  Wilson,  6  Ohio  St.  553  ;  Strohn  v.  Hartford  Ins.  Co.,  37 
Wis.  625. 

7  De  Forest  v.  Fulton  Fire  Ins.  Co.,  1  Hall  (N.  Y.  Superior  Ct),  84. 

8  Work  I".  Merchants'  &  Farmers'  Mut.  Fire  Ins.  Co.,  11  Cush.  (Mas.=!.)  271. 

9  Herkimer  v.  Rice,  27  N.  Y.  163 ;  Bobbitt  v.  Liverpool,  &c.  Ins.  Co.,  66  N.  C 
70 ;  Hooper  v.  Robinson,  98  U.  S.  528. 

1012 


CH.  XXII.]  OF   THE   LOSS   AND    ITS    ADJUSTMENT.  [§  449 

not  allowed  to  be  set  off.^  [When  A.  effects  a  policy  as 
agent  for  B.,  B.  cannot  maintain  an  action  thereon  to  recover 
a  loss  for  the  use  of  C,  declaring  C.  to  be  alone  interested  in 
the  property .2  A  wife  cannot  sue  on  a  contract  running  to 
her  husband  though  the  property  was  hers,  unless  the  policy 
show  a  trust  or  agency.^]  Where  the  policy  is  assigned  as 
collateral  security,  with  the  consent  of  the  company,  but  the 
assignee  has  no  interest  in  the  property,  both  cannot  join, 
and  the  assignee  must  sue.^  But  a  parol  agreement  by  the 
company  to  recognize  the  rights  of  another  under  the  policy, 
and  to  affirm  its  validity  as  to  any  particular  property  or 
interest,  will  give  to  that  party  a  right  of  action  on  the  policy 
in  his  own  name.^  And  there  are  many  cases  where  a  resort 
to  equity  will  be  necessary.  As  where  A.,  the  insured,  sells 
to  B.,  who  takes  in  a  partner,  C,  the  insurers  consenting  that 
the  policy  shall  remain  in  part  to  C.  and  in  part  to  B.  and  C, 
the  policy  never  having  been  assigned,  nor  any  interest  therein, 
to  C^  An  administrator  has  no  interest  in  real  estate  insured, 
and,  it  has  been  held,  cannot  sue  to  recover  for  a  loss  occur- 
ring after  his  appointment,  though  the  contract  is  to  make 
good  to  the  administrators.^  But  it  has  been  frequently  held 
otherwise.^  In  Iowa,  the  real  party  in  interest  must  bring 
the  action  ;  and  although  an  assignment  be  prohibited,  by 
special  provision  of  the  Code,  the  assignee  may  sue,  subject 
to  all  rights  of  set-off  and  defence,  legal  or  equitable,  which 
might  have  been  made  against  the  assignor.^ 

§  449.  Loss  ;  Mortgagor  and  Mortgagee ;  Debtor  and  Cred- 
itor.—  If   a  mortgagor  insures  for   himself,    the    mortgagee 

1  Braden  v.  La.  St.  Ins.  Co.,  1  La.  220. 

2  [Russell  V.  N.  E.  M.  Ins.  Co.,  4  Mass.  82  at  84.] 

3  [Ziiiimernian  v.  Farmers'  Ins.  Co.,  76  Iowa,  352.] 

*  Peabody  v.  Wash.  County  Mut.  Ins.  Co.,  20  Barb.  (N.  Y.)  339;  Frink  y. 
Hampden  Ins.  Co.,  31  How.  (N.  Y.)  30. 

6  Wood  V.  Rutland  Mut.  Fire  Ins.  Co.,  31  Vt.  552. 

6  Bodle  V.  Chenango  County  Mut.  Ins.  Co.,  2  Comst.  (N.  Y.)  53. 

7  Beach  v.  Bowery  Fire  Ins.  Co.,  8  Abb.  Pr.  (N.  Y.)  261. 

8  Lappin  v.  Charter  Oak  Ins.  Co.,  58  Barb.  (N.  Y.)  325;  Farmers'  Mut.  Ins. 
Co.  V.  Graybill,  74  Pa.  St.  17  ;  Germania  Ins.  Co.  v.  Curran,  8  Kans.  9 ;  1  Ins.  L.  J. 
171.     See  also  ante,  §  445. 

*  Mershon  v.  National  Ins.  Co.,  34  Iowa,  87. 

1013 


§  449]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.       [CH.  XXII, 

has  no  claim  to  the  proceeds  of  the  insurance  witliout  an 
assignment ;  ^  and  where  a  mortgagee  insures  his  own  interest, 
without  any  agreement  between  him  and  the  mortgagor,  the 
latter  has  no  claim  to  have  any  portion  of  the  loss  recovered 
applied  to  the  discharge  of  his  debt.^  Otherwise  if  the  mort- 
gagee effects  the  insurance  at  the  request  and  ^  cost,  and  for 
the  benefit  of,  the  mortgagor.^  Where  the  mortgagor  insures, 
payable  to  the  mortgagee  in  case  of  loss,  the  mortgagor  can- 
not sue  alone  unless  the  mortgagee  has  been  paid,  which  he 
must  allege.  If  not  paid,  both  may  join.^  Where  the  insur- 
ance is  by  the  mortgagor  payable  to  the  mortgagee,  as  his 
interest  may  appear,  and  the  mortgagee's  interest  is  greater 
than  the  amount  insured,  he  may  sue  in  his  own  name.^ 
[Otherwise  if  his  interest  is  less,  then  the  clause  in  question 
is  a  mere  appointment  of  a  part  of  the  money .'^]  If  the  death 
of  a  mortgagor  and  disposition  by  will  before  the  loss  work 
such  a  change  of  title  or  possession  by  legal  process,  judicial 
degree,  or  voluntary  conveyances,  or  transfer,  as  would  other- 
wise annul  the  policy,  —  which  was  not  decided,  —  it  will  not 
deprive  a  mortgagee  so  protected  of  his  right  to  recover.^ 
[Cancellation  of  the  mortgage  by  payment  of  the  debt  after 
the  fire,  does  not  prevent  the  mortgagee  from  suing  on  a 
policy  taken  out  by  the  mortgagor  payable  to  the  mortgagee.^] 
Where  a  creditor,  with  the  knowledge  and  consent  of  the 
debtor,  in  account  with  the  latter,  charges  him  with  the  pre- 
miums paid  for  insurance  on  the  debtor's  life  or  his  property, 

1  Columbian  Ins.  Co.  v.  Lawrence,  10  Pet.  (U.  S.)  507  ;  Carter  v.  Rockett,  8 
Paige  (N.  Y.),  437.    Contra,  Garden  v.  Ingram,  23  L.  J.  (Ch.)  478. 

•^  [Mclntire  v.  Plaisted,  68  Me.  363  at  305.] 

3  [Insurance  procured  by  a  mortgagee  upon  the  request  or  at  the  expense  of 
the  mortgagor  is  held  by  tlie  mortgagee  for  the  protection  of  both  interests,  and 
the  implied  obligation  arising,  is  that  the  insurance  money  when  paid  to  the  for- 
mer shall  apply  upon  the  mortgage  debt.  Waring  v.  Loder,  53  N.  Y.  581  at 
585.] 

*  Concord  Mut.  Fire  Ins.  Co.  v.  Woodbury,  45  Me.  447. 

5  Ennis  v.  Harmony  Fire  Ins.  Co.,  3  Bosw.  (N.  Y.  Superior  Ct.)  516. 

6  Hammel  v.  Queen's  Ins.  Co.,  50  Wis.  240. 
"  [Fire  Ins.  Co.  v.  Felrath,  77  Ala.  194.] 

8  Westchester  Fire  Ins.  Co.  v.  Dodge  (Mich.),  1880,  9  Am.  Law  Record,  297. 

9  [Bartlett  v.  Iowa  State  Ins.  Co.,  77  Iowa,  86.] 

1014 


CH.  XXII.]  OF   THE   LOSS    AND    ITS   ADJUSTMENT.  [§  450 

he  will  be  held  to  account  for  any  surplus,  over  an  amount 
necessary  to  pay  the  debt,  received  from  the  insurers,  and  on 
payment  of  the  charges  the  debtor  will  be  entitled  to  the  pol- 
icy ,i  if  the  facts  show  an  agreement  that  the  creditor  is  to 
insure,  and  the  debtor  pay  the  premium.^  And  yet  if  the 
debtor  pays  off  the  debt  during  his  life,  he  will  not  be  enti- 
tled to  demand  from  his  creditor  a  policy  purchased  and  to 
be  kept  up  at  his  expense  as  a  security  for  his  creditor,'^  —  a 
conclusion  to  which  the  Vicc-Chanccllor  (Stuart)  said,  in  the 
later  case,  he  came  with  reluctance,  because  he  found  himself 
bound  by  the  earlier  case.  But  if  the  debtor  insures  to  secure 
a  debt  part  of  which  is  usurious,  the  creditor  must  account 
for  so  much  of  the  proceeds  of  the  insurance  as  exceeds  the 
debt  less  the  usury.'*  So,  where  a  debtor  took  out  a  policy  on 
his  own  life  for  the  benefit  of  his  creditor,  paying  the  pre- 
miums thereon  till  he  became  bankrupt.  The  cash  surrender 
value  of  the  policy  was  then  credited  on  the  debt,  and  a  divi- 
dend of  twenty  per  cent  also  paid.  From  the  bankruptcy  and 
surrender  the  creditor  kept  the  policy  alive  by  paying  the  pre- 
miums liimsclf,  and  upon  the  death  of  the  debtor  claimed  the 
whole  amount  of  the  policy,  which  was  considerably  in  excess 
of  the  value  of  debt  due  him.  But  it  was  held  that  from  the 
time  when  the  creditor  began  to  pay  the  premiums  the  policy 
became  a  new  security  for  so  much  as  still  subsisted  of  the 
debt ;  and  when  that  was  paid  out  of  the  proceeds,  she  ceased 
to  be  a  creditor.^ 

§  450.  Loss  ;  Vendor  and  Vendee ;  Lessor  and  Lessee.  — 
Where  the  vendor,  in  a  contract  of  sale  of  a  house  which  is 
destroyed  by  fire  before  the  completion  of  the  purchase,  re- 

1  Holland  v.  Smith,  6  Esp.  11. 

2  Bruce  v.  Garden,  22  Law  Times,  n.  s.  595,  per  Lord  Chancellor  Hatherly, 
overruling  Vice  Chancellor  James,  in  same  case,  20  L.  T.  n.  s.  1002 ;  Wheeler  v. 
Factors  &  Traders'  Ins.  Co.  (U.  S.),  9  Ins.  L.  J.  876;  Moreland  v.  Isaac,  20  Beav. 
388. 

3  Gottleib  V.  Cranch,  4  De  G.,  M.  &  G.  440 ;  Knox  v.  Turner,  21  Law  Times, 
N.  8.  701. 

*  Coon,  Adm'r,  v.  Swan,  30  Vt.  6. 

s  In  the  Matter  of  Newland,  Dist.  Ct.  U.  S.,  South  Dist.  N.  Y.,  2  Ins.  L.  J. 
860. 

1015 


§  452j  iNsuiiANCE  :  fire,  life,  accident,  etc.     [ch.  xxii. 

ceives  payment  for  the  loss  under  a  polic}^  which  existed  at 
the  date  of  the  contract,  no  reference  being  made  in  the  con- 
tract to  the  insurance,  the  vendee  has  no  claim  upon  the 
f  unds.^  But  the  assignee  of  a  vendor's  interest  in  a  contract 
for  the  sale  of  real  estate,  which  contract  provides  for  an  in- 
surance by  the  vendee  for  the  benefit  of  the  vendor,  is  equitably 
entitled  to  the  moneys  due  upon  an  insurance  effected  by  such 
vendee  in  his  own  name  ;  and  where  the  insurer  has  notice 
of  such  assignment  he  is  liable  to  such  assignee,  to  the  extent 
of  his  interest,  although  he  has,  after  such  notice,  actually 
paid  the  loss  to  tlie  vendee.  And  the  fact  that  tlie  policy  is 
by  its  terms  unassignable  without  the  consent  of  the  office,  is 
immaterial,  since  the  liability  is  not  founded  upon  an  assign- 
ment of  the  policy,  but  upon  the  equitable  lien  of  the  vendor's 
assignee,  the  insurer  being,  after  notice,  a  trustee  of  the  fund 
for  the  assignor's  benefit.^  Where  a  tenant  agrees  to  insure 
for  the  benefit  of  his  landlord,  the  latter  deducting  one-half  of 
the  premium  from  the  rent  as  it  accrued,  it  was  held  that  the 
landlord  was  entitled  to  the  whole  of  the  insurance  money .^ 

§  451.  Loss  ;  Insurance  by  "Wife  on  her  own  Life  for  Benefit 
of  Husband  ;  Children.  — The  proceeds  of  policies  taken  out  by 
a  wife,  on  which  the  premiums  were  paid  by  her  out  of  her 
funds,  on  her  own  life,  and  for  his  benefit,  before  his  bank- 
ruptcy, do  not,  on  her  decease,  inure  to  the  benefit  of  the 
bankrupt's  estate.*  If  the  loss  be  payable  to  "  children,"  this 
does  not  include  grandchildren.^ 

§  452.  Loss  ;  Endowment  Policy  payable  in  the  alternative.  — 
When  the  policy  is  on  the  loss  of  the  husband,  "  for  the  sole 
use  "  of  the  wife,  and  payable  to  the  husband  or  his  assigns, 

1  Rayner  v.  Preston,  Sup.  Ct.  Ch.  D.,  10  Ins.  L.  J.  76  ;  Poole  v.  Adams,  12  W. 
R.  683  ;   Paine  v.  Meller,  6  Ves.  349. 

2  Cromwell  v.  Brooklyn  Fire  Ins.  Co.,  44  N.  Y.  (Ct.  of  App.)  42. 

3  Duke  of  Hamilton's  Trs.  v.  Fleming,  9  Ct.  of  Sess.  Cas.,  8d  series  (Scotch), 
329.     And  see  also  post,  §  456. 

*  Murrin  v.  Owen,  Petr.,  C.  Ct.  (Mo.),  coram  Treat,  J.,  2  Ins.  L.  J.  524.  So 
in  Canada,  under  stat.  29  Vict,  c  17,  wliicii  provides  that  the  loss  shall  be  paid 
as  directed  in  the  policy.  Brossard  v.  Massouin,  Supr.  Ct.  (Montreal),  4  Ins. 
L.  J.  305. 

*  Winsor  r.  Odd  Fellows  Association  (R.  I.),  10  lus.    L.  J.  390. 

lOlG 


CH.  XXII.]  OF   THE    LOSS    AND    ITS    ADJUSTMENT.  [§  452  A 

or  ill  case  of  his  death  within  the  time  limited  to  the  bene- 
ficiary, the  loss  goes  to  the  wife  only  in  case  the  husband  dies 
within  the  limited  timc.^ 

[§  452  A.  Who  has  the  Ultimate  Right  to  the  Proceeds?  — 
Payment  of  the  premium  on  a  policy,  if  without  contract  with 
the  assured,  gives  no  right  in  its  proceeds.^  Where  one,  neither 
a  near  relative  nor  a  creditor,  insures  a  life  for  his  own  benefit, 
although  for  the  honest  purpose  of  protecting  himself  under 
an  agreement  to  support  the  assured  life,  still  public  policy 
will  not  allow  him  to  retain  more  of  the  funds  than  is  neces- 
sary to  reimburse  him ;  the  rest  belongs  to  the  estate  of  the 
"  life."  ^  The  principle  that  insurance  is  for  indemnity,  and 
that  loss  is  payable  only  so  far  as  the  insured  had  an  insur- 
able interest,  prevents  the  administrator  from  recovering,  or 
holds  him  as  a  trustee  for  the  heir,  or  devisee,  when  the  loss 
occurs  after  the  succession  of  the  property.*  Where  a  policy  is 
made  payable  to  the  assured,  his  executors,  or  administrators, 
and  assigns,  the  personal  representative  may,  on  the  death  of 
the  assured,  maintain  an  action  thereon  as  trustee  of  the  heirs 
on  whom  the  interest  devolves,  and  the  damages  stand  in  the 
hands  of  the  administrator  as  really  subject  to  dower  and  to 
the  lien  of  creditors.^  Where  a  policy  is  payable  "  to  the  as- 
sured, his  executors,  or  administrators,"  and  any  change  of 
title  except  by  "  succession  "  is  prohibited,  the  widow,  occupying 
and  having  a  life  estate  in  the  house  by  virtue  of  her  marriage 
contract  with  the  assured,  has  no  interest  in  funds  due  on  loss 
occurring  after  the  assured's  death  ;  she  takes  by  purchase.  If 
she  had  taken  as  dowress  or  under  the  homestead  laws  she 
would  have  come  within  the  principle  which  gives  the  funds  to 
the  "  succession."  ^  Where  C.  insured  his  homestead  by  a  policy 
running  to  himself  and  his  representatives,  and  the  house  was 

1  Tennes  v.  Northwestern  Mut.  Life  Ins.  Co.,  26  Minn.  271 ;  ante,  §  390 
et  seg. 

2  [Burridge  r.  Raw,  1  T.  &  C.  C.  C.  183.] 

3  ISeigrist  v.  Schmoltz,  113  Pa.  St.  326.] 

*  [Quarles  v.  Clayton,  87  Tenn.  308,  a  dictum,  quoting  316  N.  Y.  &  IVIinn. 
cases.] 

6  [Wyman  v.  Wyman,  26  N.  Y.  2-53.] 

6  [Quarles  v.  Clayton,  87  Tenn.  308,  314,  316.] 

1017 


§  452  A]        INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.       [CH.  XXII. 

burned  after  his  death  and  while  the  widow,  who  was  entitled 
to  hold  the  premises  for  her  life,  was  occupying  the  same,  it 
was  held  that  the  policy  devolved  on  those  beneficially  inter- 
ested in  the  estate,  and  that  if  the  administrator  collected 
the  insurance  money  he  would  hold  it  in  trust  for  the  widow 
during:  her  life.^  Insurance  effected  for  the  benefit  of  an  equit- 
able owner,  and  in  pursuance  of  an  agreement  with  him,  is 
sufficient  to  hold  the  avails  as  against  a  trustee  process  in- 
stituted for  the  benefit  of  an  attaching  creditor  of  him  who 
holds  the  legal  title.^  If  A.  and  B.  insure  for  a  certain  sum 
in  a  policy  which  declares  that  A.'s  interest  is  an  undivided 
two-thirds,  and  B/s  an  undivided  one-third,  the  contract  will  be 
joint,  and  if  A.  collects  a  loss,  B.  will  be  entitled  to  receive 
one-third  of  the  money  from  him.^  When  one  having  an  in- 
terest insures  generally,  and  he  receives  the  amount  of  the  loss, 
another  part-owner  may  recover  from  him  a  share  on  proof  of 
his  interest  therein,  without  showing  a  previous  request  to 
make  the  insurance.*  When  one  having  goods  sold  but  not 
removed  in  his  possession,  which  he  is  under  no  obligation 
to  insure,  insures  all  his  goods  "  sold  but  not  removed,  con- 
signed, &c.,"  and  recovers  after  loss,  the  owner  of  the  first 
named  goods  cannot  recover  a  proportional  share  when  it 
appears  that  the  insured  received  no  more  on  account  of  includ- 
ing those  goods  in  his  statement  of  loss  than  he  would  other- 
wise.^ When  A.  effected  insurance  on  his  own  goods  and 
goods  held  by  him,  as  bailor,  without  the  knowledge  of  the 
bailee,  and  a  loss  occurred,  his  own  being  greater  than  the 
total  insurance,  the  bailor  can  have  no  part  in  the  proceeds.^ 
But  where  A.  bailed  goods  with  B.,  who  assured  A.  that  the 
goods  were  covered  by  policies  that  he,  B.,  held,  and  they  were  so 
covered,  B.  was  held  bound  to  pay  A.  his  fair  proportion  of  the 
msurance  received  on  the  policies.^     A  builder  who  contracts 

1  [Culbertson  v.  Cox,  20  Minn.  309.] 

2  [Providence  County  Bii.  ;;.  Benson,  24  Pick.  204  at  210.] 

3  [Nortlirup  v.  Phillips,  99  111.  455  ] 

4  [Miltenberger  v.  Beacom,  9  Pa.  St.  198  at  201.] 
6  [Rcitenbach  >:  Johnson,  129  Mass.  316  at  317.] 
6  [Stillwell  V.  Staples,  19  N.  Y.  401  at  407.], 

'  [Thomas  v.  Cummiskey,  108  Pa.  St.  354  ] 

1018 


CH.  XXII.]  OF   THE    LOSS    AND    ITS    ADJUSTMENT.  [§  452  B 

to  construct  a  house  cannot  recover  on  the  contract,  or  on  a 
quantum  meruit,  unless  lie  proves  a  complete  performance, 
and  if  the  structure  burn  just  before  completion  the  builder 
has  no  claim  on  insurance  secured  bj  the  contractee  on  the 
work.  The  builder  should  have  assured  his  own  interest.^ 
As  between  the  vendee  and  vendor  the  insurance  money  rep- 
resents the  property  itself,  and  equity  will  give  it  to  the 
vendor  to  the  extent  of  the  purchase-money  unpaid,  in  case 
of  the  insolvency  of  the  vendee.^  A  testator  bequeathed  chat- 
tels to  B.,  and  later  insured  them  against  loss  by  sea.  He 
and  the  chattels  were  subsequently  lost  in  a  shipwreck,  and  it 
was  held  that  B.  had  no  interest  in  the  insurance  money .-^  If 
it  could  have  been  shown  that  the  testator  perished  first  it 
would  have  been  otherwise  as  to  the  insurance.] 

[§  452  B.  Extent  of  Mortgagee's  Claim  on  the  Proceeds.  —  If 
the  proceeds  of  a  policy,  in  the  name  of  a  mortgagor,  and 
payable  to  a  mortgagee,  are  equal  to  or  greater  than  the  mort- 
gage debt,  the  latter  is  paid  when  the  mortgagees  receive  the 
insurance,  and  if  there  is  a  balance  it  belongs  to  the  mort- 
gagor.* A  mortgagee  cannot  claim  to  keep  more  than  a  com- 
pensation, and  hold  the  balance  for  the  owner,  even  where  he 
insured  his  own  interest  only.^  In  this  case  the  mortgagee 
only  needed  |128  to  make  him  whole,  after  what  he  had  re- 
ceived from  other  companies.  The  verdict,  however,  was  for 
$1,325,  and  it  was  held  that  there  must  be  a  new  trial  unless 
the  parties  consented  to  reduce  the  verdict  to  $128.  A  mort- 
gagee insuring  is  entitled  to  receive  from  the  company  no 
more  than  his  debt  minus  what  he  receives  from  sale  of  the 
remnant  of  the  insured  property.^  But  if  the  mortgagee  in- 
sured to  protect  the  owners  as  well  as  himself,  or  his  action 
has  been  ratified  by  the  owners,  the  fact  that  his  own  loss  has 

*  [Lawing  v.  Rintles,  97  N.  C.  350.] 

2  [Grange  Mill  Co.  i-.  The  People,  118  111.  306.] 

3  [Durrant  v.  Friend,  11  Eng.  Law  &  Eq.  2  at  4.] 

*  [Kleio  V.  Union  Fire  Ins.  Co.,  3  Ont.  234  ;  Bull  v.  North  Brit.  Can.  Invest. 
Co.  &  Imp.  Fire  Ins.  Co.,  14  Ont.  R.  322 ;  Schofield  v.  New  B.  Pat.  Tanning 
Co,22N.  B.  599.] 

6  [Archbold  r.  Merchants'  Mar.  Ins.  Co.,  4  Russ.  &  Geld.  (Nova  Scotia)  98.] 
6  [Harris  v.  Gasper  Fire  &  Mar.  Ins.  Co.,  9  R.  I.  207  at  216  ] 

1019 


§  452  CI        INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [Cfl.  XXII. 

been  satisfied  by  prior  insurance  will  not  prevent  recovery .^ 
The  amount  received  by  the  mortgagee  goes  to  the  credit  of  the 
mortgage.^  The  clause,  "  Loss  payable  to  the  mortgagee," 
gives  him  the  same  rights  as  if  the  policy  were  assigned  to  hira 
as  collateral  security  for  the  mortgage  debt.^  A  mortgagee  of 
the  property  has  no  claim  on  money  paid  for  its  loss,  unless 
there  is  an  assignment  or  agreement  to  that  effect.*  By  no 
principle  of  law  or  equity  can  a  mortgagee  claim  the  benefit  of 
a  policy  underwritten  for  the  mortgagor  on  the  mortgaged  prem- 
ises.^ It  is  strictly  a  personal  contract  with  which  the  mort- 
gagee has  no  more  to  do  than  any  other  creditor.^  When  the 
insured  premises  were  twice  mortgaged,  and  on  a  partial  loss 
the  money  was  paid,  according  to  agreement,  to  the  first 
mortgagee,  and  he  in  turn  pays  it  to  the  mortgagor  to  repair 
the  buildings  damaged,  the  second  mortgagee  has  no  equity  to 
compel  a  portion  to  be  applied  to  the  reduction  of  his  debt.'' 
When  a  mortgagor  assigns  a  policy  of  insurance  to  a  mort- 
gagee, the  latter  cannot  apply  the  proceeds  in  case  of  loss  to 
the  debt  before  it  is  due,  unless  by  consent  of  the  former.^ 
An  oral  agreement  between  a  mortgagor  and  mortgagee  that 
any  insurance  received  by  the  latter  shall  operate  as  a  pay- 
ment of  the  debt  pro  tanto  is  valid,  and  will  affect  the  proceeds 
of  any  policy  secured  by  the  mortgagee.^] 

[§  452  C.  Covenant  to  Insure  for  the  Benefit  of  the  Mort- 
gagee. —  If  by  covenant,  or  otherwise,  a  mortgagor  is  bound 
to  insure  the  mortgaged  premises  for  the  better  security  of 
the  mortgagee,  the  latter  has  an  equitable  lien,  to  the  extent  of 
his  interest  in  the  property  destroyed,  upon  the  money  due  on 
a  policy  taken  out  by  the  mortgagor  upon  it.^^     But  such  a 

1  [Seaman  v.  West,  5  Russ.  &  Geld.  (Nova  Sco.)  207.] 

2  [Troop  V.  Mosier,  U.  S.  Eq.  189.] 

3  [Conn.  Mut.  Life  Ins.  Co.  v.  Scamnion,  4  Fed.  liep.  263.] 

4  [Ridley  V.  Ennis,  70  Ala.  463.] 

5  [Columbia  Ins.  Co.  v.  Lawrence,  10  Pet.  507  at  512 ;  McDonald  v.  Black,  20 
Ohio,  185  at  193.] 

6  [Ryan  v.  Adamson,  57  Iowa,  30.] 

7  [Gordon  v.  Ware  Savings  Bk.,  115  Mass.  588  at  591.]  »  [Ibid.] 
s  [Baker  v.  Fireman's  Fund  Ins.  Co.,  79  Cal.  34.] 

1''  [Wheeler   v.  Insurance  Co.,   101    U.  S.  439,  442   (1879),  citing  Thomas' 
Adm'rs  V.  Vankapff's  Ex'rs,  6  Gill  &  J.  (Md.)  372,  note  to  3  Kent.  Com.  376, 
1020 


CH.  XXII. ]  OF   THE   LOSS    AND   ITS   ADJUSTMENT.  [§  452  D 

covenant  does  not  run  with  the  land,  and  the  mortgagee  cannot 
hold  the  vendee  of  the  equity  of  redemption.  If,  however, 
the  latter  insures  making  the  loss  payable  to  the  mortgagee, 
this  provision  cannot  be  revoked  or  cancelled  without  con- 
sent of  the  mortgagee.^  Where  A.,  after  executing  two 
mortgages,  each  of  them  covenanting  to  keep  the  premises 
insured  for  the  benefit  of  the  mortgagee,  obtained  insur- 
ance payable  to  the  junior  mortgagee  to  whom  the  policy 
was  delivered,  and  who  had  no  actual  notice  of  the  cov- 
enant in  the  senior  mortgage,  it  was  held  that  as  the  legal 
title  to  the  insurance  money  was  in  the  junior  mortgagee, 
and  the  equities  were  equal,  the  legal  title  must  prevail. 
The  rule  that  in  case  of  such  a  covenant  any  insurance  ob- 
tained will  be  presumed  a  fulfilment,  does  not  apply  when 
the  policy  is  in  terms  payable  to  another  incumbrancer.^ 
Where  a  mortgagor  covenanted  to  insure  for  the  benefit  of  the 
mortgagee,  but  in  fact  insured  for  himself  and  kept  the  pol- 
icy, which  covered  not  only  the  mortgaged  property  but  much 
besides,  and  the  loss  was  paid  to  the  mortgagor,  the  company 
having  no  knowledge  of  the  terms  of  the  mortgage,  it  was  held 
that  the  mortgagee  could  not  sue  the  company  on  the  policy.'^] 
[§  452  D.  Acts  of  the  Mortgagor.  —  If  a  policy,  taken  out 
by  the  owner,  is  made  payable  to  mortgagees  as  their  interest 
may  appear,  their  rights  cannot  be  destroyed  by  any  act  of 
the  owner.*  A  provision,  however,  that  the  mortgagee's  in- 
terest in  the  policy  shall  not  be  affected  by  any  act  or  neglect 
of  the  mortgagor  and  applicant,  refers  to  future  acts,  and  does 
not  shut  out  proof  that  the  policy  was  obtained  by  fraud.^  An 
indorsement  on  a  policy  that  loss  should  be  payable  to  A. 
B.,  mortgagee,  to  the  extent  of  his  interest,  is  not  an  assign- 

and  Nichols  v.  Baxter,  5  R.  I.  491.  the  last  to  the  effect  that  the  lien  exists  al- 
though tlie  agreement  between  the  mortgagor  and  mortgagee  provides  that  in 
case  the  former  does  not  procure  and  assign  the  policy  as  agreed,  the  mortgagee 
may  insure  at  the  mortgagor's  expense.] 

1  [Reid  V.  McCrum,  91  N.  Y.  412.] 

2  [Dunlop  V.  Avery,  89  N.  Y.  592.] 

3  [Stearns  v.  Quincy  Mut.  Fire  Ins.  Co.,  124  Mass.  Gl.] 
*  [Black  V.  Nat.  Ins.  Co.,  24  L.  C.  Jur.  65  ] 

6  [Omnium  Securities  Co.  v.  Can.  Fire  &  Mar.  Ins.  Co.,  1  Ont.  R.  494.] 

1021 


§  4i>2  E]        INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXII. 

merit  of  a  chose  in  action,  nor  a  contract  to  pay  A.  B.,  and 
where  there  has  been  a  breach  of  condition  A.  B.  cannot 
recover,  either  in  his  own  name  or  that  of  the  assured.^  If  a 
policy  is  payable  to  a  mortgagee,  an  adjustment  by  the  mort- 
gagor without  assent  of  the  mortgagee  does  not  bind  the  lat- 
ter.2  Qj^Q  ^Q  vvhom  a  loss  is  payable  as  his  interest  may  appear 
has  no  greater  rights  than  the  insured.  He  is  merely  an  ap- 
pointee to  receive  a  part  of  the  money .^J 

[§  452  E.  For  whom  it  may  concern.  —  A  policy  "  for  whom 
it  may  concern "  insures  all  having  an  insurable  interest 
whether  known  to  the  insurer  or  not;^  and  though  issued 
to  one  having  no  interest  therein  may  be  sued  on  by  the  actual 
owners  in  case  of  loss.^  The  policy  covers  the  interest  of  any 
one  who  has  given  authority  for  such  insurance,  or  ratifies  it, 
and  the  ratification  may  be  by  bringing  suit.^  Subject  to  the 
question  of  authority  or  ratification,  such  a  policy  covers 
the  interests  of  all  it  was  intended  to  protect  by  the  person 
procuring  it."  A  policy  is  not,  however,  a  negotiable  secu- 
rity,^ and  the  general  clause  "  for  whom  it  concerns "  only 
relates  to  the  person  for  whose  benefit  the  policy  was  intended 
at  the  time  of  issue,  and  what  person  that  was  is  a  question 
for  the  jury.  Parol  evidence  is  admissible  to  show  who  is  in- 
cluded in  a  policy  written  "  for  whom  it  may  concern,"  or 
"  for  the  owners."  ^  But  it  is  held  that  there  must  be  some- 
thing in  the  policy  to  show  that  "  others  "  are  meant  to  be  in- 
cluded. When  one  part-owner  insured  a  vessel  and  its  outfit 
in  his  own  name  only,  with  nothing  in  the  policy  to  show  that 

1  [Cormier  v.  Ottawa  Agri.  Ins.  Co.,  20  N.  B.  R.  526.] 

2  [Hall  V.  Association,  64  N.  H.  405.] 

3  [Hine  v.  Homestead  Fire  Ins.  Co.,  29  Hun,  84 ;  Harrington  v.  Fitchburg 
Ins.  Co.,  124  Mass.  126  at  132.] 

*  [The  Sidney,  23  Fed.  Rep  88  (N.  Y.),  1885] 

5  [Cobb  V.  N.  E.  Mut.  Mar.  Ins.  Co.,  6  Gray,  192  at  197-198.] 

6  [Finney  v.  Fairhaven  Ins.  Co.,  5  Met.  192  at  197;  Seanaans  v.  Loring,  4 
Mason,  127  at  136.] 

^  [Forgay  v.  Atlantic  Mut.  Ins.  Co.,  2  Rob.  (N.  Y.)  79  at  91.] 

8  [Augusta  Ins.,  &c.  Co.  v.  Abbott,  12  Md.  348  at  373.] 

9  [Bell  u.  Western  Mar.  &  Fire  Ins.  Co.,  5  Rob.  (La.)  423  at  442 ;  Catlett  v. 
Pacific  Ins.  Co.,  1  Wend.  561  at  575;  Newson  v.  Douglas,  7  H.  &  J.  (Md.)  417 
«t  451.] 

1022 


CH.  X.iLII.]  OF   THE    LOSS    AND    ITS    ADJUSTMENT.  [§  452  F 

it  was  for  any  one  else,  an  action  cannot  be  maintained  by  other 
co-owners  with  him,  showing  by  parol  testimony  that  the 
underwriters  agreed  to  insure  them  all,  and  that  it  was  so  un- 
derstood by  all.^  Where  A.  insured  his  own  share  in  the  firm 
of  A.  B.,  the  policy  still  retaining  the  printed  form  "for 
whomsoever  else  it  may  concern,"  the  insurance  will  be  held 
to  be  joint  if  such  appears  to  have  been  vl.'s  intent.^  Neither 
a  mortgagor  nor  mortgagee  can  take  advantage,  as  a  rule,  of 
a  policy  effected  by  the  other,  even  though  it  contain  the 
words  "  for  whom  it  may  concern,"  unless  the  mortgage  has 
become  absolute  by  failure  to  pay.^  But  when  the  agent  of 
the  owners  of  a  vessel  effected  an  insurance  for  the  benefit 
and  on  account  of  whom  it  may  concern  at  the  time  of  loss, 
it  was  held  that  a  mortgagee  of  one  of  tlie  owners  had  a  right 
to  the  owner's  share  of  the  proceeds  to  the  extent  of  his  debt.* 
Agents  who  have  procured  an  open  policy  to  "  themselves,  or 
whom  it  might  concern,"  may  sue  thereon  in  their  own  names 
for  the  benefit  of  the  owners.^] 

[§  452  F.  Adjustment ;  Compromise,  &c.  —  An  adjustment 
fairly  made  is  conclusive  on  the  company.^  It  is  a  new  and 
independent  agreement,  —  and  in  a  suit  upon  it  the  company 
cannot  set  up  any  breach  of  warranty  or  condition  in  the  pol- 
icy.''' But  an  adjustment  is  never  binding  unless  with  full 
knowledge  of  the  facts.  Having  the  means  of  information 
is  not  sufficient.^  And  it  has  been  held  in  England  that  the 
signing  of  an  adjustment  by  an  underwriter,  even  with  full 
knowledge  of  all  facts,  is  not  conclusive,  but  he  may  there- 
after avail  himself  of  any  defence  which  the  facts  or  the  law  of 
the  case  will  furnish.  Money  paid  cannot  be  recovered  unless 
there  is  fraud  or  mistake,  but  a  promise  to  pay  is  not  binding 

»  [Finney  v.  Bedford  Com.  Ins.  Co.,  8  Met.  348  at  352.] 

2  [Lawrence  v.  Sebor,  2  Caiiies,  203  at  206.] 

3  [McDonald  v.  Adm'r  of  Black,  20  Oliio,  185  at  194.] 
*  [Rogers  v.  Traders'  Ins.  Co.,  6  Paige  Cli.  583  at  587.] 
6  [Protection  Ins.  Co.  v.  Nilson,  6  Oliio  St.  553  at  559.] 
6  [Royal  Ins.  Co.  v.  Roodhouse,  25  Brad.  61,  66.] 

'  [Godchaux  v.  Merchants'  Mut.  Ins.  Co.,  34  La.  Ann.  235.] 
«  [Shepherd  r.  Chewter,  1  Camp.  274  at  275;  Remington  v.  Westchester  Fire 
Ins.  Co.,  14  R.  I.  245.] 

VOL.   U.-21  1023 


§  452  F]         INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.       [CH.  XXII. 

unless  there  was  a  consideration  or  previous  liability.^  After  an 
adjustment  either  the  insured  or  the  company  may,  upon  clear 
proof,  assert  any  right  arising  from  facts  not  considered  in 
the  adjustment.2  An  adjustment  and  promise  to  pay  may  be 
avoided  by  the  company  on  afterward  discovering  that  there 
was  a  misrepresentation  of  title  in  the  application.^  But 
where  a  loss  of  a  vessel  insured  occurred,  and  when  the  com- 
pany charged  fraud  and  wilful  negligence  on  the  part  of  the 
master,  the  assured  compromised  for  three-fourths  of  the 
claim,  this  was  not  set  aside,  because  of  the  subsequent 
discovery  by  the  company  of  further  proof  that  the  master 
scuttled  the  vessel.*  Mere  ignorance  of  the  rights  the  law 
attaches  to  the  facts  is  not,  however,  sufficient  to  invalidate 
an  adjustment.  The  compromise  of  a  doubtful  title  when 
procured  without  such  deceit  as  would  vitiate  any  other  con- 
tract concludes  the  parties,  though  ignorant  of  the  extent  of 
their  rights,  but  if  any  undue  advantage  was  taken  it  is  void.^ 
When  the  assured,  knowing  the  facts  and  his  legal  rights, 
yields  to  the  arrogant  claims  and  threats  of  the  company  and 
submits  to  an  unjust  settlement,  there  can  be  no  relief  for 
him^  When  a  policy  did  not  cover  the  loss,  but  the  company 
promised  the  owner  that  "  if  he  would  find  the  property 
damaged,  have  it  inspected  and  sold  at  auction,"  they  would 
pay  the  deficiency,  it  was  held  that  the  performance  of  these 
conditions  by  the  owner  entitled  him  to  the  payment  of  the 
deficiency.'^  A  promise  becomes  binding  on  the  performance 
by  the  promisee  of  that  in  consideration  of  which  the  promise 
was  made.  In  an  adjustment  of  claims  with  an  insurance  com- 
pany the  yielding  of  the  claim  of  either  party,  or  of  a  part 
thereof,  is  sufficient  consideration  for  the  other's  promise  to  pay.® 

1  [Herbert  v.  Champion,  1  Camp.  134  at  137.] 

2  [Fire  Ass.  v.  Blum,  63  Tex.  282.] 

3  [Amer.  Ins.  Co.  v.  Barnett,  73  Mo.  364.] 

4  [Barlow  v.  Ocean  Ins.  Co.,  4  Met.  270  at  275.] 

5  [Hoge  I'.  Hoge,  1  Watts  163  at  217  ;  Haigh  v.  Brooks,  10  Ad.  &  El.  309  at 
318;  Union  Bk.  i-.  Gray,  5  Pet.  99  at  114.] 

6  [Mayhew  v.  Phoenix  Ins.  Co.,  23  Mich.  105  at  108.] 

7  [Willetts  r.  Sun  Mut.  Co.,  45  N.  Y.  45.] 

8  [Fire  &  Mar.  Ins.  Co.  v.  Chesnut,  50  111.  111.] 

1024 


CH.  XXII.]  OF   THE   LOSS    AND   ITS   ADJUSTMENT.  [§  452  F 

If  the  amount  of  liability  is  ascertained  and  not  in  dispute, 
an  agreement  to  take  less  will  not  be  enforced,  unless 
additional  security  is  given,  or  there  is  some  new  consider- 
ation.i  An  adjustment  in  which  the  loss  is  ascertained  and 
stated,  but  there  is  no  signature  or  promise  of  payment,  will 
not  estop  the  company  from  showing  that  the  promise  imjylied 
from  such  adjustment  is  without  consideration.  Such  an  ad- 
justment is  only  prima  facie  evidence  of  the  assured's  right 
to'  recover  the  amount  stated.^  An  adjustment  fraudulently 
made  may  be  set  aside.^] 

1  [Amer.  Cent.  Ins.  Co.  v.  Sweetser,  116  Ind.  370;  Douglass  v.  White,  3  Barb. 
Ch.  621  at  624] 

2  [Fame  Ins.  Co.  v.  Norris,  18  Brad.  570.] 

3  [Matthews  v.  Gen.  Mut.  Ins.  Co.  of  N.  Y.,  9  La.  Ann.  590  at  591  (by  the 
company  for  fraud  of  the  insured).] 

1025 


INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXIII, 


CHAPTER   XXIII. 

SUBROGATION. 

Analysis. 

Subrogation  — 

A.    Of  insurer  to  remedies  of  assured. 

1.  None  at  common  law  as  against  one  whose  negligence  or 
wrongful  act  caused  the  loss,  especially  in  case  of  felony, 
§  453  ;  the  doctrine  of  this  section,  and  of  the  case  cited 
at  length  in  the  note,  does  not,  however,  commend  it- 
self as  reasonable  or  just.  If  A.  beats  C,  the  latter 
may  sue  him  and  recover,  and  the  fund  goes  into  his 
estate,  perhaps  to  his  heirs  and  creditors.  If  A.  beats  C.  a 
little  harder,  so  that  he  dies,  no  recovery  can  be  had,  says 
the  common  law,  therefore  there  is  no  right  of  action 
for  the  insurer  to  be  subrogated  to;  moreover,  the  injury 
to  the  insurer  depends  on  contract  with  C,  and  is  too 
remote  a  conse(|uence  of  A.'s  action  to  make  it  proper 
to  hold  him.  The  latter  objection  is  easily  reduced  to 
the  absurd,  for  it  applies  equally  to  the  mass  of  cases  in 
which  subrogation  is  allowed  by  common  consent  to  be 
proper,  and  the  doctrine  that  in  case  of  a  small  injury 
restitution  or  compensation  must  be  made  to  the  estate, 
funds,  and  purposes  of  the  injured  person  which  have 
suffered  by  the  wrong,  but  in  case  of  a  great  injury,  no 
such  compensation  is  to  be  made  by  the  wrongdoer  car- 
ries in  its  very  statement  its  own  refutation. 
To  hold  that  if  A.  knocks  a  dead  prop  of  wood  from  under  C. 
so  that  he  is  injured,  A.  must  make  compensation,  but 
if  he  takes  away  the  living  prop  of  a  father's  life  from  C, 
he  owes  him  no  compensation,  is  not  justice. 
the  true  doctrine  is  that  a  wTongdoer  ought  to  make  good  the 
direct   loss   caused  by  his  act,   great  or  small,  and   it 

'  W'ould  have  been  more  sensible  in  the  common  law  to 

com|)el  the  murderer  to  make  good  to  the  estate  of  the 
deceased  the  fair  value  of  his  life  on  the  principles  of  in- 
surance, or  reimburse  the. insurer,  §  454. 
the  injured  person  may  sue  the  wrongdoer  first,  and  if  he 
recovers,  the  insurer  is  released  ;  or  he  may  sue  the 
company  first,  and  then  the  company  may  pursue 
the  wrongdoer,  in  the  name  of  the  assured  or  his 
representatives.  The  guilty  party  must  be  made  to  bear 
the  loss,  §  454. 

1026 


CH.  XXIII.]  SUBROGATION. 

equity  will  restrain  the  assured  from  releasiug   the  wrong- 
doer, §  454. 
the  company  is  treated  as  a  surety,  §  454. 
the  right  of  subrogation  exists,  altliough   the  company  was 

not  legally  bound  to  pay  the  loss,  §  454. 
but  does  not  arise  until  full  payment  has  been  made  by  the 
company,    except    in   case   of   abandonment    or   express 
agreement  to  assign  remedies  to  the  insurer,  §  454. 
payment  by  a  mere  stranger,  or  volunteer,  however,  gives  him 
no  right  of  subrogation,  §  456. 
nor  does  such  a  payment  release  the  insurer,  §  456. 
liability  of  town  for  acts  of  mob,  §  454. 

or  defect  of  highway,  §  455. 
railroad  liable  to  company  for  loss  by  sparks,  §  454. 
carrier's  negligence,  §  454. 

the  party  liable  for  the  wrong  cannot  take  advantage  of  the 
payment  of  the  loss  by  the  company  to  reduce  damages, 
§455. 
2.    Creditor,  §  456. 

though  company  pays   the  creditor,    he   may  still   sue  the 
debtor  for  his  debt  ( ?)  §  456.    See,  however,  §§  456  a,  449, 
452  A. 
Company  may  recover  insurance  from  lessee  if  lessor  repairs 
under  the  lease,  §  456  a. 
so  the  insurer  will   be   subrogated    to   the  right  of  a 
vendor  against  a  vendee  who  has  paid  only  part  of 
the  price,  §§  456  a,  457;  and  may  use  any  lien  that 
the  insured  possesses,  to  the  extent  of  the  insurance 
paid   by  them,   §§   456  a,   457.     If  the  sale  is  not 
complete  at  the  time  of  loss,   so  that  the  loss  is 
the  vendor's,  of  course  there  is  no  room  for  subro- 
gation, §  457.      These  doctrines  carry  out  the  prin- 
ciple that  insurance  is  an  indemnity.    The  defendant 
is  no  worse  off  than  if  there  were  no  insurance,  and 
he  is  not  entitled  to  be  a  gainer  by  it  unless  he  had 
forethought  enough  to  have  a  part  in  securing  it. 
Still  it  may-be  urged  with  some  apparent  force  that 
the  company  has  received  premiums  to  take  the  risk 
of  loss  by  fire,  and  it  seems  a  little  hard  that  an  inno- 
cent vendee  should  have  to  bear  the  loss  instead  of 
the  company  that  has  been  paid  for  that  very  purpose. 
A  moment's  consideration,  however,  shows  that  the 
vendee  is  not  innocent  in  the  very  important  respect 
that  he  neglected  to  insure  himself. 
The  company  cannot  recover  if  the  assured  cannot,  §  457. 

except  in  some  cases  of  special  agreement,  see  §  457  C. 
nor  can  it  recover  more  than  it  has  paid,  §  457. 
and  the  suit  must  be  in  the  name  of  the  assured, 
§§  454,  457. 
3.    Carrier,  §§  457  A,  457  R. 

insurer  of  goods  lost  by  carrier  is  subrogated  at  common  law 
to  insured's  remedies  against  carrier,  §  457  A. 

1027 


INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXIII. 

and  may  recover  the  full  value  of  the  goods  and  6  per 
cent  interest,  §  457  A. 

although  the  insurer  may  have  waived  a  valid  defence  against 
the  assured,  §  457  A. 

the  insurer  is  not  entitled  to  commissions  on  sales  of  aban- 
doned goods,  §  457  B. 

where  the  policy  says  "  This  insurance  shall  not  inure  to  the 
benefit  of  the  carrier,"  if  the  insured  agrees  with  the 
carrier  to  give  him  the  benefit  of  the  insurance,  neither 
of  them  can  sue  the  insurer,  §  457  A. 

in  the  absence  of  fraud  or  of  such  a  stipulation  in  the  policy, 
the  assured  may  release  the  earner,  or  agree  that  he 
shall  have  the  benefit  of  the  insurance,  and  this  defeats 
the  subrogation  of  the  insurer,  §  457  B. 

the  carrier  has  no  claim  on  the  insurance  except  by  express 
agreement,  §  457  B. 

4.  Mortgagor  and  Mortgagee,  §§  456,  457  C,  458. 

insurer  paying  mortgagee  is  subrogated  to  his  rights  at  com- 
mon law,  §  457  C.  (X.  Y. ).  Contra,  §  456,  unless  there 
is  an  express  agreement.  The  mortgagee  may  recover 
from  insurer  and  debtor  both,  §  456. 

if  the  mortgagor  procured  the  insurance,  though  making  it 
payable  to  the  mortgagee,  or  if  he  ultimately  pays 
the  premiums,  the  insurance  is  for  his  benefit  and  the 
insurer  cannot  rely  on  the  mortgage,  §§  457  C,  456. 

there  is  often  a  "mortgagee  clause,"  stipulating  that  acts  of 
the  mortgagor  shall  not  vitiate  the  policy,  and  that  the 
company  may  on  payment  of  the  loss  require  an  assign- 
ment of  the  mortgage  to  that  extent,  or  entirely  on  pay- 
ment of  the  mortgage  debt,  §  457  C. 

the  election  in  the  latter  case  must  be  made  within  a  reason- 
able time,  §  457  C. 
B.  Of  one  person  to  rights  of  another  against  the   insurer,   or  the  insur- 
ance funds,  see  Carrier,   above  in  this  analysis,  and 
chap.  xxii.  analysis  (5.) 

ultimate  title  to  proceeds,  as  between  mortgagor  and  mort- 
gagee, §  456. 

vendor  and  vendee,  §  456. 

lessor  and  lessee,  §  456. 

debtor  and  creditor,  §  456. 

5.  Proximate  Cause.     If  a  spark  flying  from  a  locomotive  sets  fire  to 

a  shed,  and  this  burning  spieads  the  fire  to  other  build- 
ings, the  spark  is  the  proximate  cause  of  the  loss  of  the 
latter  buildings.  The  contrary  has  been  held,  but  rea- 
son is  clearly  with  the  rule  just  stated.  The  spark 
is  the  proximate  cause  of  the  whole  line  of  combustion 
it  sets  up,  as  much  as  a  wound  is  the  cause  of  the  pains 
that  follow  from  it  in  successive  years,  §  459. 

car  running  over  fire  hose  and  severing  it  so  that  building 
burns,  railroad  responsilde,  §  459. 

fire  running  from  A.'s  land  to  B.'s,  §  459. 

town  tearing  down  building  to  stop  fire,  §  459. 

1028 


CH.  XXIII.]  SUBROGATION.  [§  453 

§  453.  Insurers  ;  Subrogation  ;  Remedy  over  of  Insurer.  — 
The  insurer  docs  not,  at  common  law,  acquire  by  the  j)ay- 
jnent  of  a  loss  a  right  in  his  own  name  to  recover  damages 
against  the  party  by  whose  negligence  and  fraud  the  loss  is 
caused.^  One  who  wilfully  sets  fire  to  a  building,  or  negli- 
gently destroys  a  life,  and  thus  gives  rise  to  claims  against  the 
insurers  for  losses  which  they  have  been  obliged  to  pay,  is  not 
liable  over  to  the  insurers  for  the  loss  thus  occasioned,  unless 
there  be  in  some  way  privity  of  contract  between  him  and  the 
insurers,  or  there  is  due  from  him  towards  them  some  sj)ecial 
duty.  If  no  special  right  of  theirs  as  against  him  and  no 
duty  towards  them  is  violated,  they  have  no  claim.  The  injury 
is  too  remote  and  indirect  to  constitute  an  injury  in  a  legal 
sense.  The  man  who  kills  another  violates  the  rights  of  the 
deceased  and  his  general  duty  to  society  ;  but  his  misconduct 
affords  to  the  creditor  of  the  deceased  no  legal  ground  of 
action.^  In  the  case  just  cited  from  Connecticut,  where  an 
insurance  company  had  paid  a  loss  for  a  death  caused  by  the 
negligence  of  the  railroad  company,  the  court  dismissed  the 
action  on  two  grounds :  first,  on  the  ground  that  at  common 
law  a  party  is  not  liable  civiliter  for  the  destruction  of  human 
life;^  and,  secondly,  on  the  special  ground  that  there  is  no 
such  relationship  between  the  parties  as  to  lay  a  foundation  for 
such  an  action.*     (See  analysis  at  the  head  of  this  chapter.) 

1  London  Ass.  Co.  y.  Sainsbury,  3  Doug.  245. 

2  Rockingham  Mut.  Fire  Ins.  Co.  t-.  Boslier,  39  Me.  253;  Conn.  Mut.  Life 
Ins.  Co.  V.  New  York  &  New  Haven  R.  R.  Co.,  25  Conn.  265;  Anthony  v.  Slaid, 
11  Met.  (Mass.)  290. 

'  Mobile  Ins.  Co.  v.  Brame,  95  U.  S.  754.  See  also  a  very  able  criticism  upon 
this  rule  by  Dillon,  J.,  in  Sullivan  v.  Union  Pacific  Railroad  Co.,  3  Dill.  C.  Ct. 
334.     See  also  2  Cen.  L.  J.  pp.  47,  128. 

*  The  whole  opinion  is  very  able  and  interesting,  and  well  worthy  of  perusal. 
So  much  of  it  as  is  devoted  to  the  latter  ground  we  give  entire,  in  the  words  of 
Storrs,  J. 

"The  defendants,  a  railroad  compan}',  are  charged  with  having  negligently 
occasioned  the  death  of  one  Dr.  Beach,  by  wliich  event  the  plaintiffs,  a  life  in- 
surance company,  have  bean  compelled  to  pay  to  his  representatives  the  amount 
of  an  insurance  effected  upon  his  life,  of  which  amount  a  recovery  is  sought  in 
this  action.  A  plea  in  bar  sets  forth  a  payment  to  the  administratrix  of  the  de- 
ceased of  the  damages  for  which  the  defendant's  negligence  had  rendered  them 
legally  liable,  and  also  a  discharge  by  her.     This  plea  and  the  demurrer  thereto 

1029 


§  454]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXIII. 

§  454.  Loss  ;  Right  of  Subrogation  ;  Wrong-doer.  —  But  in 
all  those  cases  where  the  insured  have  a  primary  right  against 

require  no  examination,  as  they  are  immaterial  in  tlie  view  which  we  take  of 
the  declaration. 

"  It  is  clear,  from  the  declaration,  that  a  pecuniary  injury  has  been  sustained 
by  the  plaintiffs  in  consequence  of  the  unlawful  conduct  of  the  defendants.  If 
the  injury  thus  set  forth  be  actionable,  or  an  injury  in  a  legal  sense,  there  must 
be  a  recovery.  But  we  are  of  the  opinion  that  tlie  wrong  complained  of  is  not 
tlie  proper  subject  of  a  suit  at  law,  both  for  reasons  appertaining  to  the  pecu- 
liar nature  of  the  injury  and  to  the  manner  in  wiiich  its  consequences  are 
brought  home  to  the  party  claiming  redress. 

"  Tiie  other  branch  of  our  inquiry,  relating  to  the  manner  in  which  tlie  in- 
jury complained  of  was  brought  home  to  the  party  claiming  to  liave  suffered 
by  it,  concerns  principles  of  great  practical  interest,  and  novel  in  their  present 
application.  The  plaintiflfs  sustain  no  relation  to  the  authors  of  the  wrong 
other  than  that  of  mere  contractors  witii  the  party  injured,  and  their  contract  lia- 
bility is  the  medium  through  which  tiie  injurj'  is  brouglit  home  to  them.  They 
justly  say  that  their  loss  is  in  fact  distinctly  traceable  and  solely  due  to  ihe  mis- 
conduct of  tiie  defendants;  that  the  deatii  of  Dr.  Beach,  caused  by  tlie  defend- 
ants, in  a  legal  sense  determined  the  only  contingency  out  of  which  their 
liability  grew,  and  brought  upon  them  the  consequences  of  that  liability  which, 
through  the  defendants'  unlawful  acts,  had  now  become  fixed.  Still  the  ques- 
tion remains,  notwithstanding  this  precise  exiiibition  of  cause  and  effect,  whe- 
ther these  consequences,  of  which  the  deceased  was  primarily  the  subject,  and 
which  affected  the  plaintiffs  only  because  they  had  put  themselves  into  the  po- 
sition of  contractors  with  him,  were  in  a  legal  view  brought  home  to  the  plain- 
tiffs, directly  or  indirectly.  The  completeness  of  the  proof  of  connection  be- 
tween the  acts  of  the  defendants  and  the  loss  of  the  plaintiffs  does  not  vary, 
although  it  may  tend  to  confuse  the  aspects  of  the  case.  The  single  question 
is  whether  a  plaintiff  can  successfully  claim  a  legal  injury  to  himself  from 
another,  because  the  latter  has  injured  a  third  person  in  such  a  manner  that 
the  plaintiffs'  contract  liabilities  are  thereby  affected.  An  individual  slan- 
ders a  merchant  and  ruins  his  business  ;  is  tiie  wrong-doer  liable  to  all  the  per- 
sons who,  in  consequence  of  their  relations  by  contract  to  the  bankrupt,  can  be 
dearly  shown  to  have  been  damnified  by  the  bankruptcy  ?  Can  a  fire  insurance 
companj',  who  have  been  subjected  to  loss  by  the  burning  of  a  building,  resort 
to  the  responsible  author  of  the  injury,  who  had  no  design  of  affecting  their 
interest,  in  their  own  name  and  right?  Such  are  the  complications  of  human 
affairs,  so  endless  and  far-reaching  the  mutual  promises  of  man  to  man,  in  busi- 
ness and  in  matters  of  money  and  property,  that  rarely  is  a  death  produced 
by  human  agency  which  does  not  affect  the  pecuniary  interest  of  those  to  whom 
the  deceased  was  bound  by  contract.  To  open  the  door  of  legal  redress  to 
wrongs  received  through  the  mere  voluntary  and  factitious  relation  of  a  con- 
tractor with  the  immediate  subject  of  the  injury,  would  be  to  encourage  collu- 
sion and  extravagant  contracts  between  men,  by  which  the  deatii  of  either, 
through  the  involuntary  default  of  others,  might  be  made  a  source  of  splendid 
profits  to  the  other,  and  would  also  invite  a  system  of  litigation  more  portentous 
than  our  jurisprudence  has  yet  known.    So  self  evident  Is  the  principle  that  an 

1030 


CH.  XXIII.]  SUBROGATION.  [§  454 

third  parties,  who  have  been  the  authors  of  the  injury  either 
through  negligence  or  culpable  misconduct  not  amounting  to 

injury  tlius  suffered  is  indirectly  brought  liome  to  the  party  seeking  couipensa- 
tion  for  it,  tliat  courts  liave  rarely  been  called  upon  to  promulgate  such  a  doc- 
trine. The  case,  however,  of  Anthony  v.  Slaid,  11  Met.  290,  referred  to  at  the 
bar,  is  in  point.  A  contractor  for  the  support  of  paupers  had  been  subjected  to 
extra  expense,  by  means  of  a  beating  which  one  of  those  paupers  had  received, 
and  he  sought  from  the  assailant  a  recovery  of  the  expenditure.  But  the  court 
held  that  the  damage  was  remote  and  indirect,  having  been  sustained  not  by 
means  of  any  natural  or  legal  relation  between  the  plaintiff  and  the  party  in- 
jured, but  by  means  of  the  special  contract  by  which  he  had  undertaken  to 
support  the  town  paupers. 

"  The  case,  however,  would  present  a  different  aspect,  if  by  virtue  of  the 
contract  between  the  railroad  company  and  the  deceased,  a  direct  relation  was 
established  between  the  former  and  the  insurers.  If  the  contract  for  the  trans- 
portation of  Dr.  Beach  safely,  either  in  Us  terms  or  through  its  necessary  legal 
incidents,  or  by  fair  inference  as  to  the  intent  of  the  parties,  devolved  upon  the 
railroad  company  a  duty  towards  the  present  plaintiffs,  the  latter  might  sue  for 
a  violation  of  that  duty.  An  obligation  thus  imposed  will  not  always  require  a 
suit  for  its  breach  to  be  brought  by  a  party  to  the  contract;  an  independent 
right  of  action  resides  in  the  party  to  whom  the  duty  was  to  be  performed.  In 
this  respect  there  is  no  difference  between  an  obligation  imposed  bj'  law  and  by 
contract.  Where  the  duty  of  keeping  a  highway  is  lodged  in  a  certain  quarter 
by  statute,  the  way  is  to  be  kept  in  repair  for  the  public,  for  everybody ;  and 
when  any  person  is  injured  by  its  defects,  the  breach  of  duty  is  to  him,  and  he 
has  an  action  for  the  violation  of  his  right.  If  a  stage-coach  proprietor  agrees 
with  a  master  to  carry  his  servant,  and  injures  the  latter  on  the  road,  he  is  lia- 
ble directly  to  the  servant;  for  although  undertaken  at  tlie  request  of  and  by 
agreement  with  another,  the  duty  was  directly  to  the  party  injured.  Longmeid 
et  ux.  V.  Holliday,  G  Eng.  L.  &  Eq.  562.  But  it  is  evident  that  the  present  case 
cannot  be  brought  within  the  principle  of  such  decisions.  It  would  be  unfair 
to  argue  that  when  two  parties  make  a  contract,  they  design  to  provide  for  an 
obligation  to  any  other  persons  than  themselves  and  those  named  expressly 
therein,  or  to  such  as  are  naturally  within  the  direct  scope  of  the  duties  and 
obligations  prescribed  by  the  agreement.  On  this  point  it  is  enough  to  sa}'  that 
when  an  agreement  is  entered  into,  neither  party  contemplates  the  requirement 
from  the  other  of  a  duty  towards  all  the  persons  to  whom  he  may  have  a  rela- 
tion by  numberless  private  contracts,  and  who  may  therefore  be  affected  by  the 
breach  of  the  other's  undertakings.  We  cannot  find  that  any  public  law  charged 
the  present  defendants  with  any  duty  to  the  plaintiffs,  regarding  Dr.  Beach's 
life,  nor  can  we  see  that  Dr.  Beach  exacted,  either  expressly  or  by  reasonable 
intendment,  any  obligation  from  the  defendants  towards  the  insurers  of  his  life, 
when  he  contracted  for  his  transportation  to  New  York.  Had  the  life  of  Dr. 
Beach  been  taken  with  intent  to  injure  the  plaintiffs,  through  their  contract  lia- 
bility, a  different  question  would  arise,  inasmuch  as  every  man  owes  a  duty  to 
every  other  not  intentionally  to  injure  him. 

"  We  decide  that  in  the  absence  of  any  privity  of  contract  between  the  plain- 
tiff and  defendants,  and  of  any  direct  obligation   of  the  latter  to  the  former 

1031 


§  454]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXIII. 

felony,  the  insurers  on  making  good  the  loss  are  entitled  to 
enforce  the  remedy  of  the  assured,  and  in  their  name  to  re- 
coup themselves  for  their  expenditure.  This  right  is  recog- 
nized by  the  courts  as  the  right  of  subrogation.  The  contract 
of  insurance  is  treated  as  an  indemnity,  and  the  insurer  as  a 

growing  out  of  the  contract  or  relation  between  the  insured  and  the  defendants, 
the  loss  of  the  plaintiffs,  altliough  due  to  the  acts  of  the  railroad  company,  being 
brought  home  to  tlie  insurers  only  through  their  artificial  relation  of  contractors 
witli  the  party  who  was  the  immediate  subject  of  tlie  wrong  done  by  the  rail- 
road company,  was  a  remote  and  indirect  consequence  of  the  misconduct  of  tlie 
defendants,  and  not  actionable. 

"  Since  tlie  determination  of  this  case,  we  have  observed  a  decision,  recently 
made  in  Maine,  Rockingham  Mut.  Fire  Ins.  Co.  i-.  Bosher,  39  Me.  253,  fully  con- 
firming the  legal  theory  which  we  have  advanced.  The  suit  was  broiiglit 
against  a  party  who  iiad  wilfully  fired  a  store,  by  tlie  insurance  company,  who 
had  paid  the  consequent  loss,  and  in  their  own  name.  The  court  dismissed  the 
action  on  demurrer,  taking  the  same  view  of  the  common-law  doctrine  whicii  we 
have  expressed  relative  to  the  indirect  and  remote  manner  in  whicli  the  inter- 
ests of  the  insurer  were  prejudiced  by  the  misconduct  of  the  wrong-doer.  Tiie 
cases  in  which  insurers  have  been  permitted  to  recover  against  the  authors  of 
those  losses  are  not  in  contravention  of  these  principles.  They  have  recovered 
not  by  color  of  their  own  legal  right,  but  under  a  general  doctrine  of  equity  jur- 
isprudence, commonly  known  as  the  doctrine  of  subrogation,  applicable  to  all 
cases  wherein  a  party  who  has  indemnified  another  in  pursuance  of  his  obliga- 
tion so  to  do,  succeeds  to  and  is  entitled  to  a  cession  of  all  the  means  of  redress 
held  by  the  party  indemnified  against  the  party  who  has  occasioned  the  loss.  In 
some  instances  the  doctrine  has  been  carried  so  far  that  an  insurer  has  been  per- 
mitted to  recover  from  the  insured  such  compensation  as  the  latter  has  subse- 
quently obtained  from  the  wrong-doer,  as  if  the  money  paid  by  the  tortfeasor 
under  such  circumstances  was  really  paid  for  the  use  of  the  insurer  By  virtue 
of  this  doctrine  there  is  no  doubt  of  the  right  of  an  insurer,  who  has  paid  a  loss, 
to  use  the  name  of  the  insured  in  order  to  obtain  redress  from  the  author  of  the 
wrong,  —  a  right  to  be  exercised  for  the  benefit  of  the  party  equitably  entitled 
to  its  benefits,  not  to  be  enforced  by  its  possessor  in  his  own  name,  but  by  liim 
as  the  successor  to  the  remedies  of  the  person  whom  he  has  indemnified.  Hav- 
ing no  independent  claim  on  the  wrong-doer,  he  might  be  successfully  met  by 
the  superior  equities  of  the  wrong-doer,  such,  for  instance,  as  a  payment  to  tlie 
party  directly  injured,  without  notice  of  the  insurer's  claim  to  be  subrogated. 
Nothing  can  be  plainer  than  that  an  indirect  liability  of  this  kind  is  an  argument 
rather  against  the  claim  of  a  direct  responsibility  of  the  wrong-doer  than  a  sug- 
gestion in  its  favor.  The  views  taken  by  courts  in  recognizing  the  insurer's 
right  of  subrogation  tend  to  sustain  the  principle  which  we  now  maintain"  See 
also  Propeller  Monticello,  17  How  152,154;  Mason  v  Sainsbury,  26  E.  C.  L. 
36  ;  3  Doug.  61 ;  Yates  v.  Whyte,  4  Bing  New  Cas.  272  ;  Quebec  Fire  Ins.  Co. 
V.  St.  Louis,  22  Eng.  L.  &  Eq.  73  ;  Quebec  Fire  Ins.  Co.  ?'  Molson  ef  al,  1  L.  C. 
Rep  222;  Hart  v.  W.  R.  Co.,  13  Met.  99 ,  Bean  v  At.  &  St.  Law.  R.  R  Co.,  58 
Me.  82. 

1032 


CH.  XXIII.]  SUBROGATION.  [§  454 

surety  who  is  entitled  to  all  the  remedies  and  securities  of  the 
assured,  and  to  stand  in  his  place.  If  the  insurers  were  first 
liable,  payment  by  them  would  be  a  satisfaction  and  relieve 
the  wrong-doer ;  but  this  is  not  so,  for  the  latter  is  first  liable. 
The  assured  have,  indeed,  a  double  remedy  ;  ^  if  they  pursue 
that  against  the  wrong-doer  and  recover  compensation,  the 
insurers  escape,  but  if  they  choose  to  enforce  the  claim  against 
the  insurers  in  the  first  instance,  the  latter  are  entitled  to  use 
the  name  of  the  assured  in  an  action  to  recover  the  money 
which  they  have  paid.^  And  the  right  is  based  upon  the 
equitable  doctrine  that  where  one  has  been  obliged  to  pay 
money  to  another  by  the  non-feasance  or  misfeasance  of  a 
third,  who,  being  at  fault,  ought  to  bear  the  loss,  the  party  so 
paying,  as  by  his  direct  obligation  towards  the  party  suffering 
the  loss  he  may  be  compelled  to  do,  shall  be  allowed,  indi- 
rectly and  through  the  riglit  which  the  injured  party  had,  to 
compel  the  wrong-doer  to  bear  the  burden  which  was  imposed 
by  his  fault ;  although  between  him  and  the  wrong-doer  there 
is  no  direct  relation  upon  which  to  found  a  cause  of  action- 
In  other  words,  the  party  injured  being  so  situated  that  he 
may  call,  by  his  right  at  law,  upon  the  party  who  is  responsi- 
ble for  the  injury,  or,  by  his  contract,  upon  one  who  is  not  at 
fault,  for  his  indemnity  ;  if  he  elect  the  latter,  then  the  latter 
shall  be  allowed  to  do,  in  his  name,  what  in  the  first  instance 
the  injured  party  might  have  done,  and  justice,  as  between  all 
the  parties,  decrees  ought  to  be  done.  And  this  result  is 
accomplished  by  the  courts  when  suit  is  brought  by  the  insur- 
ers in  the  name  of  the  insured,  by  holding  that  the  payment 
of  the  money  to  the  latter  is  no  satisfaction  of  the  latter's 
claim  against  the  wrong-doer.  The  liability  of  the  wrong- 
doer is  in  legal  effect  first  and  principal,  and  that  of  the 
insurer  secondary,  not  in  order  of  time,  but  in  order  of  ulti- 
mate liability.  And  where  the  insured  insists  upon  his  rem- 
edy against  the  party  secondarily  liable,  he  is  conscientiously 
bound  to  make  an  assignment,  in  equity,  to  the  person  enti- 
tled to  the  benefit,  and  the  acceptance  of  the  indemnity  from 

1  Burrows  v.  March  Ins.  Co.,  L.  R.  5  Exch.  Cas.  68,  7  Exch.  96. 

2  Bunyon  Fire  Ins.  165. 

1033 


§  454]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC        [CH.  XXIII. 

the  insurers  is  in  the  nature  of  an  equitable  assignment,  which 
authorizes  the  assignor  to  sue,  in  the  name  of  the  assignee, 
for  his  own  benefit.  And  this  is  a  right  which  a  court  of 
equity  will  support,  by  restraining  and  prohibiting  the  assignee 
from  defeating  it  by  a  release.  Thus  where  a  house  was  de- 
stroyed by  a  mob,  and  the  insurers  paid  the  loss,  a  suit  against 
the  hundred  wliicli  were  primarily  responsible  was  maintained 
in  the  name  of  the  insured,  but  for  the  benefit  of  the  insur- 
ers.^ So  where  the  underwriters  have  paid  a  loss  occasioned 
by  sparks  from  a  locomotive,  they  may  recover  from  the  rail- 
road company  the  amount  thus  paid,  in  a  suit  in  the  name  of 
the  owner  of  the  property  destroyed,  which  action  the  owner 
cannot  control.^  [Or  if  the  insured  has  recovered  from 
the  railroad  company  as  well  as  from  the  insurer,  the  latter 
may  claim  the  excess  above  indemnity  to  the  assured.^]  So 
where  the  loss  is  entailed  by  the  negligence  *  of  a  common 
carrier,  whereby  the  goods  intrusted  to  his  care  are  destroyed 
by  fire.  As  between  a  common  carrier  of  goods  and  the 
insurer  the  liability  for  their  loss  is  primarily  upon  the 
carrier,  while  the  liability  of  the  insurer  is  only  secondary. 
In  respect  to  the  ownership  of  the  goods  and  the  risk  inci- 
dent thereto,  the  owner  and  the  insurer  are  considered  but 
one  person,  having  together  tlie  beneficial  right  to  the  in- 
demnity due  from  the  carrier  for  a  breach  of  his  contract, 
or  for  a  non-performance  of  his  legal  duty.  The  insurer 
stands  practically  in  the  position  of  a  surety,  and  whenever  he 
has  indemnified  the  owner  for  the  loss,  he  is  entitled  to  all  the 

1  Mason  v.  Sainsbury,  3  Doug.  61  ;  Conn.  Mut.  Life  Ins.  Co.  v.  R.  R.  Co., 
supra,  §  453.  As  to  tlie  liability  for  negligence  at  common  law,  see  also  Yates  v. 
Whyte,  4  Bing.  N.  C.  272  ;  Quebec  Fire  Ins.  Co.  v.  St.  Louis,  22  Eng.  L.  &  Eq.  73  ; 
Clark  V.  Inhabitants  of  Bly thing,  2  B.  &  C.  254 ;  Ryan  v.  N.  Y.  Central  R.  R.  Co., 
352 ;  Webb  v.  Rome,  &c.  R.  R.  Co.,  49  N.  Y.  421.  As  to  when  notice  before  suit 
is  necessary,  see  Hough  v.  ^tna  Life  Ins.  Co.,  52  111.  318. 

2  Hart  V.  Western  R.  R.  Co.,  13  Met.  (Mass.)  99;  Monmouth  Insurance 
Co.  V.  Hutchinson,  21  N.  J.  Eq.  107 ;  Conn.  Fire  Insurance  Co.  v.  Railway  Co., 
73  N.  Y.  399. 

3  [Hartford  Ins.  Co.  v.  Pennell,  2  111.  Ap.  609  at  614.] 

*  [A  company  paying  the  loss  caused  by  the  negligence  of  a  railroad,  is  sub- 
rogated to  the  rights  of  the  owner  against  the  road.  Holcombe  v.  Richmond, 
&c.  R.  Co.,  78  Ga.  776.] 

1034 


CH.  XXIII.]  SUBROGATION.  [§  454 

means  of  indemnity  which  the  satisfied  owner  held  against 
the  carrier.  This  right  depends  not  upon  privity  of  contract, 
but  is  worked  out  through  the  right  of  the  creditor  or  owner, 
and  in  his  name ;  ^  and  exists  although  the  insurer  was  not 
legally  bound  to  indemnify  the  insured  for  the  loss  he  sus- 
tained.2  So,  where  a  house  is  wilfully  burned  by  a  third 
person,  or  a  life  is  lost  by  the  negligence  of  a  steamboat  or 
railroad  company.  But  in  all  such  cases  the  action  must  be 
brought  in  the  name  of  the  party  directly  injured,  or  his  legal 
representatives,  and  an  action  in  the  name  of  the  third  party 
will  not  be  sustained.^  And  several  parties  injured  may  join 
in  the  same  action.*  This  right  of  subrogation  does  not, 
however,  accrue  until  full  payment  of  the  liability  which  gives 
rise  to  such  right  on  the  part  of  the  insurance  company  claim- 
ing to  be  subrogated.^  [It  is  true  that  in  marine  insurance 
an  abandonment  passes  to  the  insurers  all  claims  and  rights 
of  the  insured,  and  they  can  sue  the  person  whose  negligence 

1  Hall  V.  Nash.  &  Chat.  R.  R.  Co.,  13  Wall.  (U.  S.)  367;  Gales  v.  Hailman. 
11  Pa.  St.  515;  Georgia  Ins.  Co.  v.  Dawson,  2  Gill  (Md.),  365. 

2  Insurance  Co,  v.  The  "  C.  D.,  Jr.,"  1  Wood  (U.  S.  C.  Ct.),  72:  Monticello  v. 
Mollison,  17  How.  (U.  S.)  152. 

3  Rockingliam  Miit.  Fire  Ins.  Co.  v.  Bosher,  39  Me.  253  ;  Peoria  Mar.  &  Fire 
Ins.  Co.  V.  Frost,  87  III.  333  ;  Conn.  Mut.  Life  Ins.  Co.  v.  N.  Y.  &  N.  H.  R.  R.  Co.. 
25  Conn.  265;  ^tna  Ins.  Co.  v.  Han.  &  St.  Joseph  R.  R.,  3  Dill.  C.  Ct.  I.  In 
Lower  Canada,  Iiowever,  where  a  churcli  was  set  on  fire  and  burned  by  the 
sparks  from  a  passing  steamboat,  which  had  no  grille  on  its  chimney,  the  insur- 
ance company  were  allowed,  after  liaving  paid  the  loss,  after  a  transfer  of  the 
claim  against  the  company,  but  without  any  legal  assignment  thereof  by  the 
church  proprietors,  to  maintain  in  their  own  name  an  action  against  the  steam- 
boat company  to  recover  the  amount  they  had  been  compelled  to  pay  under  the 
policy.  Quebec  Fire  Ass.  Co.  v.  St.  Louis,  1  L.  C.  222.  This  case  turned  upon 
the  peculiarities  of  the  French  law,  and  was  affirmed  in  the  Privy  Council,  22 
Eng.  L.  &  Eq.  73.  So  in  admiralty,  Amazon  Ins.  Co.  v.  Steamboat,  6  Ins.  L.J. 
155.  See  also  Kentucky  Ins.  Co.  v.  Railway  Co.  (Tenn.),  6  Ins.  L.  J.328;  Mon- 
ticello V.  Mollison,  17  How.  (U.  S.)  152;  St.  Paul's  Ins.  Co.  v.  Steamboat,  U.  S. 
Dist.  Ct.  (Mich.),  5  Ins.  L.  J.  73. 

*  Swarthout  et  ol.  v.  Chicago  R,  R.  Co.,  49  Wis.  629. 

^  People's  Ins.  Co.  v.  Straehle,  2  Cincinnati  Sup.  Ct.  Reporter,  186  ;  Neptune 
Ins.  Co.  f.  Dorsey,  3  Md.  Ch.  334,  338;  Kyner  v.  Kyner,  6  Watts  (Pa.),  221. 
It  has  been  held,  however,  that  after  an  abandonment  in  marine  insurance  the 
insurer  supervenes  to  all  the  rights  of  the  insured,  and  may  maintain  a  libel, 
although  he  has  not,  before  bringing  it,  paid  the  loss.  Traders'  Ins.  Co.  v.  Pro- 
peller Manistee,  5  Biss.  C.  Ct.  381. 

1035 


§  454]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.      [CH.  XXIII. 

caused  the  loss,  before  they  have  paid  the  policy ;  ^  and  that 
in  fire  insurance  a  special  agreeing  to  assign  to  the  insurer 
an  interest  in  the  mortgage  or  deed  of  trust,  equal  to  the  loss 
paid,  is  a  condition  precedent  to  recovery  by  the  insured.*^ 
When  the  insured  covenants  that  on  receiving  payment  he 
will  assign  to  the  company  any  claims  he  may  have  against 
any  one  whose  negligence  or  fault  may  have  caused  the  loss, 
refusal  of  the  insured  to  make  the  assignment  before  or  con- 
current with  the  payment  is  a  good  defence  to  a  suit.^  But 
where  there  is  no  express  covenant,  no  subrogation  can  be  de- 
manded until  the  company  has  paid  the  loss,  and  the  insured 
may  settle  with  and  release  the  negligent  party  as  to  damage 
other  than  that  insured  without  affecting  his  remedy  against 
the  insurer.  If,  however,  the  insured  recovers  from  the  negli- 
gent person  for  the  whole  loss,  he  cannot  afterward  sue  the 
insurer.*]  This  liability  for  negligence  existed  at  common 
law  ;  ^  and  in  some  of  the  States  is  imposed  by  statute,  with- 
out regard  to  the  question  of  negligence.  [A  town  insurance 
company,  paying  a  loss  arising  from  the  negligence  of  a  rail- 
road, may  take  an  assignment  of  the  claim  for  damages  against 
the  railway  and  recover  from  it  in  full.^  Freight  to  be  earned 
is  no  incident  to  the  ownership  of  the  vessel,  and  the  company 
is  not  entitled  to  the  benefit  of  any  damages  recovered  from 
the  owners  of  the  wrong-doing  ship  on  account  of  loss  of 
freight. 7  An  insurer  paying  the  loss  by  collision  may  sue  the 
colliding  vessel  for  damages.^  When  both  the  master  and  the 
insurers  are  liable  to  the  assured,  and  there  is  an  abandon- 
ment for  a  total  loss  and  the  insurers  pay,  they  may  be  subro- 
gated to  the  rights  of  the  assured  against  the  master.^    The 

1  [Tlie  Manistee,  5  Biss.  381  at  384.] 

2  [Dick  V.  Franklin  Fire  Ins.  Co.,  81  Mo.  103.] 

3  [Niagara  Fire  Ins.  Co.  v.  Fidelity,  &c.  Co.,  123  Pa.  St.  516.] 
*  [Insurance  Co.  i\  Fidelity,  &c.  Co.,  id.  523  ] 

6  Canterbury  v.  Attorney-General,  1  Phil.  30G ;  Pigot  v.  Eastern  Counties 
Railway  Co.,  3  C.  B.  229  ;  Aldridge  v.  Great  West.  Railway  Co.,  3  M.  &  G.  515; 
Longman  v.  Grand  Junction  Canal  Co.,  3  F.  &  F.  7.36,  738. 

6  [Hustisford  F.  M.  Ins.  Co.  v.  C.  M.  &  St.  P.  R.  Co.,  66  Wis.  58.] 

•?  [Sea  Ins.  Co.  v.  Hadden,  13  Q.  B.  D.  706.] 

8  [Tlie  Frank  G.  Fowler,  8  Fed.  Rep.  360,  S.  Dist.  of  N.  Y.  1881.] 

9  [Atlantic  Ins.  Co.  v.  Storrow,  5  Paige,  285  at  294.] 

1036 


CII.  XXIII.]  SUBROGATION.  [§  455 

company  is  entitled  to  have  the  amount  recovered  by  the 
insured  from  the  wrong-doer  brought  into  account  witli 
the  insurance,  and  if  the  two  more  than  cover  the  loss  and 
all  expenses  of  the  insured  in  the  matter,  so  that  he  is 
better  off  than  if  no  accident  had  happened,  the  company 
is  entitled  to  the  benefit  of  the  excess,  to  the  extent  of  their 
liability.i] 

§  455.  Loss  ;  Subrogation  ;  Wrong-doer  can  have  no  benefit 
from  Payment  by  the  Insurer.  —  The  principles  stated  in  the 
last  section  were  further  illustrated  in  a  recent  case  in  Ver- 
mont,2  where  a  town  which  was  sued  for  injuries  resulting 
from  a  defect  in  a  highway  undertook  to  claim  in  its  behalf, 
by  way  of  reduction  of  damages,  the  amount  which  had  been 
paid  the  plaintiff  by  an  insurance  company.  But  the  court 
said  there  was  no  technical  ground  which  necessarily  leads  to 
the  conclusion  that  the  money  received  by  the  plaintiff  of  the 
accident  insurance  company  should  operate  as  a  defence  pro 
tanto,  or  inure  to  the  benefit  of  the  town.  The  insurer  and 
the  defendant  are  not  joint  tortfeasors  or  joint  debtors,  so  as 
to  make  a  payment  or  satisfaction  by  the  former  operate  to 
the  benefit  of  the  latter.  Nor  is  there  any  legal  privity  be- 
tween the  defendant  and  the  insurer,  so  as  to  give  the  former 
a  right  to  avail  itself  of  a  payment  by  the  latter.  The  policy 
of  insurance  is  collateral  to  the  remedy  against  the  defendant, 
and  was  procured  solely  by  the  plaintiff  and  at  his  expense, 
and  to  the  procurement  of  which  the  defendant  was  in  no 
way  contributory,  and  there  is  no  legal  principle  which  seems 
to  require  that  he  should  have  any  benefit  therefrom.  To 
the  suggestion  that  the  plaintiff  was  entitled  to  but  one  satis- 
faction for  the  injury,  the  reply  was,  that  if  this  was  to  be 
regarded  as  a  correct  proposition,  the  question  would  arise 
whether  the  defendant  stands  in  a  position  which  entitles 
him  to  make  the  objection.  And  this  depends  upon  another 
question.  Who,  as  between  the  insurer  and  the  defendant, 
ought  to  pay  the  damage  ?  which  of  the  two  ought  neces- 
sarily to  make  compensation  to  the  plaintiff,  and  ultimately 

1  [National  Fire  Ins.  Co.  v.  McLaren,  12  Ont.  R.  682] 

2  Harding  v.  Townshend,  43  Vt.  536. 

1037 


§  45G]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXIII. 

to  bear  the  loss  ?  If  the  insurer  ought  ultimately  to  bear  the 
loss,  the  defendant  is  entitled  in  this  action  to  have  the  bene- 
fit of  that  payment ;  but  if  the  defendant  ought  ultimately  to 
bear  the  loss,  then  the  payment  by  the  insurer,  and  the  col- 
lection of  the  entire  damage  of  the  defendant,  only  creates  an 
equity  between  the  plaintiff  and  the  insurer,  to  be  ultimately 
adjusted  between  them,  in  which  the  defendant  has  no  in- 
terest, and  with  which  he  has  no  concern.^  [When  a  sheriff 
wrongfully  took  goods  of  A.  which  were  insured,  and  A. 
recovered  on  the  policy  (the  goods  being  destroyed  while  in 
the  sheriff's  possession),  it  was  held  that  he  could  recover 
also  in  trespass  for  the  full  value  of  the  goods,  the  wrong-doer 
having  nothing  to  do  with  the  other  payment.^  The  insur- 
ance ou  the  property  and  transactions  between  the  insurer  and 
assured  as  to  payment  of  loss  have  nothing  to  do  with  the 
extent  of  the  liability  of  one  who  has  maliciously  burned 
insured's  property.^  Nor  can  they  be  given  in  evidence  in 
mitigation  of  damages  when  the  negligence  of  the  third  party 
is  in  question.*] 

§  456.  Loss  ;  Subrogation  ;  Intervention  of  Strangers  to  the 
Contract  ;  Debtor  and  Creditor  ;  Mortgagor  and  Mortgagee  :  Ven- 
dor and  Vendee  ;  Lessor  and  Lessee.  —  But  this  right  of  sub- 
rogation is  based  upon  the  fact  that  the  person  who  pays  the 
debt  stands  in  the  position  of  a  surety,  or  is  compelled  to  pay 
to  protect  his  own  interest,  as  where  one  is  surety  for  another 
that  he  will  account  for  moneys.  A  mere  stranger  or  volun- 
teer having  no  interested  relationship  to  the  parties,  who  pays 
the  debt  of  another,  cannot  be  subrogated  to  the  creditor's 

1  See  also  Mason  v.  Sainsbury,  3  Doug.  61  ;  Clark  v.  Inhabitants  of  Bly- 
thing,  2  B  &  C.  254;  Yates  v.  White  et  al ,  i  Bing.  N.  C.  272  ;  Monticello  v. 
MoUison,  17  How.  (U.  S.)  152,  which  were  cited  by  tlie  court  as  authorities  up- 
on the  first  point ;  Anonymous,  4  Ins.  L  J.  158  ;  Merrick  v.  Brainard,  34  N.  Y. 
208  ;  Weber  v.  Morris  &  Essex  R.  R,  35  N.  J.  409.  The  case  of  Pym  v.  Great 
Northern  Railway  Co.,  4  B.  &  S.  396,  if  not  distinguishable,  is  opposed  by  Al- 
thorf  V.  Wolf,  22  N.  Y.  355.  And  the  same  may  be  said  of  Hicks  v.  Newport 
Railway  Co.,  an  unreported  case  at  Nisi  Prius,  referred  to  in  a  note  to  Aithorf 
V.  Wolf,  decided  under  Lord  Campbell's  Act,  4  Ins.  L.  J.  158. 

2  [Perrott  v.  Shearer,  17  Mich.  48  at  56.] 

3  [Hayward  v.  Cain,  105  Mass  213  at  214] 

4  [Collins  V.  N,  Y.  Central,  &c.  R.  R.,  5  Hun,  503  at  506.] 

1038 


CH.  XXIII.]  SUBROGATION.  [§  456 

rights.^  On  the  other  hand,  if  a  stranger  to  the  contract  sees 
fit  to  donate  to  the  insured  the  amount  of  any  loss  he  may 
have  suffered,  this  will  not  relieve  the  insurers  from  their 
obligation  to  perform  their  contract.^  Not  even  the  insurers 
can  intervene  and  intercept,  or  lay  successful  claim  to  a  debt 
or  its  securities,  when  they  are  neither  directly  nor  indirectly 
affected  by  the  conduct  of  the  creditor,  or  authorized  by  his 
consent.  The  insurers  of  the  prompt  payment  of  a  note  are 
not  entitled  to  the  note  itself  on  payment,  unless  by  special 
agreement.  The  note  is  still  the  property  of  the  insured 
valeat  quantum.^  Nor  can  they  require  the  insured  to  enforce 
a  prior  claim,  —  the  mechanic  his  lien,  for  instance,  —  before 
calling  on  them  for  indemnity.*  A  creditor  to  whom  a  policy 
is  made  payable,  and  who  has  promised  the  insured,  his  debt- 
or, to  pay  off  certain  other  debts  of  the  insured,  may  recover 
and  hold  the  proceeds  of  the  insurance  in  trust  for  his  debtor 
against  any  claims  of  the  insurer  to  subrogation  against  the 
insured,  notwithstanding  the  creditor  may  have  been  fully 
paid.^  A  mortgagee  who  insures  generally,  and  at  the  time 
declares  his  purpose,  but  not  otherwise,  to  cover  the  mortga- 
gor's interest,  may  recover  the  full  amount  of  the  loss.^  So 
the  assignee  of  a  mortgage  for  a  consideration,  only  part  of 
which  he  has  paid,  may  recover  the  whole  amount  of  the  sum 
agreed  to  be  paid,  though  the  mortgaged  property  was  sold 
for  more  than  he  had  actually  paid ;  nor  can  he  be  first 
required  by  the  insurers  to  exhaust  his  remedy  on  the  mort- 
gage before  he  can  call  upon  the  insurers."     The  facts  that  the 

J  Hough  V.  iEtna  Life  Ins.  Co.,  57  111.  318. 

2  People's  Ins.  Co.  v.  Straehle,  2  Cincinnati  Sup.  Ct.  Reporter,  186 ;  ante, 
§116. 

3  Mayer  v.  Legrand,  Dalloz,  Jur.  Gen.,  1870,  218. 

*  Royal  Ins.  Co.  v.  Stinson,  Sup.  Ct.  U.  S.,  11  Reptr.  689. 

6  Cone  V.  Niagara  Fire  Ins.  Co.,  60  N.  Y.  619. 

6  Richardson  r.  Home  Ins.  Co.,  21  U.  C.  (C.  P.)  291 ;  Hazard  v.  Canada  Agr. 
Ins.  Co.,  39U.  C.  (Q.  B.)  419. 

'  Excelsior  Fire  Ins.  Co.  v.  Royal  Ins.  Co.,  55  N.  Y.  343,359.  In  this  case  the 
ground  is  taken  that  the  insurance  of  a  mortgagee's  interest  is  an  insurance  of 
the  property  and  not  of  the  debt,  controverting  the  dicta  in  ^tna  Ins.  Co.  i'. 
Tyler,  16  Wend.  38-5.  Carpenter  r.  Prov.  Ins.  Co.,  16  Pet.  (U.  S  )  495  ;  Smith 
V.  Columbian  Ins.  Co.,  17  Pa.  St.  283,  and  Kernochan  v.  Barry  Ins.  Co.,  17  N.  Y. 
428,  apparently  to  the  contrary. 

VOL.  II.  —  22  1039 


§  456]  INSURANCE :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXIII. 

property  after  the  fire  is  sufficient  security  for  the  debt,  and 
that  it  has  been  restored  by  the  mortgagor,  constitute  no 
defence  in  behalf  of  the  insurers,  nor  are  they  entitled  to  be 
subrogated  to  the  mortgagor's  rights.^  Indeed  it  may  be 
stated,  as  a  general  rule,  that  no  one,  except  the  nominal 
assured,  or  his  assignee  after  loss,  can  claim  either  from  the 
insurers,  or  from  the  party  to  whom  the  loss  has  been  paid, 
any  part  of  the  proceeds  of  a  policy,  unless  by  express  agree- 
ment, or  unless  the  policy  covered  property  in  which  the 
claimant  had  an  interest,  and  was  intended  and  was  effected 
in  part  or  in  whole  for  his  benefit  and  at  his  expense.^  Thus 
a  mortgagor  cannot  recover  from  a  mortgagee  except  under 
such  circumstances  ;  ^  nor  a  mortgagee  from  a  mortgagor  ;  * 
nor  a  consignor  from  a  consignee ;  ^  nor  a  vendee  from  a  ven- 
dor, who,  not  having  assigned  the  policy,  had,  after  loss  of  the 
property  sold,  collected  the  insurance  ;  ^  nor  a  vendor  from 
a  vendee ; ''  nor  a  lessor  from  a  lessee  ;  ^  nor  a  lessee  from  a 
lessor  ;  ^  nor  a  debtor  from  a  creditor.!*^  In  order  to  give  the 
right  to  intervene  between  the  insurer  and  the  insured,  the 
party  intervening   must   have   some  relation  to,  or  concern 

1  ^tna  Ins.  Co.  v.  Baker  (111.),  10  Ins.  L.  J.  275 ;  a7Ue,  §  424. 

2  Steele  v.  Franklin  Fire  Ins.  Co.,  17  Pa.  St.  290;  Turner  v.  Stetts,  28  Ala. 
420.  And  see  ante,  §  424.  [The  text  was  quoted  and  approved  in  Galyon  & 
Co.  for  use,  &c.  v.  Ketehen,  85  Tenn.  55,  59,  where  it  was  decided  tliat  the  holder 
of  a  mechanics'  lien  has  no  claim  on  insurance  effected  by  the  owner  and  assigned 
to  a  mortgagee  of  the  property  after  loss,  but  before  the  lienor's  bill  was  filed.] 

3  White  V.  Brown,  2  Cush.  (Mass.)  412;  Cushing  v.  Thompson,  34  Me.  496; 
Concord  Mut.  Fire  Ins.  Co.  v.  Woodbury,  45  id.  447 ;  McPherson  v.  Proudfoot, 
2  U.  C.  (C.  P.)  57  ;  Bunyon  Fire  Ins.,  150,  b,  c,  and  d.  [Where  a  mortgagee  ob- 
tains a  policy  on  his  own  account,  and  the  premiums  are  not  paid  by  or  charged 
to  the  mortgagor,  the  latter  cannot  claim  the  benefit  of  it.  Pendleton  v.  Elliott, 
67  Mich.  496,  citing  Stinchfield  v.  Milliken,  71  Me.  567;  Insurance  Co.  f .  Wood- 
bury, 45  Me.  447  ;  White  v.  Brown,  2  Cush.  412.] 

*  Kansas  Ins.  Co.  v.  Berry,  8  Kans.  159. 

5  Stillwell  V.  Staples,  19  N.  Y.  401,  reversing  same  case  in  6  Duer  (N.  Y.),  63, 

6  King  ?'.  Preston,  11  La.  Ann.  95  ;  Rayner  v.  Preston,  28  W.  R.  808  ;  s.  c.  10 
Ins.  L.  J.  556;  Poole  v.  Adams,  12  W.  R.  683. 

"  Hammer  v.  Johnson,  44  111.  192  ;  Wood  v.  Northwestern  Ins.  Co.,  46  N.  Y. 
421. 

8  Merchants'  Ins.  Co.  v.  Mazange,  22  Ala.  168 ;  Ely  v.  Ely,  80  111.  532. 

9  Miltenberger  v-  Beacora,  9  Pa.  St.  198;  Tongue  v.  Nutwell,  31  Md  302. 

1'^  Bruce  v.  Garden,  22  L.  T  n.  s  595;  Henson  v  Blackwell,  4  Hare,  Ch.  434. 
1040 


CH.  XXIII.]  SUBROGATION.  [§  456 

with,  the  contract  of  insurance,  as  where  the  mortgagee  in- 
sures in  his  own  name,  but  at  the  request  and  at  the  expense 
of  the  mortgagor.  In  such  case,  u])on  payment  of  the  debt 
the  mortgagor  may  recover  the  insui-ance  in  the  name  of  the 
mortgagee.^  [If  a  mortgagor  covenants  to  insure  for  the 
benefit  of  the  mortgagee,  the  latter  may  equitably  claim  the 
proceeds  of  a  prior  policy  taken  out  by  the  mortgagor.^ 
Where  parties  having  a  demand  against  the  owner  of  a  vessel 
for  money  disbursed  on  it,  take  out  a  policy  to  cover  the  sum, 
loss  payable  to  them  or  whom  it  may  concern,  and  the  follow- 
ing day  receive  a  letter  from  the  owner  requesting  them  to 
have  their  advances  insured  so  as  not  to  call  on  the  owner  in 
case  of  loss,  and  they  replied  that  they  had  covcx'ed  the 
amount,  the  letters  amount  to  a  declaration  of  trust,  or  an 
agreement  that  the  insurance  should  be  for  the  benefit  of  the 
owner.^]  Where  the  vendee,  before  title  obtained,  insures, 
and  suffers  loss,  whereby  the  contract  is  rescinded,  he  holds 
the  insurance  money,  without  obligation  to  account  to  the 
vendor.*  A  creditor  who  acquires  title  to  an  estate  under  a 
levy  of  execution,  the  time  for  redemption  having  expired, 
has  no  relation  to,  or  concern  with,  a  contract  of  insurance 
between  the  former  owner  of  the  estate  and  the  insurers,  upon 
which  to  found  a  claim  upon  the  latter  for  the  amount  of  the 
loss,  or  any  part  of  it.'^  But  a  purchaser  under  a  decree  of 
sale  will  be  entitled  to  the  proceeds  of  the  policy,  if  the  loss 
happen  after  the  sale,  but  before  its  confirmation.^  Payment 
to  a  creditor  by  an  insurance  company  of  the  amount  of  a 
policy  taken  out  and  paid  for  by  him  on  the  life  of  the  debtor, 
is  not  pro  tanto  a  satisfaction  of  the  debt,  but  tlie  debt  still 
remains  a  valid  security  for  its  full  amount  against  the 
debtor."  [An  insurance  by  a  mortgagee  is  probably  not  an 
insurance  of  the  debt  in  any   such  sense    that   payment  of 

1  Norwich  Fire  Ins.  Co.  v.  Boomer,  52  III.  442;  ante,  §  450. 

2  [Ames  V.  Richardson,  *29  Minn.  ooO.] 

3  [Phenix  Ins.  Co.  v.  Parsons,  56  N.  Y.  Super.  423.] 
*  Bartlett  v.  Looney,  3  Vict.  Law  Rep.  E.  15. 

5  Plimpton  0.  Farmers'  Mut.  Fire  Ins.  Co.,  43  Vt.  497. 

6  Gates  V.  Smith,  4  Ed.  (N.  Y.)  Ch.  702;  Ex  parte  Minor,  11  Ves.  559. 
''  Humphrey  v.  Arabin,  Lloyd  &  Goold,  Ch.  318. 

1041 


§  456  a]        INSURANCE  :    fire,   life,    accident,   etc.       [CH.  XXIII. 

the  policy  would  satisfy  the  mortgage.^]  And  the  mortgagee 
may  recover,  notwithstanding,  since  the  loss  he  has  foreclosed 
under  the  mortgage.^  Nor  can  a  mortgagee  under  such  cir- 
cumstances, paid  by  the  insurers,  be  compelled  to  assign  his 
mortgage  debt  to  the  insurers.^  [An  insurer  cannot  claim  to 
be  subrogated  to  a  mortgage  on  paying  a  loss  less  than  the 
whole  mortgage  debt.*]  But  it  has  been  held  in  New  York  ^ 
that  where  the  mortgagor  insures,  and  with  assent  of  the  com- 
pany assigns  to  the  mortgagee,  the  latter  could  only  recover 
for  a  loss  on  condition  of  assigning  to  the  insurers  an  interest 
in  the  mortgage  equal  to  the  amount  paid  by  them.*^ 

§  456  a.  Insurer ;  Insured  ;  Lessee.  —  In  a  very  recent  case 
in  England,  by  a  strict,  not  to  say  new,  application  of  the 
principle  that  a  contract  of  fire  insurance  is  a  contract  of  in- 
demnity, the  insured,  who  had  obtained  his  indemnity,  and 
afterwards  had  the  damaged  property  restored,  was  obliged 
to  surrender  the  indemnity.  The  facts  were  that  one  P. 
leased  his  house  to  B.,  under  a  lease  which  bound  B.  to  re- 
pair, F.  insured  the  house,  which  was  destroyed  by  an  ex- 
plosion insured  against,  and  obtained  his  indemnity  from  the 
insurers.  B.  afterwards  repaired,  as  he  was  bound  to  do  by 
his  lease,  with  money  he  obtained  from  the  town  for  injury 
to  his  leasehold  estate  ;  whereupon  the  insurers  brought  suit 
against  the  assignee  of  the  insured,  to  whom  the  indemnity 
had  been  paid,  and  were  held  entitled  to  recover,  upon  the 
general  principle  that  a  policy  of  fire  insurance  is  a  contract 
of  indemnity,  and  that  upon  payment  of  the  amount  of  loss 
the  insurer  is  entitled  to  be  put  into  the  place  of  the  insured  ; 
and  if  at  a  subsequent  time  the  insured  receives  compensa- 
tion from  other  sources  for  the  loss  sustained  by  him,  the  in- 
surer is  entitled  to  recover  from  the  insured  any  sum  wliich 

1  [Louden  r.  Waddle,  08  Pa.  St.  242.] 

2  Hadley  v.  New  Ilanipsliire  Ins.  Co.,  55  N.  H.  110. 

3  King  V.  State  Mut.  Fire  Ins.  Co.,  7  Cusli.  (Mass.)  1  ;  Suffolk  Fire  Ins.  Co. 
V.  Boyden,  9  Allen  (Mass.),  12:].     Contra,  Honore  v.  Lamar  Ins.  Co.,  51  111.  409. 

*  [Phenix  Ins.  Co.  v.  First  Nat.  Bank,  18  Ins.  L.  J.  302  (Va.)  Feb.  1889. J 
5  Kip  i:  Mat.  Fire  Ins.  Co.,  4  Edw.  Cli.  (N.  Y.)  86. 

^  See  also  ante,  §  .379.  In  Canada  the  law  upon  this  point  is  unsettled.  Black 
V.  National  Ins.  Co.,  (Q.  B.,  Montreal),  3  Legal  News,  29. 

1042 


CH.  XXIII.]  SUBROGATION.  [§  456  a 

he  may  have  received  from  the  former  in  excess  of  the  loss 
actually  sustained.^  [In  a  later  English  case  the  doctrine  was 
very  clearly  stated.  Where  the  owner  has  made  a  contract 
for  sale  of  the  property  and  it  is  damaged  by  fire,  for  which  he 
receives  the  insurance,  and  afterward  obtains  the  full  price 
agreed  on  from  the  vendee,  with  no  reduction  on  account  of 
the  insurance,  the  company  can  recover  the  insurance  money. 
As  between  the  insurer  and  the  insured,  the  former  is  entitled 
to  the  advantage  of  every  right  of  the  assured,  whether  such 
right  exists  in  contract  fulfilled  or  not,  or  in  remedy  for  tort 
capable  of  being  insisted  on  or  already  insisted  on,  or  in  any 
other  right,  whether  by  way  of  condition  or  otherwise,  legal  or 
equitable,  which  can  be  or  has  been  exercised,  or  has  accrued 
(whether  such  right  could  or  could  not  be  enforced  by  the 

1  Darrell  v.  Tibbitts,  5  Q.  B.  D.  560  (1880),  referring  to  and  following  North 
British,  &c.  Ins.  Co.  v.  London,  &c.  Ins.  Co.,  5  Ch.  D.  569  (ante,  §  436  a),  which 
was  a  controversy  about  contribution  between  two  companies,  and  in  which,  it 
is  said,  it  was  settled  that  the  contract  of  fire  insurance  is  a  contract  of  indem- 
nity. Tiiat  tlie  contract  is  one  of  indemnity  has  been  heretofore  conceded  else- 
where than  in  England  as  elementary.  Nor  are  we  aware  that  it  lias  ever  been 
seriously  controverted.  But  it  has  been  supposed  that  the  insurer  contracts  that 
he  will  indemnify.  Whether,  however,  this  application  of  the  doctrine  will  re- 
ceive the  approval  of  our  courts  remains  to  be  seen.  It  certainly  deals  rather 
summarily  with  rights  acquired  under  lawful  contracts  lawfully  executed,  where 
tiie  considerations  are  equivalents  {ante,  §  107,  sub  Jinein),  which  cannot  be  re- 
scinded or  modified  except  by  the  parties  thereto.  It  should  be  added,  that  when 
the  insurers  paid  over  the  indemnity  they  did  not  know  that  the  lessee  was 
bound  to  repair.  But  why  is  not  the  lessee's  contract  also  a  contract  of  indem- 
nity ?  If  both  are  to  indemnify,  why  should  the  latter  suffer  the  whole  loss? 
See  ante,  §§  116,  424.  Lush,  J.,  gave  judgment  for  the  defendant  in  the  court 
below.  In  the  Court  of  Appeal,  judgment  reversed  by  Brett,  Cotton,  and  Thes- 
iger,  JJ.  See  also  Burnand  v.  Bodocanachi,  5  C.  P.  D.  424,  before  Coleridge, 
C.  J.,  and  a  jury.  In  Freedmansdorf  v.  Watertowu  Ins.  Co.,  C.  Ct.  (111.),  Blod- 
gett,  J.,  held  that  where  the  policy  was  insured  to  the  mortgagor,  payable  in  case 
of  loss  to  the  mortgagee,  both  in  the  courts  of  Illinois  and  in  the  courts  of  the 
United  States  the  suit  must  be  in  the  name  of  the  mortgagor,  and  intimated 
that,  if  it  were  otherwise,  the  mortgagee  would  have  no  right  of  action  if  the 
premises  had  been  repaired,  as  the  contract  with  him  was  only  that  the  property 
should  remain  unimpaired  as  security.  See  also  Excelsior  Ins.  Co.  v.  Royal  Ins. 
Co.,  .55  N.  Y.  343.  In  Newcomb  v.  Cincinnati  Ins.  Co.,  22  Ohio  St.  382,  where 
the  plaintiff,  not  fully  insured,  after  recovering  his  insurance  money,  sued  the 
wrong-doer  for  the  balance  of  his  loss,  it  was  said  that  if  the  insured  was  bound 
to  account  to  the  insurers  for  anything,  it  could  only  be  for  the  surplus  after  de- 
ducting his  full  loss  and  expenses. 

1043 


§  457]  INSURANCE  :     FIRE,    LIFE,  ACCIDENT,  ETC.       [CH.  XXIII. 

insurer  in  the  name  of  the  assured),  by  the  exercise  or  requir- 
ing of  which  right  or  condition  the  loss  against  which  the 
assured  is  protected  can  be  or  has  been  diminished.^] 

§457.  Subrogation. —  Some  of  our  own  earlier  cases,  in- 
deed, seem  to  have  gone  further  in  favor  of  the  insured  than 
is  conceded  to  be  permissible  according  to  the  doctrine  of  the 
cases  heretofore  cited.-  Thus,  in  ^Etna  Insurance  Company 
V.  Tyler,^  it  was  said  that  where  the  property  insured  is  held 
by  a  vendee  under  a  contract  of  sale,  and  a  portion  of  the 
purchase-money  remains  unpaid  at  the  time  of  the  loss,  and 
the  vendor  receives  the  amount  of  the  loss  from  the  under- 
writer, the  latter  will  be  entitled  to  be  substituted  in  the  place 
of  the  vendor  in  respect  to  his  rights  and  remedies  against  the 
purchaser.  And  upon  the  doctrine  of  the  last  case  the  Court 
of  Errors  and  Appeals  of  New  Jersey  ^  broadly  laid  down  the 
rule,  that  where  a  party  holding  a  lien  upon  real  estate  to 
secure  a  debt  effects  an  insurance  upon  such  property,  in  case 
of  a  loss  the  insurance  company,  upon  payment  of  the  insur- 
ance, will  be  entitled  to  the  benefit  of  the  security  held  by 
the  insured  to  the  amount  of  the  money  paid ;  and  if  they 
pay  the  insured  the  whole  amount  of  the  claim  for  which  he 
holds  such  security,  they  will  have  a  right  to  the  whole  of 
the  security  held  by  him.  And  if  the  insured  holds  other 
securities  for  the  same  debt,  the  insurers  will  have  a  right 
to  them  also,  and  if  after  effecting  the  insurance  the  in- 
sured parts  with  a  portion  of  his  securities,  he  will  forfeit  the 
right  fro  tanto  to  recover  of  the  insurers.  But  these  cases 
seem  hardly  consistent^  with  Benjamin  v.  Saratoga  County 
Mutual  Insurance  Company,^  where  a  vendor,  under  a  con- 
tract of  sale,  agreed  with  the  vendee  to  sell  him  the  property, 

1  [Castellain  v.  Preston,  8  Q.  B.  D.  613;  11  Q.  B.  D.  380.] 

2  Ante,  §  456. 

8  16  Wend.  (N.  Y.)  385. 

*  Sussex  County  Mut.  Ins.  Co.  v.  Woodruff,  2  Dutch.  (N.  J.)  541.  See  also 
to  the  same  point,  Dick  v.  Franklin  Ins.  Co.,  St.  Louis  Ct.  of  App.,  10  Ins.  L.  J. 
468;  Honore  v.  Lamar  Ins.  Co.,  51  III.  400. 

5  [The  cases  seem  consistent  to  me  on  the  prmciples  set  out  in  the  analysis 
at  the  head  of  this  chap'er.] 

6  17  N.  Y.  415.     See  also  Clinton  v.  Hope  Ins.  Co.,  45  N.  Y.  454. 

1044 


CH.  XXIII.]  SUBROGATION.  [§  457  A 

the  vendee  to  pay  him  the  premiums  he  might  pay  under  an 
insurance  which  he  ah'cady  had  for  continuing  the  same,  of 
which  facts  the  insurers  had  notice  and  to  which  they  gave 
their  consent,  and  it  was  held  that,  upon  payment  of  the  loss 
to  the  vendor,  the  insurers  were  not  entitled  to  be  subrogated 
to  his  rights  against  the  vendee ;  and  Kernochan  v.  New  York 
Bowery  Fire  Insurance  Company ,i  where  a  policy  was  taken 
out  in  the  name  of  the  mortgagee,  under  an  agreement  be- 
tween him  and  the  mortgagor  that  the  mortgagee  should  pay 
the  premiums,  the  insurers  knowing  nothing  of  the  agreement, 
and  the  insurers  were  held  not  entitled  to  subrogation.^ 
[Where  a  vendor  has  made  a  complete  sale,  and  taken  a  mort- 
gage for  a  part  of  the  purchase-money,  a  company  on  offering 
the  amount  of  her  mortgage  may  be  subrogated  to  her  rights 
under  it.  But  if  the  sale  is  not  yet  complete  at  the  time  of 
loss,  the  vendor  is  still  the  owner,  the  loss  is  hers,  and  the 
company  is  liable  on  its  contract  of  absolute  indemnity,  and 
cannot  demand  an  assignment  of  the  mortgage.^  Except  as 
varied  by  express  agreements  among  the  parties  *  the  insurer 
has  no  rights  against  a  wrong-doer  other  than  those  of  the 
assured,  and  it  can  enforce  those  only  in  his  name  and  after 
admitting  the  claim  on  the  policy.^  The  insurer  can  recover 
what  he  has  paid  and  no  more.^] 

[§  457  A.  Subrogation  ;  Carrier.  —  An  insurer  of  gOods  lost 
while  in  course  of  transportation  by  a  carrier  is  entitled  after 
payment  of  the  loss  to  recover  what  he  has  paid  from  the  car- 
rier" except  where  the  shipper  has  agreed  that  the  carrier  shall 
have  the  benefit  of  insurance  on  the  goods.  In  Louisiana, 
however,  it  has  been  held  that  when  cotton  was  lost  while  on 

1  17  N.  Y.  428.  See  also  Royal  Ins.  Co.  r.  Stinson,  Sup.  Ct.  (U.  S.),  H  Reptr. 
68'J  ;  Bradford  v.  Greenwich  Ins.  Co.,  8  Abb.  (N.  Y.)  261. 

-  See  also  Excelsior  Ins.  Co.  v.  Royal  Ins.  Co.,  55  N.  Y.  343. 

3  [Nelson  v.  Bound  Brook  Mut.  Fire  Ins.  Co.,  43  N.  J.  Eq.  256, 259,  reversing 
Bound  Brook  Mut.  Fire  Ins.  Ass.  v.  Nelson,  41  N.  J.  Eq.  485.] 

*  [§§  457  A.,  457  B.] 

s  [Midland  Ins.  Co.  v.  Smith,  6  Q.B.D.  561 ;  Alliance  Mar.  Ins.  Co.  v.  Louis. 
State  Ins.  Co.,  8  La.  1 ;  Plioenix  Ins.  Co.  i-.  Erie,  &c.  Trans.  Co.,  117  U.  S.  312, 
and  118  U.  S.  210,  and  cases  cited.] 

6  [Holbrook  v.  United  States,  21  Ct.  CI.  434  (1886).] 

7  [Phoenix  Ins.  Co.  i-.  E.  &  W.  Trans.  Co.,  10  Biss.  18  at  29.] 

1045 


I  457  A]       INSURANCE  :    fire,    UFE,   accident,    etc.       [cH.  XXIII. 

board  A.'s  train,  and  the  insurance  company  paid  the  assured 
the  loss,  it  was  held  that  it  could  not  sue  in  the  name  of  the 
insured  and  recover  of  the  common  carriers,  although  they 
would  have  been  liable  to  the  insured,  the  ground  of  the  decis- 
ion being  that  there  was  no  privity  of  contract  between  the 
insurers  and  the  railroad  company. ^  The  dissent  of  J  J.  Talia- 
ferro and  Wyly  is,  however,  a  complete  refutation  of  the  maj- 
ority opinion,  showing  that  the  railroad  company  ought  to  stand 
the  loss,  and  it  made  no  difference  whether  it  paid  the  insured 
or  the  insurer,  who  had  reimbursed  the  insured.  The  car- 
rier's liability  is  the  ultimate  liability,  for  it  arises  from  failure 
of  duty.  If  the  insured  wishes  to  place  the  ultimate  liability 
on  the  insurer,  he  must  make  his  contract  in  that  way  and 
pay  his  additional  premium ;  then  he  will  be  in  a  condition  to 
stipulate  that  the  carrier  shall  have  the  benefit  of  insurance 
and  get  lower  freight-rates  in  consequence.  If  a  policy  says, 
"  this  insurance  shall  not  inure  to  the  benefit  of  any  carrier," 
the  carrier  cannot  avail  himself  of  it ;  and  if  this  clause  is  vio- 
lated by  an  agreement  between  the  carrier  and  the  assured 
that  the  former  shall  be  subrogated  to  the  insurance,  neither 
of  them  can  sue  the  insurer,  the  policy  is  void,  and  this  al- 
though the  carrier  did  not  know  of  the  provision.^  An  insurer 
suing  the  common  carrier  by  right  of  subrogation  may  recover 
the  full  value  of  the  goods  without  regard  to  the  amount  of 
the  policy  ^  and  six  per  cent  interest  from  the  time  they  would 
probably  have  been  delivered  in  the  ordinary  course  of  affairs.* 
A  defence  which  might  have  been  set  up  by  the  company 
against  the  insured,  but  was  waived  by  it,  and  which  would 
not  be  good  in  a  suit  by  the  owner  against  the  carrier,  is  no 
bar  to  an  action  by  the  company  against  the  carrier,  by  sub- 
rogation.^    An  insurer  on  paying  the  loss  becomes  the  real 

1  [Carroll  v.  New  Orleans,  &c.  R.  R.,  26  La.  Ann.  447.] 

2  [Insurance  Co.  v.  Easton,  73  Te.x.   167 ;  Carstairs  v.  Mechanics',  &c.  Ins. 
Co.,  18  Fed,  Rep.  47.3,  4th  Cir.  (Md.)  1883.] 

3  [Mobile,  &c.  R.  R.  v.  Jurey,  111   U.  S.  584  (1884).] 

^  [Insurance  Co.  of  New  York  v.  St.  Louis,  &c.  Ry.  Co.,  9  Fed.  Rep.  811, 
8th  Cir.  (Mo.),  11  Ins.  L.  J.  182,  1882.] 

5  [Sun  Mut.  Ins.  Co.  v.  Miss.  Val.  Trans.  Co.,  17  Fed.  Rep.  919,  8th  Cir., 
1883.] 

1046 


CH.  XXIII.]  SUBROGATION.  [§  457  B 

party  in  interest,  and  to  the  extent  of  his  disbursement  subro- 
gated to  the  right  of  the  insured  against  a  carrier,  without 
any  formal  assignment  or  express  stipulation,  and  when  the 
circumstances  give  jurisdiction  to  the  admiralty  courts  may 
bring  suit  in  his  own  name.^] 

[§  457  B.  Subrogation;  Carrier  {continued).  A  common 
carrier  may  by  agreement  with  the  owners  secure  to  himself 
the  benefit  of  any  insurance  effected  by  the  owner  on  the  goods, 
and  in  the  absence  of  fraud,  such  an  agreement  defeats  the 
right  of  subrogation  the  insurance  company  would  otherwise 
have.2  If  there  is  a  stipulation  in  the  bill  of  lading  that  the 
carrier,  if  incurring  liability,  shall  have  the  benefit  of  the  in- 
surance on  the  goods,  the  insurer  has  no  right  of  suit  by  sub- 
rogation.3  The  right  that  an  insurer  has,  on  paying  the  loss, 
to  pursue  third  persons  is  only  the  right  that  the  insured  has, 
and  if  the  latter  contracts  with  a  carrier  that  he,  the  carrier, 
shall  have  the  benefit  of  any  insurance  on  the  goods  in  case 
the  carrier  incurs  liability  by  the  loss  or  damage  of  the  goods, 
in  the  absence  of  fraud  or  express  stipulation  for  subrogation 
in  the  policy  this  contract  with  the  carrier  is  good,  and  limits 
the  right  of  the  insurer  by  way  of  subrogation.*  "  As  the  car- 
rier might  lawfully  himself  obtain  insurance  against  loss  of 
the  goods  by  the  usual  perils,  though  occasioned  by  his  own 
negligence,  he  may  lawfully  stipulate  with  the  owner  to  be 
allowed  the  benefit  of  insurance  voluntarily  obtained  by  the 
latter.  This  stipulation  does  not,  in  terms  or  effect,  prevent 
the  owner  from  being  reimbursed  the  full  value  of  the  goods ; 
but  being  valid  as  between  the  owner  and  the  carrier,  it  does 
j)revent  either  the  owner  himself,  or  the  insurer,  who  can  only 
sue  in  his  right,  from  maintaining  an  action  against  the  carrier 
upon  any   terms    inconsistent  with   this    stipulation."  ^      An 

1  [Liverpool  &  Great  Western  Steam  Co.  v.  Plienix  Ins.  Co.,  129  U.  S.  397  ; 
The  Sidney,  27  Fed.  Rep.  119  (N.  Y.),  1886,  reversing,  23  id.  38.] 

2  [Mercantile  Mut.  Ins.  Co.  v.  Calebs,  20  N.  Y.  173  at  178;  Rentoul  v.  N.  Y. 
Central,  &c.  R.  R.,  20  Fed.  Rep.  313;  '2d  Cir.  (N.  Y.),  1884.] 

3  [Piatt  V.  Richmond,  &c.  R.  Co.,  108  N.  Y.  358;  British,  &c.  M.  Ins.  Co.  v. 
The  Gulf,  &c.  R.  Co  ,  63  Tex.  475] 

<  [Phoenix  Ins.  Co.  v.  Erie,  &c.  Trans.  Co.,  117  U.  S.  312,  325-326.     See  also 
Jackson  Co.  v.  Boylston  Ins.  Co.,  139  Mass.  508,  510,  511.] 
s  [J.  Gray,  17  U.  S.  325.] 

1047 


§  457  C]       INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXIII. 

agreement  in  a  contract  of  carriage  that  the  carrier,  if  he 
incurs  liability  by  loss  or  damage  to  the  goods,  shall  have  the 
benefit  of  any  insurance  on  them,  is  not  within  a  clause  against 
selling,  transferring,  or  pledging  the  interest  of  the  insured  in 
the  policy.^  But  in  the  absence  of  express  agreement  the  car- 
rier has  no  claim  on  the  insurance,  and  in  a  suit  by  the  owner 
of  goods  against  a  railway  for  their  loss  by  its  negligence,  it 
is  no  defence  that  the  owner  has  received  their  value  from  an 
insurance  company.^  When  a  consignor  receipts  a  bill  of 
lading  to  a  common  carrier  which  stipulates  against  the  lat- 
ter's  liability  for  loss  by  fire,  the  former  cannot  show  that  he 
did  not  read  the  bill,  and  the  latter  is  not  liable  unless  the  fire 
was  caused  by  his  negligence.^  A  by-law  requiring  the  insured 
to  release  the  railroad  before  applying  to  the  railroad  relief 
association  for  damages  is  valid,  as  it  simply  puts  the  assured 
to  his  election.*  Underwriters  who  sell  abandoned  property 
are  not  entitled  to  any  commissions  on  the  sales,  in  a  suit 
against  the  carrier.^] 

[§  457  C.  Mortgagor  and  Mortgagee.  —  If  an  insurance  com- 
pany pay  a  mortgagee  the  loss,  it  is  subrogated  to  the  rights 
of  the  mortgagee,  and  may  proceed  against  the  mortgagor  on 
the  mortgage.  The  right  docs  not  rest  on  contract  but  on 
principles  of  justice.  If  the  mortgagee  has  made  a  settle- 
ment that  prevents  this  subrogation  he  cannot  recover  from 
the  insurance  company,  but  he  may  bind  himself  not  to  pro- 
ceed against  the  mortgagor,  reserving  the  right  to  sue  the  in- 
surance company,  and  in  such  case  his  receipt  and  covenant 
would  not  prevent  the  company  from  proceeding  against  the 
mortgagor.^  But  where  a  mortgagor  takes  out  a  policy  and 
pays  the  premiums  making  the  insurance  payable  to  the  mort- 

1  [Jackson  Co.  v.  Boylston  Ins.  Co.,  139  Mass.  508] 

2  [Tex.  &  Pac.  R.  Co.  v.  Levi,  59  Tex.  674,  following  Webber  v.  Morris,  &c. 
E.  Co.,  35  N.  J.  413 ;  Clark  r.  Wilson,  103  Mass.  221,  &o.] 

3  [Grace  v.  Adams,  100  Mass.  505  at  507.] 

4  [Owens  V.  Bait.  &  Ohio  R.  Co.,  35  Fed.  Rep.  715;  State  v.  Same,  36  Fed. 
Rep.  ()55  (Md.),  1888] 

5  [Sun  Mut.  Ins.  Co.  v.  Miss.  Val.  Trans.  Co.,  10  Fed.  Rep.  800,  East  Dist.  of 
Missouri,  1883.] 

^  [Thomas  v.  Montauk  Fire  Ins.  Co.,  43  Hun,  218  ] 

1048 


CH.  XXIII.]  SUBROGATION.  [§  458 

gagees,  the  company  cannot  claim  to  be  subrogated  to  the 
first  mortgagee  on  paying  the  amount  of  his  mortgage.  The 
insurance  is  for  the  benefit  of  the  mortgagor,  and  the  money 
paid  to  the  mortgagee  goes  in  satisfaction  of  his  debt.  Only 
where  the  mortgagee  himself  insures  his  interest,  or  other  pecu- 
liar circumstances  exist  making  the  company  a  surety,  will 
subrogation  to  the  mortgage  be  decreed. ^  An  agreement  in 
the  policy  that  the  insurance  as  to  the  interest  of  a  mortgagee 
shall  not  be  avoided  by  any  act  of  the  mortgagor,  but  that  in 
case  a  loss  occurs  after  action  of  the  mortgagor  which  causes 
forfeiture  as  to  himself,  the  company  shall  on  paying  the  loss 
to  the  mortgagee  be  subrogated  to  his  rights  under  the  mort- 
gage, to  the  extent  of  such  payment,  and  may  pay  the  whole 
debt  and  require  an  assignment  of  the  mortgage,  is  valid  and 
will  be  sustained  by  the  courts.^  If  the  parties  by  their  action 
destroy  the  right  of  the  company  to  the  subrogation  named, 
the  company  is  at  the  same  time  released  from  liability  under 
the  mortgagee  clause.^  The  election  of  the  company  to  pay 
the  mortgage  debt  and  have  the  mortgage  assigned  must  be 
exercised  within  a  reasonable  time,  and  a  tender  seven  months 
after  suit  was  begun,  by  the  mortgagee  on  the  policy,  is  not 
within  a  reasonable  time.'*] 

§  458.  Loss  ;  Right  of  Insurers  to  intervene  by  Contract  ; 
Mortgagor  and  Mortgagee.  —  Under  such  a  provision  as  that 
named  in  the  last  section,  if  the  mortgagee  enters  into  any  con- 
tract which  by  its  terms  would  be  inconsistent  with  his  riglit 
of  assignment  of  the  mortgage  debt,  such  contract  would  con- 
stitute a  valid  bar  to  his  recovery.  But  a  contract  whereby 
the  mortgagee  in  possession  lets  a  third  party  into  that  pos- 
session, and  agrees,  for  a  consideration  to  be  paid  at  a  future 
time,  that  he  will  upon  such  payment  assign  the  mortgage, 
the  contract  being  still  unexecuted,  is  not  such  a  contract.^ 
The  Springfield  Fire  and  Marine  Insurance  Company  v.  Allen  ^ 

1  [Pearman  v.  Gould,  42  N.  J.  Eq.  49.] 

2  [Allen  V.  Watertown  Ins.  Co.,  132  Mass.  482.] 

3  [Lett  V.  Guardian  Fire  Ins.  Co.,  52  Hun,  570.] 

*  [Eliot  Five  Cents'  Savings  Bank  v.  Commercial  Ass.  Co.,  142  Mass.  142.] 
6  Davis  V.  Quincy  Mut.  Fire  Ins.  Co.,  10  Allen  (Mass.),  113. 
«  43  N.  Y.  389. 

1049 


§  459]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXIII. 

presented  a  case  where  a  policy  was  issued  to  the  owner  of 
mortgaged  premises  in  which  the  loss  was  made  payable  to 
the  mortgagee,  and  which  provided  also  that  in  case  of  any 
change  of  title  the  policy  should  be  void  (except  as  to  the  in- 
terest of  the  mortgagee),  and  further  that  in  case  of  payment 
of  loss  to  the  mortgagee,  for  which  the  insurers  would  not 
have  been  liable  to  the  mortgagor,  the  insurers  should  be  sub- 
rogated to  the  rights  of  the  mortgagee ;  and  it  was  held,  on  a 
bill  to  foreclose,  that  the  property  having  been  sold  contrary  to 
the  conditions  of  the  policy,  and  the  insurers  having  paid  the 
mortgagee  his  loss  and  taken  an  assignment  of  his  mortgage, 
the  mortgagor  could  not  require  the  amount  paid  the  mort- 
gagee by  the  insurer  to  be  appropriated  towards  the  liquida- 
tion of  the  mortgage.  And  though  the  mortgage  authorizes 
the  mortgagee  to  insure  at  the  expense  of  the  mortgagor,  the 
mortgagee  may  nevertheless  directly  insure  his  own  interest, 
and  may  agree  to  assign  to  the  insurer  an  interest  in  the 
mortgage  equal  to  the  amount  of  loss  paid,  in  which  case  the 
insurer  will  be  subrogated  to  that  amount. ^ 

§  459.  Loss  ;  Negligence  ;  Proximate  Cause.  —  Much  discus- 
sion has  been  had  on  the  subject  of  the  liability  of  railroads 
for  negligence,  largely  turning  upon  the  distinction  between 
remote  and  proximate  causes.  In  Ryan  v.  New  York  Cen- 
tral Railroad,^  where  fire  was  first  communicated  by  sparks 
from  the  engine  to  a  wood-shed  of  the  company,  and  thence 
by  sparks  from  the  shed  to  the  property  of  the  plaintiff,  it 
was  held  that  the  cause  was  remote,  and  the  plaintiff  could 
not  recover.  And  this  case  seems  to  have  been  followed  in 
Pennsylvania  3  and  in  Illinois.*  But  in  Massachusetts,-^  it 
was  held  that  such  a  circumstance  did  not  affect  the  question 
of  immediateness  or  remoteness;  and  in  Perley  v.  Eastern 
Railroad  Company ,6  referring  to  the  case  in  New  York,  the 
court  say  :  — 

1  Foster  v.  Van  Reed,  70  N.  Y.  19. 

2  35  N.  Y.  210. 

3  Penn.  R.  R.  Co.  v.  Kerr,  62  Pa.  353,  363. 
*  Flint  V.  Railway  Co.,  59  111.  349. 

6  Hart  r.  Western  R.  R.  Co.,  13  Met.  (Mass.)  99. 
6  98  Mass.  418. 

1050 


CH.  XXIII.]  SUBROGATION.  [§  459 

"  The  defendant's  counsel  have  referred  us  to  the  case  of 
Ryan  v.  New  York  Central  Railroad  Company.  We  under- 
stand the  liability  in  that  State  is  ])y  the  common  law,  and 
not  under  the  provisions  of  any  statute.  In  that  case,  a  dis- 
tinction is  made  between  proximate  and  remote  damages. 
The  fire  was  communicated  from  the  defendants'  locomotive 
to  their  wood-shed,  and  thence  by  sparks,  one  hundred  and 
thirty  feet,  to  the  plaintiff's  house ;  and  it  was  held  that  the 
plaintiff  could  not  recover,  because  the  injury  was  a  remote 
and  not  a  proximate  consequence  of  the  carelessness  of  the 
defendants  in  permitting  their  fire  to  escape.  Our  own  cases, 
above  referred  to,  are  not  noticed  in  the  opinion.  Nor  does 
the  opinion  draw  any  line  of  distinction  between  what  is 
proximate  and  what  is  remote ;  and  such  a  line  is  not  obvious 
in  that  case.  If,  when  the  cinder  escapes  through  the  air,  the 
effect  which  it  produces  upon  the  first  combustible  substance 
against  which  it  strikes  is  proximate,  the  effect  must  continue 
to  be  proximate  as  to  everything  which  the  fire  consumes  in 
its  direct  course.  This  is  so,  whether  we  regard  the  fire  as  a 
combination  of  the  burning  substance  with  the  oxygen  of  the 
air,  or  look  merely  at  its  visible  action  and  effect.  As  matter 
of  fact,  the  injury  to  the  plaintiff  was  as  immediate  and  di- 
rect as  an  injury  would  have  been  which  was  caused  by  a  bul- 
let, fired  from  the  train,  passing  over  the  intermediate  lots,  and 
wounding  the  plaintiff  as  he  stood  upon  his  own  lot.  It  is  as 
much  so  as  pain  and  disability  are  proximate  effects  of  an  in- 
jury, though  they  occur  at  intervals  through  successive  years 
after  the  injury  was  received.  Yet  these  are  called  proximate 
effects,  though  the  actual  effects  of  the  injury  may  be  greatly 
modified  in  every  case  by  bodily  constitution,  habits  of  life, 
and  accidental  circumstances.^ 

"  The  instructions  given  in  respect  of  the  back  fires,  which 
were  kindled  with  a  view  to  check  the  fire  which  had  pro- 
ceeded from  the  locomotive,  were  correct ;  for  they  required 
the  jury  to  find,  in  substance,  that  these  fires  did  not  in  fact 
contribute  to  the  loss  of  the  plaintiff,  but  that  they  were 

1  See  also  ante,  §  302 ;  post,  §  518,  note. 

1051 


§  459]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CII.  XXIII. 

swallowed  up  by  the  advancing  flame,  which  went  on  and  de- 
stroyed the  plaintiff's  property."  ^ 

[A  railroad  company  having  notice  that  a  hose  was  laid 
across  its  track  as  the  only  available  way  of  lighting  a  fire, 
which  nevertheless  ran  a  train  over  the  same,  tlms  rendering 
it  impossible  to  save  the  buildings  on  fire,  is  liable  for  the  loss,^ 
the  severing  of  the  hose  being  the  proximate  cause  of  the  de- 
struction of  the  building.  One  who  negligently  sets  a  fire  on 
his  own  land  and  keeps  it  negligently  is  liable  for  loss  done 
by  its  spreading  directly  to  the  land  or  property  of  another,  in 
whatever  way  and  whether  or  not  he  might  reasonably  have 
anticipated  the  particular  manner  in  which  it  spread.^  When 
a  city  tears  down  a  building  under  lawful  authority  during  a 
fire  it  is  liable  to  the  owner  for  damages,  unless  the  building 
would  have  been  inevitably  destroyed  by  the  flames,  when 
nothing  can  be  recovered.*] 

1  By  the  statute  of  Massachusetts,  the  railway  company  is  liable  for  fires 
caused  by  lire  communicated  by  the  engine,  witliout  reference  to  tlie  question  of 
negligence  on  their  part.  By  the  common  law  the  liabiHty  is  based  upon  negli- 
gence ;  but  it  is  not  easy  to  see  how  the  distinction  at  all  enters  into  the  question 
whether  a  cause  is  proximate  or  remote.  The  opinions  must  be  regarded  as  di- 
rectly opposed  to  each  other.  Ryan  v.  N.  Y.  Central  R.  R.  Co.  has  been  said  to 
be  inconsistent  with  the  prior  case  of  Field  v.  N.  Y.  Central  R.  R.  Co ,  32  N.  Y. 
339,  in  Webb  v.  Rome,  &c.  R.  R  Co.,  3  Lansing  (N.  Y.),  45.3.  This,  however, 
was  not  admitted  by  the  Court  of  Appeals  ;  nevertheless,  they  affirmed  the  judg- 
ment in  Webb  v.  Rome,  &c.  R.  R.  Co.,  49  N.  Y.  421,  although  that  was  founded 
upon  the  case  of  Field  v.  N.  Y.  Central  R.  R.  Co.,  assuming  that  case  to  be  totally 
inconsistent  with  Ryan  v.  N.  Y.  Central  R.  R.  Co. 

2  [Metallic,  &c.  Co.  v.  Fitchburg  R.  R.  Co.,  109  Mass.  277  at  283.] 

3  [Higgins  V.  Dewey,  107  Mass.  494  at  490.] 

4  [Mayor  v.  Lord,  17  Wend.  285  at  296  (decision  on  2  R.  Laws,  368.)] 

1052 


CH.  XXIV.]  CREDITORS.  [§  459  A 


CHAPTER    XXIV. 

CREDITORS. 

Analysis. 

§  459  A.     Extent  of  a  creditor's  claim  on  the  proceeds  of  insurance  made  to  secure 

the  debt. 
§  459  B.     Creditors  v.  beneficiaries. 
§  459  C.     Statutes. 
§  459  D.     Creditor  may  recover  though  the  debt  is  paid. 

Creditor  to  whom  policy  payable  as  his  interest  may  appear  has  no  right 

of  action  on  the  policy. 
Creditor  not  a  "dependant." 
Homestead  exempt,  and  so  are  proceeds. 
Proceeds  of  other  exempt  property  not  so. 

Ordinary  life  policy  vests  in  heirs,  not  subject  to  debts.     Endowment 
policy  otherwise. 
§  459  E.     Insolvency. 
§  459  F. .    Garnishment. 
§  459  G.  Proofs  if  not  waived  must  be  furnished  by  insured  or  by  creditor, 

before  the  latter  can  trustee  the  company. 
§  459.  When  creditor  cannot  garnishee. 

[§  459  A.  A  Creditor's  Claim  upon  the  Proceeds  of  Insur- 
ance Intended  to  Secure  the  Debt  should  go  110  further  than 
indemnity,  and  all  beyond  the  debt,  premiums,  and  ex- 
penses should  go  to  the  debtor  and  his  representative,  or  re- 
main with  tlie  company,  according  as  the  insurance  is  upon 
life  or  on  property.  The  authorities,  however,  are  agreed. 
Some  refuse  to  give  the  debtor  or  his  representatives  the  ex- 
cess unless  the  insurance  was  at  his  motion,  request,  or 
expense. 

Where  the  relation  of  debtor  and  creditor  exists,  and  it  is 
apparent  that  the  instrument  in  question  was  effected  by  the 
creditor  as  a  security  or  indemnity  for  the  debt,  and  if  the 
debtor  directly  or  indirectly  provides  money  to  defray  the  ex- 
pense of  that  security,  he  is  entitled  to  the  policy  when  tlie 
debt  is  paid,  and  this  applies  to  a  life  annuity. ^     On  the  debt- 

1  [Courtenay  v.  Wright,  2  Giff.  337.] 

1053 


§  459  A]     insurance:  fire,  life,  accident,  etc.     [ch.  xxiv. 

or's  death,  his  representatives  may  claim  the  proceeds  of  the 
policy  after  payment  of  the  debt  and  the  premiums.^  When 
a  policy  of  insurance  is  effected  by  a  creditor  to  secure 
payment  of  a  debt,  it  does  not  belong  absolutely  to  the 
creditor,  nor  is  he  entitled  to  it  and  also  to  the  payment 
of  the  debt.2  Where  a  husband  and  wife  assign  to  the  hus- 
band's creditors  (his  brothers)  a  contingent  interest  of  the 
wife's,  and  the  creditors  insure  the  wife's  life,  and  she  dies 
before  contingent  interest  falls  in,  the  creditors  receiving  the 
insurance  money,  upon  the  husband's  becoming  a  bankrupt 
later,  the  brothers  may  only  prove  the  amount  due  them  less 
the  insurance  received  minus  expenses.  They  were  trustees, 
and  cannot  take  to  themselves  benefits  due  to  the  cestui  que 
trust.^  A  judgment  creditor  of  a  corporation  insured  its  real 
estate  in  his  and  the  corporation's  names,  and  afterwards  bid 
the  same  in  at  a  sale  under  his  judgment.  Later,  fire  par- 
tially destroyed  it,  and  he  was  held  able  to  recover  and  hold 
the  insurance  money.  If,  however,  the  corporation  had  re- 
deemed before  the  loss,  or  the  loss  had  happened  before  the 
sale,  the  insurance  money  would  have  belonged  to  the  corpora- 
tion.* Where,  however,  a  creditor  insured  the  life  of  his  debtor 
for  $6500,  the  debt  being  about  |1000,  and  the  creditor  collect- 
ed $2124,82  on  the  policies,  which  after  deducting  debt,  inter- 
est, premiums,  and  expenses,  left  a  balance  of  $474.53,  it  was 
held  that  the  creditor  was  entitled  to  this  balance.^  And  in 
Amick  V.  Butler,^  it  was  held  that  a  policy  for  $2000  taken 
out  by  F.  on  his  own  life,  naming  A.  as  beneficiary,  a  creditor 
of  F.'s  for  $600,  A.  paying  the  expenses  and  premiums,  was  a 
good  contract,  and  that  F.'s  representatives  could  not  recover 
from  A.  the  $1250  excess  over  the  debt  and  premiums  re- 
ceived by  him  on  the  death  of  F,  The  lower  court  gave  judg- 
ment for  the  administrator,  but  the  Supreme  Court  reversed 

1  [Moreland  v.  Isaac,  20  Beav.  389;  Holland  v.  Smith,  6  Esp.  11.     In  both 
these  cases  the  creditor  liad  cliarged  up  the  premiums  to  the  debtor.] 

2  [Lea  V.  Hinton,  5  De  G.  M.  &  G.  823.] 

3  [Ex  parte  Andrews,  1  Madd.  573.] 

*  [Mickles  v.  Rochester  City  Bank,  11  Paige  Ch.  118  at  128.] 
6  [Rittler  V.  Smith,  70  Md.  261.] 
6  [111  Ind.  578.] 

1054 


CH.  XXIV.]  CREDITORS.  [§  459  B 

the  decision  upon  reasoning  not  altogether  satisfactory.  Where 
the  "  life  "  is  the  real  contracting  party  and  pays  the  premiums, 
any  one  may  be  named  as  beneficiary.  But  where  the  "  life  " 
is  only  nominally  the  contractor,  the  real  party  being  the  benefi- 
ciary, the  case  in  substance  does  not  differ  from  a  jjolicy  direct 
to  the  beneficiary,  and  if  a  policy  of  $1000  taken  out  by  A.  on 
the  life  of  F.  without  any  interest  in  the  life  of  F.  is  objection- 
able, then  why  is  not  a  policy  taken  by  A.  for  $2000  on  the 
life  of  one  who  owes  him  only  $600  just  exactly  as  objection- 
able, if  A.  is  allowed  to  keep  a  profit  ?  The  court  felt  sure 
that  in  this  case  there  was  no  intent  to  speculate.  We  think 
the  law  should  go  further  and  prevent  the  fact  of  speculative 
profit.  Motives  are  hard  to  prove,  and  if  such  contracts  are 
to  be  sustained  wagers  become  an  easy  thing.  A  debt  is 
easily  created  and  a  policy  obtained  in  the  name  of  the 
debtor. 

In  the  case  under  discussion  the  policy  was  to  be  turned 
over  to  the  debtor  on  payment  of  the  debt  and  premiums.  So 
far  as  this  is  of  effect,  it  goes  to  show  that  in  substance  the 
agreement  was  one  of  security  merely,  and  that  the  creditor 
was  entitled  to  no  more  than  indemnity  for  what  he  lost  by 
the  death  of  F.  That  is  the  result  pointed  to  whether  we  look 
at  the  nature  of  insurance,  or  to  the  broader  ground  of  perfect 
justice.] 

[§  459  B.  Beneficiary  v.  Creditors.  —  In  Alabama  a  husband 
may  insure  his  life  in  favor  of  his  wife,  and  to  the  extent  of 
$500  annual  premiums  it  will  be  good  against  creditors.  But 
if  the  wife  die  before  the  husband  his  creditors  take  prece- 
dence of  her  "  heirs  and  representatives,"  to  whom  the  policy 
is  made  payable.^  Policies  taken  out  by  a  husband  for  the 
benefit  of  his  wife  and  children  are  not  subject  to  the  claims 
of  creditors  of  the  wife.^  The  wife  takes  free  of  husband's 
creditors,  though  the  insured  gave  the  policy  to  her  by  his 
will.3  It  is  not  fraudulent  as  against  creditors  for  a  hus- 
band to  pay  reasonable  premiums  to  insure  his  life  for  his 

1  [Tompkins  v.  Levy,  87  Ala.  203] 

2  [Leonard  r.  Clinton,  2G  Hun,  288,  291]. 
8  [Pinneo  v.  Goodspeed,  120  111.  536.] 

VOL.  11.  _  23  1055 


§  459  C]       INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXIV. 

wife.^  Even  though  he  is  really  insolvent,  in  order  to  recover 
the  premiums  so  paid  it  must  be  shown  that  there  was  a 
fraudulent  intent  in  which  the  company  participated.^  But 
after  the  money  has  been  paid  to  the  wife  and  deposited  by 
her  in  bank  in  her  own  name,  it  may  be  reached  by  her  cred- 
itors.^ If  A.  insures  his  life  for  the  benefit  of  B.,  but  with  a 
private  understanding  that  the  avails  shall  be  used  not  alone 
for  B.  but  for  A.  as  well,  if  he  had  any 'outstanding  accounts, 
and  if  A.  just  prior  to  his  death  directs  B.  to  pay  a  certain 
debt  from  said  avails,  B.  is  under  legal  obligation  to  do  so.'* 
In  Pennsylvania,  where  a  person  takes  out  a  policy  on  his  own 
life  in  the  name  and  for  the  benefit  of  his  family  or  dependent 
relatives,  their  title  is  not  subject  to  his  debts,  and  even  the 
question  of  fraud  cannot  be  raised,  but  if  he  takes  out  a  pol- 
icy in  his  own  name,  and  then  assigns  it  to  his  wife  or  other 
dependent  relative,  his  creditors  may  raise  the  question  of 
fraud.°] 

[§  459  C.  Creditors  and  Beneficiaries  ;  Statutes.^  —  The 
rights  of  creditors  as  against  beneficiaries  are  largely  deter- 
mined by  the  statutes  of  the  several  States.  In  New  York  a 
policy  on  a  husband's  life  in  favor  of  the  wife  is  not  assign- 
able except  in  cases  authorized  by  statute.  The  court  cannot 
compel  an  assignment,  nor  can  the  avails  thereof  be  appro- 
priated in  advance  by  operation  of  law,  or  subjected  to  the 
liens  of  creditors  of  herself  or  husband.'''  Premiums  in  excess 
of  $500  paid  by  the  husband  inure  to  the  benefit  of  creditors, 
and  a  receiver  may  institute  proceedings  to  ascertain  the 
amount  of  such  excess,  secure  a  lien  on  the  policy,  and  re- 
strain the  beneficiaries  from  assigning  the  policy.^  Under  the 
code  of  Alabama  a  policy  on  the  husband's  life  for  the  benefit 
of  wife  and  children  is  not  subject  to  the  claims  of  creditors. 

1  [Brick  V.  Campbell,  54  N.  Y.  Super.  305] 

2  [Central  Bank  of  Washington  v.  Hume,  128  U.  S.  195.] 
8  [Crosby  v.  Stephan,  32  Hun,  478.] 

*  [Hutchings  v.  Miner,  46  N.  Y.  456.] 

6  [McCutchcon's  Appl.,  99  Pa.  St.  133.] 
«  [See  §§  391-392.] 

7  [Baron  v.  Brummer,  100  N.  Y  .372.] 

8  [Masten  v.  A  merman,  20  Abb.  N.  C.  443.] 
1056 


CH.  XXIV.]  CREDITORS.  [§  459  D 

The  solvency  or  insolvency  of  the  husband  when  the  premiums 
are  paid  does  not  affect  the  policy,  but  the  policy  would  be 
subject  to  debts  existing  before  the  law  was  passed,^  and  if  the 
annual  premiums  exceed  $500  on  a  policy  taken  out  by  a  hus- 
band in  favor  of  his  wife,  the  excess  may  be  taken  by  creditors,^ 
and  they  may  reach  the  premiums  paid  on  or  the  proceeds  of  a 
life  policy  obtained  by  the  debtor  for  one  of  his  children,  unless 
the  policy  was  intended  to  secure  a  debt  due  the  child.  Such 
a  policy  is  not  within  the  protection  of  the  code  §  2733,  which 
was  designed  for  the  benefit  of  loife  and  children,  while  this 
policy  was  for  one  child  only.^  Under  the  Florida  statute  if 
the  premiums  are  reasonable,  and  no  intent  to  divert  funds 
from  creditors  or  other  fraudulent  purpose  is  shown,  the  pro- 
ceeds of  the  insurance  must  go  to  the  beneficiary  free  of  the 
debts  of  the  insured.*  In  the  District  of  Columbia  the  claims 
of  creditors  upon  a  policy  on  the  life  of  an  insolvent  debtor  in 
favor  of  his  wife  and  children,  extend  to  the  premiums  paid 
since  insolvency,  but  no  further.^] 

[§  459  D.  A  creditor  may  recover  though  the  debt  has 
ceased  between  the  issue  of  the  policy  and  the  death  of  the 
debtor.^  A  creditor  to  whom  a  policy  is  payable  "  as  his  in- 
terest may  appear  "  has  no  right  of  action  on  the  instrument.'^ 
A  creditor  of  a  member  of  a  beneficiary  association  is  not  a 
''  dependant,"  and  a  promise  by  the  association  to  pay  him  a 
sum  due  at  the  member's  death  is  void.^  A  policy  on  a  home- 
stead is  exempt  the  same  as  the  proceeds  of  a  sale  of  the 
homestead ;  the  policy  is  not  even  subject  to  a  lien  on  the 
homestead  itself.^  Even  one  who  held  a  mechanic's  lien  on 
the  building  cannot  garnishee.^^     In  general,  however,  if  prop- 


[Fearn  v.  Ward,  65  Ala.  33.] 

[Felrath  v.  Schonfield,  76  Ala.  199,  under  a  statrte  like  that  of  New  York.] 

[Fearn  v.  Ward,  80  Ala.  555,  559.] 

[Eppinger  v.  Canepa,  20  Fla.  2G2.] 

[Central  National  Bank  v.  Hume,  3  Mackey,  360.] 

[Rittler  v.  Smith,  70  Md.  261] 

[Hatch  V.  Metropole  Ins.  Co.,  13  Rop'r.  298.  8th  Cir.  (Col.)  1882.] 

[Skillings  r.  Mass.  Ben.  Ass.,  146  Mass.  217.] 

[Porter  v.  Porter,  2  Tex.  Civ.  Cas.  434  ;  Cameron  v.  Fay,  55  Tex.  58.] 

[Cameron  v.  Fay,  55  Tex.  58.J 

1057 


§  459  F]        INSURANCE  :    fire,    life,    accident,    etc.       [CH.  XXIV. 

erty  exempt  from  execution  is  destroyed,  the  insurance  money 
does  not  partake  of  the  exemption.^  The  amount  of  insurance 
due  on  a  mutual  contract  is  not  chargeable  with  the  pay- 
ment of  the  debts  of  the  deceased.^  An  ordinary  life  policy 
is  not  part  of  the  estate  of  the  deceased,  for  the  payment 
of  debts,  but  vests  absolutely  in  his  heirs.  An  endowment 
policy,  however,  is  a  part  of  his  estate,  and  subject  to  his 
debts.^] 

[§  459  E.  Insolvency.  —  But  a  policy  taken  out  by  A,  for  the 
benefit  of  himself  and  his  representatives  becomes  a  part  of  his 
estate  and  subject  to  all  the  rules  of  law  applicable  thereto, 
and  an  assignment  of  such  a  policy  by  A.  to  his  daughters,  he 
being  then  insolvent,  will  not  prevent  the  creditors  from  fol- 
lowing the  fund  in  equity,  though  an  executor  is  estopped 
by  the  act  of  his  intestate  to  deny  the  title  of  his  as- 
signee.* The  rights  of  creditors  become  fixed  by  a  decree  of 
insolvency.  And  where  a  decree  of  dissolution  was  made, 
and  a  receiver  appointed,  who  notified  A.  to  forward  his  policy 
for  cancellation,  a  loss  hj  fire  subsequent  to  this  notice  gave 
A.  no  right  to  any  more  than  the  ratable  proportion  of  his 
unearned  premium  under  the  cancellation.^  A  composition  with 
creditors  rests  on  the  principle  that  each  creditor  acts  on  the 
belief  that  the  others  accept  and  receive  tlie  same  proportion 
he  takes,  and  no  more,  and  any  agreement  favoring  one  that 
is  not  consented  to  by  the  others  is  void.^] 

[§  459  F.  Garnishment.  —  A  policy  is  a  mere  chose  in  ac- 
tion., and  not  subject  to  attachment  or  garnishment.'^  But 
after  a  loss  the  insurance  company  may  be  garnished,  where 
the  payment  of  the  loss  is  not  conditional  on  anything  remain- 


1  [Mouniea  r.  German  Ins.  Co.,  12  Brad.  240.] 

2  [Mellows  V.  Mellows,  61  N.  H.  137 ;  Smith  v.  Bullard,  id.  381.] 

3  [White  V.  Smith,  2  Tex.  Civ.  Cas.  400,  401] 
<  [Burton  i-.  Farinliolt,  86  N.  C.  260  ] 

6  [Dean  &  Son's  Appl.,  98  Pa.  St.  101.] 

6  [Pfleger  v.  Browne,  28  Beav.  .391.] 

7  [Grace  ;;.  Koch,  1  Tex.  Civ.  Cas.  §  1065 ;  Price  y.  Brad.v,  21  Tex.  614;  Tay- 
lor V.  Gillean,  23  Tex.  508 ;  Ellison  v.  Tuttle,  26  Tex.  283 ;  Handy  v.  Dobbin,  12 
?ohns.  220:  Drake  on  Attachment,  481.] 

1058 


CH.  XXIV.]  CREDITORS.  [§  459  F 

ing  to  be  done.^  If  a  creditor  garnishecing  an  insurance  com- 
panj  shows  the  policy  and  that  proofs  of  loss  were  furnished 
or  waived,  it  \^  prima  facie  evidence  of  liability.-  When  a  policy 
is  written  "  for  whom  it  concerns,"  the  proceeds  in  the  insur- 
er's hands  are  subject  to  the  trustee  process  by  a  creditor  of  one 
part-owner,  to  the  extent  of  his  share,  although  he  be  not 
mentioned  in  the  policy .^  A.  died,  leaving  insured  personal 
property,  i?.,  a  creditor,  recovered  a  judgment  against  the 
executors,  and  levied  on  the  property  in  their  hands,  which 
was  afterwards  destroyed  under  the  policy,  and  it  was  held 
that  B.  had  a  right  to  priority  of  payment  out  of  the  proceeds 
thereof,  over  subsequently  recovered  judgments  of  other  credi- 
tors.* An  assignment  to  a  creditor  of  a  policy  on  goods  before 
loss,  without  notice  to  the  underwriters,  vests  an  equitable 
right  in  the  assignee,  which  holds  against  a  trustee  attachment 
after  loss  by  another  creditor  of  the  assignor.  The  creditor  thus 
attaching  can  stand  in  no  better  position  than  the  assignor.^ 
The  dissolution  of  a  company  does  not  abate  a  prior  attach- 
ment of  a  creditor  on  the  debt  of  a  mutual  member  to  the 
company.^  If  the  company  adjust  a  loss  with  an  assignee,  a 
creditor  of  the  assignor  cannot  take  advantage  of  the  fact  that 
the  assignment  was  without  consent  of  the  company.  Only 
the  insurer  can  set  up  that  fact.'  But  where  A.  assigns  a 
policy  to  B.  as  collateral,  and  after  loss  B.  receives  on  the 
policy  an  amount  in  excess  of  the  debt  secured,  the  creditors 
of  A.  may  garnishee  the  excess  in  ^.'s  hands.^  Where  A.  in- 
sures, payable  to  B.,  a  mortgagee,  as  his  interest  may  appear 
in  the  goods,  (7.,  a  creditor  of  A.,  may  garnish,  and  if  B.  comes 
into  the  proceedings  as  a  claimant,  C.  may  attack  his  mortgage 
as  fraudulent.^     If,  however,  the  mortgage  is  valid  on  its  face 

1  [Hanover  Fire  Ins.  Co.  v.  Connor,  20  Brad.  297.] 

2  [Crescent  Ins.  Co.  v.  Moore,  63  Miss.  419 ;    Lovejoy  v.  Hartford  Fire  lus. 
Co.,  11  Fed.  Rep.  63,  65  (111.),  1882] 

3  [City  Bank  v.  Adams,  45  Me.  455.] 

•»  [Mapes  V.  Coffin,  5  Paige  Ch.  296  at  298.] 

5  [Wakefield  v.  Martin,  3  Mass.  558  at  559.] 

6  [Hays  V.  Lycoming  Fire  Ins.  Co.,  99  Pa.  St.  621.] 
''  [Insurance  Co.  v.  Trask,  8  Pliila.  (Pa.)  32  at  34.] 

8  [Warder  v.  Baker,  67  Wis.  409.] 

9  [North  Star  Boot  &  Shoe  Co.  v.  Ladd,  32  Minn.  381.] 

1059 


§  459  H]       INSURANCE  :    fire,    life,    accident,    etc.       [CH.  XXIV. 

and  given  in  good  faith,  though  never  filed  for  record,  it  will 
be  sufficient  against  the  creditor.^] 

[§  459  G.  Insured  or  Creditor  must  furnish  Proofs  or  they 
must  be  Waived.  —  A  trustee  process  in  favor  of  a  creditor 
will  not  lie  until  the  proofs  of  loss  as  required  by  the  statute 
have  been  furnished  or  waived.^  When  after  a  loss  by  fire 
covered  by  a  policy  the  insured  had  not  made  the  required 
preliminary  proof  to  the  company,  and  when  at  that  time  the 
company  was  summoned  as  trustee  for  the  insured  it  was 
discharged,  although  after  the  service  of  the  trustee  writ  and 
within  the  necessary  time  to  recover  the  insurance,  the  pre- 
liminary proof  was  made.  The  claim  was  contingent  until 
the  proofs  were  furnished,  as  the  policy  declared  that  the 
company  should  have  sixty  days  after  proofs  in  conformity 
with  the  conditions  of  the  policy  in  which  to  pay.^  But  when 
the  assured  neglects  to  make  preliminary  proofs,  his  claim 
may,  nevertheless,  be  attached  and  the  proofs  made  by  the 
creditor,^  The  assured  was  out  of  the  State.  In  Texas  it  is 
held  that  although  a  policy  provides  that  suit  shall  not  be 
begun  until  proof  of  loss,  yet  a  creditor  may  garnishee  the 
company  before  such  proof.^] 

[§  459  H.  When  the  Creditor  cannot  Garnishee.  —  A  life 
policy  payable  to  the  legal  representatives  of  the  assured  is 
not  subject  to  attachment  by  his  creditors  during  his  life,  and 
on  his  death  the  funds  vest  in  the  representatives  for  the 
benefit  of  all  who  are  interested  in  the  decedent's  estate.^ 
A  creditor  of  the  insured  cannot  take  by  garnishment  funds 
payable  by  the  policy  to  a  mortgagee  of  the  insured.''  If 
a  trustee  holding  land  in  trust  for  A.  for  life  with  a  rever- 
sion to  himself,  insures  the  same  in  his  own  name,  it  will 
be  held  to  be  trust  money  and  not  attachable  by  private 
creditors,  unless  it  be  shown  to  be  for  more  than  the  life 

1  [Coykendall  v.  Ladd,  32  Minn.  529.] 

2  [Nickerson  r.  Nickerson,  80  Me.  100.] 

3  [Davis  V.  Niagara,  49  Me.  282,  284.] 

*  [Northwestern  Ins.  Co.  v.  Atkins,  3  Bush  (Ky.),  328  at  333.] 
6  [Insurance  Co.  v.  Willis,  70  Tex.  12.] 
•  6  [Day  V.  N.  E.  L.  Ins.  Co.,  Ill  Pa.  St.  507.] 
'  [Mansfield  v.  Stevens,  31  Minn.  40.] 

1060 


CH.  XXIV.]  CREDITORS.  [§  459  H 

interest.^  Where  a  policy  is  payable  to  the  representatives 
of  the  insured  for  the  sole  use  of  his  children,  the  adminis- 
trator is  the  only  one  who  can  collect  from  the  company,  and 
it  will  not  be  liable  to  trustee  process  brought  by  a  creditor 
of  one  of  the  children.^  When  an  action  is  pending  in  one 
State  against  an  insurance  company  it  cannot  be  summoned 
in  this  State  as  trustee  for  the  plaintiff  in  that  suit.^] 

1  [Lerow  v.  Wilmarth,  9  Allen,  382  at  384.] 

2  [Stowe  V.  Phinney,  78  Me.  244.] 

»  [American  Bk.  v.  Rollins,  99  Mass.  313  at  315.] 

1061 


INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXV. 


CHAPTER  XXV. 

OF   THE   NOTICE.      PRELIMINARY  PROOF,  PARTICULAR  ACCOUNT. 

Analysis. 

§  460.  Notice  and  proofs  necessary.     Proofs  may  be  notice,  but  notice  can- 

not dispense  with  proofs.     A  second  proof  is  to  be  taken 
with  the  first.     Assured  not  bound  to  apportion  loss  in 
his  proofs. 
§  461.  Time,  place,  and  mode  of  notice.     Mail.     Mere  silence  no 

waiver  of  time  limit. 
§462.  "Forthwith,"    "soon   as  possible,"    "immediately," 

mean  within  a  reasonable  time  under  all  the 
circumstances. 
§  463.  By  whom  and  to  whom  notice  is  to  be  given. 

§  464.  Waiver  of  notice  (see  also  §  461).    Even  defects  in  violation  of 

statute  may  be  waived,  for  the  provision  is  for  the 
company's  benefit. 
Receiving   and    acting   on    an    oral  notice   waive  a 

written  one. 
Silence  when  notice  is  not  given  in  time  is  no  waiver, 
for  speaking  could  not  aid  the  insured  to  cure 
the  defect. 
§  465.  Preliminary  proofs.     See  also  §  460. 

Who  may  furnish  and  receive.    Time  and  waiver  of  it.    Mail. 
Form    (see   also   §   466).      Due    notice    and    proof    of 
death,  §  465.     Waiver  of  it.     Presumption  of  death  in 
case  of  absence.     In  what  part  of  the  seven  years  death 
is  to  be  supposed  to  have  taken  place.     Two  persons 
perishing,  which  first,  §  465. 
Excuse.     Loss  of  policy  is  not,  nor  instantaneous  death  (?); 
but  insanity,  or  absence,  or  act  of  company  may  be,  and 
notice  of  total  loss  may  make  further  proof  unnecessary 
except  to  show  value.     Liberal  construction  to  save  for- 
feiture, §  465.     Books,  invoices,  and  vouchers,  excuses 
for  not  furnishing,  §  465. 
Sworn  appraisement  as  part  of  proof,  §  465. 
Proofs  as  evidence,  §  465,  also  §  460. 
Honest  mistakes  not  fatal,  §  465. 

Insured  may  recover  more  than  the  value  named  in  proofs, 
§  465. 
§  466.  Certificate  of  magistrate,  examination  on  oath. 

§  467.  Proof  of  death  (see  also  §  465).     Family  physician,  §  466. 

§§  468—471.  Waiver  of  preliminary  proof. 

Refusal  to  pay  on  other  grounds,  or  general  denial  of  liability 
without  giving  reasons  waives  the  furnisliing  of  proofs, 
or  defects  in  them  if  they  have  been  furnished,  §  469. 

1062 


CH.  XXV.]  OF   THE   NOTICE,   ETC.  [§  460 

Defects  are  waived  by  omission  to  notify  the  assured  of  them 
promjdlij  and  specifically,  so  as  to  give  him  opportunity 
for  correction.     A  mere  general  statement  that  the  proofs 
are  imperfect  is  not  sufficient.     It  has  been  hekl,  how- 
ever, that  rejecting  the  proofs  and  demanding  otliers  "  in 
exact  accordance  with  the  conditions  of  the  policy  "  is  a 
sufficient  specification,  §  469  B. 
Especially  will  any  act  recognizing  the  policy  without  men- 
tioning defects  be  a  waiver,  §§  469  B,  473. 
Payment  of  money  into  court  admits  cause  of  action. 
Proceeding   to  investigate  loss,  make  adjustment,   &c.,  any 
act  leading  insured  to  suppose  proofs  would  be  useless, 
waives  them,    §§  469  C,  469  B,   469,   even  though  re- 
quired by  statute,  §  469  C. 
Who  may  waive,  §  469  D. 

Provision  in  the  policy  or  in  by-law  that  no  condition  shall 
be  waived  except  in  writing  or  by  indorsement  on  policy, 
will  not  prevent  waiver  by  voice  or  act,  §§  473,  473  A. 
Particular  defects  pointed  out  waives  others,  §  470. 
What  is  not  a  waiver,  §  471. 

Mere  silence  not  enough  to  waive  furnishing  proofs, 

&c.,  §  471. 
Waiver  of  notice  is  not  waiver  of  proofs,  §  471. 
§  472.  Evidence  of  preliminary  proof. 

False  swearing  in,  see  §  477. 
§§  474,  475.     Particular  account,  §  474  (see  §  465),  and  what  is  required  in  it,  §  475. 
Loss  of  books  excuses  except  so  far  as  memory  or  other  means 
serve,  §  476. 
Waiver  of  it,  §  475  (see  also  §  465).     Time  of  ren- 
dering it,  §  475. 
§  476.  When  suit  may  be  brought.     Personal  examination,  &c. 

§  477.  Fraud  and  false  swearing  in  preliminary  proof. 

Payment  by  mistake  may  be  recovered. 

§  460.  Notice  ;  Preliminary  Proof  ;  Particular  Amount.  — 
Where  a  loss  has  occurred,  it  devolves  upon  the  assured  to 
give  notice  thereof,  and  also  to  furnish  some  proof  thereof 
and  of  the  amount  claimed.  These  duties  are  usually  re- 
quired in  substantially  the  same  phraseology,  and  with  greater 
or  less  exactness  and  particularity,  as  conditions  precedent 
to  the  right  to  demand  payment,  and  in  order  that  the  in- 
surers may  investigate  for  themselves  the  validity  of  the 
claim.  They  are  also  usually  required  within  a  certain  speci- 
fied time,  though  not  always.  The  preliminary  proofs  are 
only  evidence  of  the  fact  that  the  required  proofs  have  been 
furnished,  not  of  the  facts  stated  in  them ;  ^  and  they  are  dis- 

1  Newton  v.  Mut.  Benefit  Life  Ins.  Co.,  2  Dill.  C.  Ct.  154;  Planters'  Ins.  Co. 
V.  Comfort,  50  Miss.  662;  post,  §  465. 

1063 


§  461]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.       [CH.  XXV. 

tinct  from  and  supplementary  to  the  notice,  so  that  notice  is 
not  proof,  though  proof  may  be  notice.^  [It  is  error  to  refuse 
to  instruct  that  if  proper  notice  and  proofs  were  not  given  the 
plaintiff  cannot  recover.^  A  second  proof  of  loss  does  not 
nullify  a  prior  proof  returned  by  the  company  ;  the  proofs  are 
to  be  taken  together  as  supplying  each  other's  defects,  and  if 
combined  they  answer  the  requirements,  the  law  is  satisfied.^ 
The  insured  is  not  bound  in  his  proofs  to  apportion  the  loss 
among  the  several  companies,  although  the  policy  requires  the 
proofs  to  state  the  amount  claimed.  Equity  will  apportion 
the  loss.*] 

§  461.  Notice  of  Loss  ;  Time  and  Mode.  —  When  the  time  of 
notice  is  specified,  it  must  be  given  within  the  time  required 
by  the  conditions  of  the  contract.^  [A  delay  of  fifty  days 
without  excuse  is  unreasonable.^  If  a  policy  provides  that 
notice  shall  be  given  within  twenty-four  hours  after  loss,  but 
does  not  expressly  make  failure  a  cause  of  forfeiture,  it  will  not 
be  so  held.'''  If  notice  is  not  rendered  in  time,  mere  silence  of 
the  company  does  not  prevent  its  afterwards  defending  on  that 
ground.^]  It  need  not  be  in  writing,  unless  expressly  so  stip- 
ulated ;  ^  nor  need  the  insured  go  to  the  office  or  to  the  agent  of 
the  insurers  for  the  purpose  of  giving  the  notice.  If  the  persons 
authorized  to  receive  notice  on  behalf  of  the  insurers  go  to  and 
inspect  the  premises,  they  thereby  obtain  all  the  information 
which  it  is  the  object  of  the  notice  to  bring  to  their  knowledge, 
and  further  notice  will  be  useless  and  unnecessary.  Thus, 
where  the  president  and  one  of  the  directors  of  the  company 
visit  the  scene  of  the  fire  for  the  purpose  of  examining  into  the 
matter,  no  further  notice  on  the  part  of  the  insured  will  be 

1  O'Reilly  v.  Guardian,  &c.  Ins.  Co.,  60  N.  Y.  169 ;  [Central  City  Ins.  Co.  v. 
Gates,  86  Ala.  558.] 

2  [Sun  Mut.  Ins.  Co. ;;.  Holland,  2  Tex.  Civ.  Cas.  446.] 

3  [Brown  v.  Hartford  Fire  Ins.  Co.,  52  Hun,  260.] 

4  [Fuller  V.  Detroit  Fire  &  Mar.  Ins.  Co.,  36  Fed.  Rep.  469  (III.)  1888.] 

5  Davis  v.  Davis,  49  Me.  282. 

6  [Pickel  V.  Phenix  Ins.  Co.,  18  Ins.  L.  J.  598  (Ind.),  June,  89.] 
■7  [Coventry,  &c.  Ins.  Co.  v.  Evans,  102  Pa.  St.  281.] 

8  [Knickerbocker  Ins.  Co  v.  Gould,  80  111.  388,  -395.] 

^  Kiliips  V.  Putnam  Fire  Ins.  Co.,  28  Wis.  472 ;  [State  Ins.  Co.  v.  Manckeos, 
38  N.  J.  L.  564  at  568.] 
1064 


CH.  XXV.]  OF   THE    NOTICE,    ETC.  [§  462 

required.^  The  form  is  immaterial,  if  it  includes  the  fact  to 
be  made  known,  however  much  it  is  overloaded  with  sur- 
plusage.^ Where  the  notice  of  loss  and  affidavit  was  re- 
quired to  state  "  the  value  of  such  parts  as  remain,"  and  the 
notice  stated  that  the  building  was  destroyed  on  a  certain 
day,  and  was  a  total  loss,  it  appearing  that  the  building  de- 
stroyed was  insured  for  $1500,  and  was  valued  at  !$2400,  and 
that  the  brick  and  stone  work  uninsured  was  worth  about 
$100,  it  was  held  that  the  notice  of  the  loss  was  sufficient,  in 
the  absence  of  any  evidence  that  it  was  objected  to,  or  a  more 
particular  statement  required.^  [Sending  notice  of  loss  by 
mail  properly  addressed  is  prhna facie  evidence  of  service,  and 
in  the  absence  of  denial  the  jury  may  find  that  it  was  received.* 
A  provision  for  notice  to  be  sent  "  to  the  company  at  Hartford  " 
and  proofs  to  be  furnished,  &c,,  does  not  require  that  the  proofs 
shall  be  sent  to  Hartford.^  When  notice  and  proof  of  loss 
are  to  be  given  the  insurer  in  the  city  of  his  residence  or  princi- 
pal place  of  business,  deposit  of  such  notice  or  proof  in  the  mail 
at  the  place  of  loss  properly  addressed  is  not  a  compliance.^] 

§462.  Notice;  "Forthwith;"  "Soon  as  possible,"  &c. — If 
the  notice  be  required  to  be  "  forthwith,"  "*  or  "  as  soon  as  pos- 

1  Roumage  v.  Mechanics'  Fire  Ins.  Co.,  1  Green  (N.  J.),  110;  post,  §  473. 

2  Rix  V.  Mut.  Ins.  Co.,  20  N.  H.  198. 

2  Wyman  v.  People's  Equity  Ins.  Co.,  1  Allen  (Mass.),  301. 

*  [Susquehanna  Mut.  Fire  Ins.  Co.  v.  Tunkhannock  Toy  Co.,  97  Pa.  St.  424.] 

6  [Scheiderer  v.  Travelers'  Ins.  Co.,  58  Wis.  13,  17] 

6  [Central  City  Ins.  Co.  v.  Gates,  86  Ala.  558.] 

'  ["  Forthwith  "  means  within  a  reasonable  time.  Central  City  Ins.  Co.  v. 
Gates,  86  Ala.  558.  Central  City  Ins.  Co.  v.  Gates,  18  Ins.  L.  J.  761  (Ala.),  May  2, 
1889  ;  Erwin  v.  Springfield  Fire  &  Mar.  Ins.  Co.,  24  Mo.  App.  145.  A  statement 
sent  in  two  days  after  the  loss  is  sent  forthwith.  Beatty  v.  Lycoming  Co.  Mut.  Ins. 
Co.,  66  Pa.  St.  9.  Notice  to  the  local  agent  in  a  few  days  after  loss,  and  by  him 
sent  at  once  to  the  company,  satisfies  the  requirement  of  notice  "forthwith." 
Argall  V.  Insurance  Co.,  84  N.  C.  .355.  Nine  months'  delay  is  unreasonable.  Scam- 
mon  V.  Germania  Ins.  Co.  101  111.  G21.  Where  notice  was  given  twenty-two  days 
after  the  fire,  it  was  held  to  be  question  for  the  jury  if  it  was  within  a  reasona- 
ble time.  Donahue  v.  Windsor  Co.  M.  Fire  Ins.  Co.,  56  Vt.  .374.  If  there  is  a 
delay  of  forty-eight  days  without  excuse,  the  plaintiff  should  be  non-suited. 
Brown  v.  London  Ass.  Corp.,  40  Hun,  101.  A  condition  to  give  notice  forfhivith 
to  the  secretary  of  the  company,  is  not  fulfilled  by  notice  to  the  agent,  who  de- 
laj'ed  sending  it  to  the  company,  so  that  it  was  eiehteen  days  before  the  com- 
pany was  notified.     Sparrow  v.  Universal  Fire  Ins.  Co.,  17  Phil.  329.] 

1065 


§  462]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.       [CH.  XXV. 

sible,"  ^  or  "  immediately,"  ^  it  will  meet  the  requirement,  if 
given  with  due  diligence  under  the  circumstances  of  the  case, 
and  without  unnecessary  and  unreasonable  delay,  of  which 
the  jury  are  ordinarily  to  be  the  judges.  To  give  the  word  a 
literal  interpretation  would  in  most  cases  strip  the  insured  of 
all  hope  of  indemnity,  and  policies  of  insurance  would  become 
practically  engines  of  fraud.^  Thus  notice  within  eight  days 
after  the  fire  and  within  five  days  after  it  came  to  the  knowl- 
edge of  the  insured,  has  been  held  to  be  reasonable.^  So, 
where  the  fire  happened  on  the  tenth,  and  notice  of  loss,  dated 
the  eleventh,  reached  the  insurers  on  the  fifteenth  of  the  same 
month.^  But  a  delay  of  four  months  in  one  case,^  of  thirty- 
eight  days  in  another,"  of  twenty  days  in  another,^  and  of 

1  ["  As  soon  as  possible "  means  within  a  reasonable  time.  What  is  a 
reasonable  time  is  a  question  for  the  court  if  the  facts  are  ascertained, 
otherwise  for  the  jury  und^r  instructions.  Amer.  Fire  Ins.  Co.  v.  Hazen, 
110  Pa.  ft.  530.  Thirty  days'  delay  will  not  prevent  the  submission  of  the  ques- 
tion to  the  jury.  Ben  Franklin  Ins.  Co.  v.  Flynn,  98  Pa.  St.  628.  Where  there 
was  a  delay  of  three  months  on  account  of  a  criminal  suit  brought  against 
the  insured  on  the  charge  of  having  set  fire  to  his  house,  the  jury  found  that 
the  proofs  were  sent  as  soon  as  possible.  Home  Ins.  Co.  v.  Davis,  98  Pa.  St. 
280.  There  was  also  a  waiver  in  the  case  by  receipt  of  proofs  witliout  objec- 
tion. Eight  months'  delay  with  no  excuse  except  "  inconvenience  "  is  not  "  as 
soon  as  possible."     Cameron  v.  Can.  Fire  and  Mar.  Ins.  Co.,  6  Ont.  R.  892.] 

2  [A  condition  requiring  immediate  notice  merely  imposes  the  duty  of  reason- 
able diligence,  under  the  circumstances.  Insurance  Co.  v.  Brim,  111  Ind.  281, 
3770  R.  S.  1881;  People's  Ace.  Ass.  v.  Smith,  126  Pa.  St.  317  ;  Rokes  v.  Ama- 
zon Ins.  Co.,  51  Md.  512  at  519.  Notice  in  four  days  has  been  held  "  immedi- 
ate." Hoffecker  v.  N.  C.  C.  M.  Ins.  Co.,  5  Hous.  (Del.)  101.  The  policy  required 
"  immediate  proof  and  notice  "  of  loss.  The  fire  occurred  October  8,  or  Octo- 
ber 9,  and  an  inventory  of  loss  sent  to  the  company  November  13,  was  held 
sufficient,  in  view  of  the  great  derangement  of  business  caused  by  the  great  fire 
in  Chicago.  Same  v.  Mc  Ginnis,  87  111.  70  at  71 ;  Knickerbocker  Ins.  Co.  v. 
Gould,  80  111.  388,  391,  quoting  May.] 

3  Kingsley  v.  New  England  Mut.  Fire  Ins.  Co.,  8  Cush.  (Mass.)  .393;  Peoria 
Ins.  Co.  V.  Lewis,  18  111.  553;  Edwards  v.  Baltimore  Ins.  Co.,  3  Gill  (Md.),  176; 
Prov.  Life  Ins.  Co.  v.  Baum,  29  Ind.  236  ;  St.  Louis  Ins.  Co.  v.  Kyle,  11  Mo.  278; 
Phillips  V.  Prot.  Ins.  Co.,  14  Mo.  220. 

4  New  York  Central  Ins.  Co.  v.  Nat.  Prot.  Ins.  Co.,  20  Barb.(N.  Y.  Sup.  Ct.)  468. 

5  Schenck  v.  Mercer  County  Mut.  Ins.  Co.,  4  Zabr.  (N.J.)  447  ;  West  Branch 
Ins.  Co.  V.  Helfenstein',  40  Pa.  St.  289. 

6  McEvers  r.  Lawrence,  1  Hoff.  Ch.  (N.  Y.)  171. 

7  Inman  v.  Western  Fire  Ins.  Co.,  12  Wend.  (N.  Y.)  4-52. 

8  Whitehurst  v.  North  Carolina  Mut.  Ins.  Co.,  7  Jones,  Law  (N.  C),  433. 

1066 


CH.  XXV.]  OF   THE    NOTICE,    ETC.  [§  463 

eleven  days  in  another,^  there  being  no  sufficient  excuse 
therefor,  has  been  held  to  be  unreasonable.  Yet  where  tlie 
insurers  had,  contrary  to  their  agreement,  refused  to  issue 
a  policy,  they  were  held  to  have  waived  their  right  to  object 
to  a  notice  sent  even  eleven  months  after  the  loss.''^  Whether 
due  diligence  has  been  used  in  giving  the  notice  is  a  question 
which  is  ordinarily  left  to  the  jury,  to  be  found  from  all  the 
circumstances  in  the  case.^  But  where  the  facts  and  circum- 
stances bearing  upon  the  question  of  due  diligence  are  not  in 
dispute,  it  becomes  a  question  of  law  for  the  court.* 

§  463.  Notice  by  whom  and  to  whom  given.  —  The  assured, 
no  other  party  being  interested,  is  the  proper  person  to  give 
the  notice.  But  although  the  notice  is  required  from  the 
insured,  a  notice  signed  by  a  third  person  at  the  request  of 
the  insured,  though  not  on  its  face  appearing  to  have  been  by 
his  request,  is  a  sufficient  compliance  with  the  requirement.^ 
If  the  policy  has  been  assigned  by  the  assured  with  the  assent 
of  the  insurers,  the  notice  of  loss  properly  comes  from  the 
assignee.^  Notice  from  the  real  party  in  interest,  though  not 
insured,  will  doubtless  be  sufficient  in  any  case.^  And  a 
notice  from  the  local  agent  of  the  company,  upon  information 
communicated  to  him  by  the  assured,  is  sufficient.^  In  many 
cases  the  policy  designates  the  person  to  be  notified  as  the 
president,  secretary,  or  agent  of  the  company.  It  is  essential 
that  in  such  cases  the  notice  should  be  given  to  the  person 
designated.^  Where  it  was  provided  in  a  policy  which  had 
been  negotiated  through  a  local  agent  of  the  defendant's  that 

1  Trask  v.  State  Fire  &  Mar.  Ins.  Co.,  29  Pa.  St.  198. 

2  Tayloe  v.  Merchants'  Fire  Ins.  Co.,  9  How.  (U.  S.)  390. 

3  Edwards  v.  Baltimore  Ins.  Co.,  3  Gill  (Md.),  176;  O'Brien  v.  Phoenix  Ins. 
Co.,  76  N.  Y.  459  ;  Continental  Ins.  Co.  v.  Lippold,  3  Neb.  391. 

*  Kimball  et  als.  v.  Howard  Fire  Ins.  Co.,  8  Gray  (Mass.),  33;  Bennett  r. 
Lycoming  Ins.  Co.,  67  N.  Y.  274, 

5  Stimpson  v.  Monmouth  Mat.  Fire  Ins.  Co.,  47  Me.  349. 

6  Cornell  v.  Le  Roy,  9  Wend.  (N.  Y.)  16.3. 

7  Graham  v.  Firemen's  Ins.  Co.,  C.  Ct.  (N.  Y.),  9  Reptr.  285  ;  Watertown  Ins. 
Co.  V.  Grover,  41  Mich.  131. 

8  West  Branch  Ins.  Co.  v.  Helfenstein,  40  Pa.  St.  289. 

9  Patrick  v.  Farmers'  Ins.  Co.,  43  N.  H.  621 ;  Inland  Ins.  &  Dep.  Co.  v.  Stauf- 
fer,  33  Pa.  St.  397. 

106T 


§  464]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XXV. 

notice  of  loss  must  be  given  to  the  manager,  "  or  to  some 
known  agent  of  the  company ; "  before  the  loss  the  defend- 
ants had  transferred  their  business  to  another  company,  and 
it  was  held  that  a  notice  of  loss  given  to  the  local  agent  was 
sufficient,  the  plaintiff  having  had  no  notice  of  the  change  in 
business,  or  termination  of  the  agency.^  But  a  director  is  not 
an  "  authorized  "  officer  to  receive  such  a  notice.^  [Notice  of 
loss  to  one  held  out  to  be  an  agent,  and  through  whom  the 
policy  is  issued,  who  receives  the  notice  without  demurring, 
is  good  notice  to  the  company.^  A  notice  of  loss  addressed  to 
one  of  two  companies  concerned,  and  served  on  the  agent  of 
both  companies,  who  countersigned  the  policy,  is  sufficient  to 
hold  both  companies.'*] 

§  464.  Notice  ;  Waiver.  —  Although  the  notice  of  loss  must 
be  given,  if  required,  and  as  required,  yet  as  it  is  a  stipulation 
for  the  advantage  of  the  insurers,  it  is  in  their  option  to  waive 
any  delinquency  on  the  part  of  the  insured  in  this  respect. 
And  such  a  waiver  will  be  inferred  from  any  conduct  on  the 
part  of  the  insurers  clearly  inconsistent  with  an  intention  to 
insist  upon  the  failure  to  give  due  notice ;  as  for  instance,  the 
payment  of  so  much  as  they  estimate  the  loss  to  be,  though 
not  so  much  as  is  claimed  by  the  insured,  or,  in  other  words, 
a  payment  of  a  part  of  the  amount  claimed  to  be  due  under 
the  policy  ;  ^  or  the  special  examination,  known  to  the  insured, 
by  the  agent  of  the  insurers,  and  the  making  a  schedule  of  the 
property  burned;^  or  a  direction  to  go  on  and  furnish  the 
proofs.''  [Receiving  and  acting  on  an  oral  notice  waives  a 
written  one.^  A  policy  provided  for  written  notice  of  death. 
Oral  notice  was  given  to  0.,  the  agent.  He  gave  the  company 
notice,  and  they  gave  him  blank  affidavits,  which  were  after- 

1  Marsden  v.  City  &  County  Ass.  Co.,  1  Law  Rep.  (C.  P.)  232, 

•■i  Inland  Ins.  &  Dep.  Co.  v.  Stauffer,  33  Pa.  St.  397. 

8  [Kendall  v.  Holland  Purchase  Ins.  Co.,  2  T.  &  C.  375  at  876.] 

<  [Bernero  v.  South  British,  &c.  Ins.  Co.,  65  Cal.  386] 

*  Westlake  v.  St.  Lawrence  Mut.  Ins.  Co.,  14  Barb.  (N.  Y.)  206,  207. 

6  Badsrer  v.  Glens  Falls  Ins.  Co.,  49  Wis.  389  ;  ante,  §461 ;  Beatty  v.  Lycom- 
ing Ins.  Co.,  66  Pa.  St.  9. 

7  Cann  v.  Imp.  Fire  Ins.  Co.,  1  R.  &  C.  (Nova  Scotia)  240. 

8  [Edwards  v.  Travelers'  Life  Ins.  Co.,  20  Fed.  Rep.  661  (N.  Y.),  1884.] 

1068 


CH.  XXV.]  OF   THE  NOTICE,    ETC.  [§  464 

ward  filled  up  and  received  by  the  company  without  objection. 
This  was  held  a  waiver  of  written  notice  of  death. ^  When  a 
company  sends  its  agent  to  adjust  a  loss  it  is  estopped  from 
denying  proper  notice  of  loss.^]  There  seems  to  be  no  reason 
to  doubt  that  a  waiver  is  equally  effectual  whether  the  notice 
be  a  general  statute  requirement,  or  is  provided  for  in  the  act 
of  incorporation,  or  be  a  condition  of  the  contract.  Being  all 
alike  provisions  for  the  benefit  of  the  insured,  they  may  be 
waived,  even  though  the  waiver  apply  to  defects  which  are  in 
violation  of  express  statute  provisions.^  A  vote,  however,  to 
indefinitely  postpone  the  question  of  the  payment  of  a  loss  is 
no  waiver  of  a  condition  in  the  policy  requiring  notice  of  a 
loss  within  thirty  days.  It  is  rather  a  refusal  to  allow  any- 
thing on  account  of  it.  A  failure  to  give  notice  within  the  time 
required  stands  upon  a  different  ground  from  a  failure  to  give 
the  notice  in  due  form.  The  latter  defect  may  be  remedied  by 
a  new  and  more  accurate  form,  but  the  former,  if  insisted 
upon  by  the  insurers,  is  irremediable.  It  may,  indeed,  be 
waived,  but  it  would  be  reasonable  to  require  a  different  kind 
of  evidence  from  that  which  ought  to  be  satisfactory  in  cases 
of  a  mere  defect  in  form.  The  silence  of  the  insurers  upon  a 
mere  defect  of  form  might  be  very  injurious  to  the  assured, 
since,  if  the  defect  were  pointed  out  to  him,  he  might  at  once 
supply  the  deficiency  and  save  himself  from  loss.  A  failure 
to  give  the  notice  in  due  time,  on  the  contrary,  leaves  the  in- 
sured entirely  at  the  mercy  of  the  insurers,  and  to  point  out 
to  him  the  fact  will  not  in  the  least  aid  him  to  remedy  the 
defect.  The  omission  to  point  it  out  to  him  is  therefore  no 
wrong  or  prejudice  or  want  of  good  faith  towards  him,  nor  is 
the  insurer  under  any  legal  obligation  so  to  do.^     [A  letter 

1  [Travellers'  Ins.  Co.  v.  Edwards,  122  U.  S.  457.] 

2  [Home  Ins.  Co.  v.  Myer,  93  111.  271  at  275.] 

8  Lewis  V.  Monmouth  Mut.  Fire  Ins.  Co.,  52  Me.  492. 

*  Patrick  t;.  Farmers'  Ins.  Co.,  43  N.  H.  621 ;  St.  Louis  Ins.  Co.  v.  Kyle,  11 
Mo.  278;  Edwards  v.  Bait.  Fire  Ins.  Co.,  3  Gill  (Md.),  176;  post,  ^  471.  In 
American  Express  Co.  v.  Triumph  Ins.  Co.,  5  Ins.  L.  J.  466,  Dist.  Ct.  Hamil- 
ton Co.,  Ohio,  it  is  said  that  the  acceptance  of  proofs  without  objection  had 
never  been  held  a  waiver  of  neglect  in  point  of  time,  when  the  policy  provided 
that  the  proofs  should  be  presented  as  soon  as  possible.  But  see  contra,  Palmer 
V.  St.  Paul,  &c.  Ins.  Co.,  44  Wis.  201. 

1069 


§  465]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.         [CH.    XXV. 

■written  to  the  assured  by  the  company's  agent  (no  authority 
appearing),  stating  that  he  would  advise  him  of  the  loss  and 
that  an  adjuster  would  probably  be  sent,  is  no  waiver  by  the 
insurers  of  proper  notice  of  loss.^  In  the  absence  of  proof 
to  that  effect  the  soliciting  agent  or  the  adjusters  are  not  to 
be  presumed  to  have  power  to  waive  immediate  notice.^  An 
agent  for  adjustment  may  waive  notice  of  loss,  although  the 
policy  provides  that  acts  or  declarations  of  agents  not  contained 
in  the  policy  shall  not  bind  it.^] 

§  465.  Preliminary  Proofs;  Who  may  furnish;  Time  and  form  ; 
"Due  Notice."  —  Required  preliminary  proofs  when  furnished 
are  only  evidence  that  the  insured  has  complied  witli  the  re- 
quisitions of  the  policy,  and  are  inadmissible  as  evidence  for 
the  plaintiff  to  prove  the  issue  on  trial ;  *  and  although  the 
statements  in  them  will  be  taken  against  the  insured  as  admis- 
sions against  interest,^  he  may  show  that  the  statements  them- 
selves are  without  foundation,  and  were  inadvertently  made. 
Such  inadvertent  mistakes  are  without  effect  to  estop  the  in- 
sured from  showing  the  truth.^    [An  honest  error  in  stating  the 

1  [Forest  City  Ins.  Co.  v.  School  Directors,  4  111.  App.  145  at  148.] 

2  [Barre  v.  Council  Bluffs  Ins.  Co.,  76  Iowa,  609,  611.] 

3  [Stevens  v.  Citizens'  Ins.  Co.,  69  Iowa,  668] 

4  Citizens'  Fire  Ins.  Co.  v.  Doll,  35  Md.  89,  Newmark  v.  Lon.  &  Liv.  Life  «Sc 
Fire  Ins.  Co.,  30  Mo.  160;  Newton  v.  Mut.  Benefit  Ins.  Co.,  2  Dillon,  C.  Ct.  154; 
Planters'  Ins.  Co.  v.  Comfort,  50  Miss.  662;  iEtna  Ins.  Co.  v.  Farrell  (Tenn.), 
3  Ins.  L.  J.  852 ;  Browne  v.  Clay  Ins.  Co.,  68  Mo.  133 ;  ante,  §  460  ;  [Common- 
wealth Ins.  Co.  V.  Sennett,  41  Pa.  St.  161  at  165.  Knickerbocker  Ins.  Co.  v. 
Gould,  80  111.  388  at  392-393  (no  evidence  of  value).  Proofs  of  loss  made  by  tlie 
insured  and  admitted  to  siiow  that  he  has  complied  with  the  requirements  of  liis 
policy  are  for  the  judge.  They  are  not  to  go  to  the  jury,  nor  to  be  taken  out 
with  them.  Kittanning  Ins.  Co.  v.  O'Neill,  110  Pa.  St.  548.  Indor.sements  on 
back  of  proofs  of  loss  may  be  read  to  the  jury  to  show  when  they  were  received 
by  the  company.     Schwarzbach  v.  Protective  Union,  27  W.  Va.  622.] 

5  [The  proofs  of  loss  introduced  in  evidence  by  the  assured  may  be  appealed 
to  by  the  company  to  prove  the  vacancy  of  the  house,  or  other  fact  admitted 
therein  by  the  assured.  N.  A.  F.  Ins.  Co.  v.  Zaenger,  63  111.  462  at  467  ;  Insur- 
ance Co.  V.  Newton,  22  Wall.  32  at  35.] 

6  McMaster  v.  Insurance  Co.  of  North  America,  55  N.  Y.  222 ;  Hayes  v. 
Union,  &c.  Ins.  Co.,  44  U.  C.  (Q.  B.)  360;  Mutual  Ben.  Ins.  Co.  v.  Newton,  22 
Wall.  (U.  S.)  32;  Connecticut  Ins.  Co.  v.  Schwenk,  94  U.  S.  593;  Maher  v.  Hi- 
bernia  Ins.  Co.,  67  N.  Y.  283  ;  American,  &c.  Ins.  Co.  r.  Day,  39  N.  J.  89.  [Mos- 
ley  V.  Vt.  Mut.  Fire  Ins.  Co.,  55  Vt.  142;  ^tna  Ins.  Co.  v.  Stevens,  48  111.  31 
at  35  (inadvertent  omission  of  some  articles).     When  one  stated  in  the  proofs 

1070 


CH.  XXV.]  OF   THE  NOTICE,   ETC.  [§  465 

value  of  the  property  lost  is  not  fatal.  The  amount  recovered 
may  be  more  than  that  named  in  the  proofs  of  loss.^  What 
the  goods  brought  at  auction  and  the  cost  of  manufacture  of 
such  goods  are  proper  subjects  of  inquiry  in  estimating  the 
value  of  the  goods  lost.^  And  in  regard  to  the  auction  if  an 
attempt  is  made  to  show  that  such  a  sale  is  not  the  mode 
which  a  prudent  man  desiring  to  make  the  most  of  his  goods 
would  pursue,  the  plaintiff  may  ask  an  expert  in  such  matters 
if  there  is  any  better  mode  of  disposing  of  such  goods.^  If  the 
policy  provides,  that  a  claim  for  more  than  is  legally  due  shall 
avoid  the  policy,  it  must  be  shown  that  the  excessive  claim 
was  made  with  fraudulent  intent.*  An  overestimate  of  value 
in  the  proof  of  loss  not  fraudulent  will  not  avoid  the  policy  or 
render  the  proof  insufficient,  but  a  statement  claiming  for  all 
the  goods  lost,  and  yet  referring  to  only  one  of  two  buildings 
in  which  they  were,  is  insufficient,  under  a  policy  making  de- 
scription of  the  buildings  necessary .°]  The  same  persons  who 
may  give  and  receive  notice  may  doubtless  furnish  proofs  and 
receive  tliem ;  ^  and  where  there  are  several  policies  with  the 

of  loss  that  he  was  tlie  "  legal  heir  of  his  wife,"  the  statement,  though  errone- 
ous, was  not  held  to  be  fatal,  being  made  bonajide,  and  being  not  a  matter  of  fact, 
but  rather  a  conclusion  of  law  which  could  not  mislead.  Rohrbach  v.  Germania 
Ins.  Co.,  62  N.  Y.  613  at  614.  But  when  the  policy  provided  that  the  interest  of 
the  assured  should  be  stated  in  the  proofs  of  loss,  an  omission  to  so  state  is  fa- 
tal, unless  waived  by  the  company.  Shawmut  Sug.  Ref.  Co.  v.  People's  Mut.  Fire 
Ins.  Co.,  12  Gray,  535  at  540.] 

1  [Miaghan  v.  Hartford  Fire  Ins.  Co.,  24  Hun,  58.  The  proofs  said  $800,  and 
the  complaint  was  amended  to  $2000.  Lebanon  Mut.  Ins.  Co.  v.  Kepler,  106 
Pa.  St.  28.] 

2  [Clement  v.  British  Amer.  Ins.  Co.,  141  Mass.  298.]  3  [ibid  ] 
*  [Stone  V.  Hawkeye  Ins.  Co.,  68  Iowa,  7-37.] 

5  [Towne  v.  Springfield  Fire  &  Mar.  Ins.  Co.,  145  Mass.  582.] 
5  Ante,  §  40.3.  [Proofs  are  sufficient  though  executed  by  the  husband  as 
agent  of  the  wife  whose  property  was  insured,  he  having  transacted  the  whole 
business,  she  having  no  personal  knowledge  of  the  property.  Findeisen  v.  Me- 
tropole  Fire  Ins.  Co.,  57  Vt.  520.  When  the  company  had  recognized  A.  as 
the  assured's  agent  by  delivering  the  policy  to  and  receiving  the  premium  from 
him,  it  cannot  after  loss  object  to  his  right  to  furnish  proofs.  Swan  v.  Liv. 
Lond.  &  Gl.  Ins.  Co.,  52  Miss.  704  at  709.  A  mortgagee  may  supply  proofs  if 
the  mortgagor  neglects  to  do  it,  and  may  take  advantage  of  any  waiver  of  them 
by  the  company.  Nickerson  v.  Nickerson,  80  Me.  100.  Proof  of  loss  to  the  gen- 
eral adjuster  of  the  company  wlio  is  attending  to  tlie  claim  in  question  is  suffi- 
cient.    Merchants'  &c.  Ins.  Co.  v.  Vining,  67  Ga.  661.] 

VOL.  II.  —  24  1071 


§  465]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XXV. 

same  subject-matter,  issued  by  the  same  company,  one  set  of 
preliminary  proofs  will  be  suflficient.^ 

As  to  the  time  within  which  the  preliminary  proofs  must 
be  furnished,  as  in  the  case  of  notice,  if  it  is  specified  defi- 
nitely it  must  be  complied  witli,^  unless  the  condition  is  quali- 
fied, as  by  adding  "  and  till  furnished  no  action  shall  be 
brought."  ^  Mailing  the  proofs  within  the  time  seems  to  be 
sufficient*  And  if  no  definite  time  is  fixed,  they  are  to 
be  furnished  within  a  reasonable  time.°  Looking  at  the  cir- 
cumstances and  the  object,  even  five  years'  delay  has  been 
held  to  be  excusable,  where  the  insured  was  not  at  fault,  and 
the  delay  was  chargeable  to  the  conduct  of  the  insurers.^ 
(^Excuses)  A  failure  to  forward  any  proofs  at  all  within  the 
required  time  will  be  fatal,  although  the  circumstances  were 
such  —  as  where  the  insured  in  an  accident  policy  met  with 
an  instantaneous  death,  and  no  survivor  knew  of  the  exist- 
ence of  the  policy  —  that  it  was  impossible  that  notice  could  be 
given.  The  court  said  that  this  was  not  a  case  where  the 
notice  was  rendered  impossible  by  the  act  of  God,  for  the  in- 
sured might  have  provided  for  the  contingency  by  informing 
some  one  of  the  existence  of  the  policy.'''  This  certainly  is 
applying  the  rule  with  great  strictness,  and  seems  hardly  con- 
sistent with  the  recent  decision  in  the  Supreme  Court  of  the 
United  States,  where  it  is  held  that  if  the  insured  be  insane 
at  the  time  when  it  becomes  necessary  to  furnish  his  prelimi- 
nary proof,  this  will  excuse  the  non-performance  of  that  re- 

1  Girard  Life  Ann.  &  Tr.  Co.  v.  Mut.  Life  Ins.  Co.  (Pa.),  9  Weekly  Notes  of 
Cases,  425,  1881. 

2  Smith  V.  Haverhill  Mut.  Fire  Ins.  Co.,  1  Allen  (Mass.),  297. 

3  Lafarge  v.  Liverpool,  Lon.  &  Globe  Ins.  Co.,  17  L.  C.  Jur.  237. 
*  Badger  v.  Glens  Falls  Ins.  Co.,  49  Wis.  389;  post,  §  476. 

5  [Miller  v.  Hartford  Fire  Ins.  Co.,  70  Iowa,  704.] 

6  Columbia  Ins.  Co.  v.  Lawrence,  10  Pet.  (U.  S.)  507;  Cammell  v.  Beaver, 
&c.  Ins.  Co.,  39U.  C.  (Q.  B.)  1. 

^  Gamble  v.  Accident  Ass.  Co.,  4  Ir.  R.  C.  L  204.  [And  in  another  case  where 
the  policy  is  on  condition  that  the  assured  or  his  representatives  should  in  case  of 
any  accident  give  notice  within  a  certain  time,  failure  to  do  so  is  an  answer  to 
a  suit  on  the  policy,  although  death  was  caused  instantaneously  by  the  injury. 
Patton  V.  Employer's  Liability  Ass.  Corp.  Ir.  L.  R.  20  C.  P.  93,  (aff.)  ;  Gamble 
V.  Ace.  Ass.  Co.,  Ir.  R.  4  C  L.  204.]    Ante,  §  362. 

1072 


CH.  XXV.]  OF   THE   NOTICE,   ETC.  [§  465 

quirement.^  But  inability  by  reason  of  loss  of  the  policy  is 
no  excuse.2  [When  the  insured  is  out  of  the  country  and 
cannot  make  the  proofs  required  to  be  made  by  Jiim,  it  is  pos- 
sible equity  might  grant  relief.^  If  immediate  notice  of  total 
loss  is  given,  no  further  notice  or  proof  is  necessary.^  But 
the  rule  that  notice  of  the  total  destruction  of  a  building 
dispenses  with  further  proofs  of  loss  though  required  by 
the  contract  in  general  terms,  does  not  apply  to  the  total  loss 
of  the  contents  of  a  building  comprising  a  variety  of  articles.^ 
When  the  assured  had  been  examined  under  oath  after  loss, 
by  the  insurers,  and  his  books  had  been  in  tlieir  hands,  it  was 
held  that  he  must  still  furnish  proofs  of  loss.^  Failure  of  the 
company  to  furnish  the  usual  blanks  is  no  excuse.  Returns 
required  to  be  made  to  the  company  would  be  sufficient  in  or- 
dinary writing  or  print,  without  any  blank  form,  and  as  the 
furnishing  of  these  is  a  mere  convenience  and  courtesy,  a 
custom  to  do  so  cannot  give  such  a  right  to  them  that  failure 
to  furnish  them  will  excuse  the  returns.^  Where  the  fire  oc- 
curred January  17th,  and  the  proofs  were  prepared  January  22d, 
and  received  by  the  agent  "  early  in  February  "  (he  could  not 
state  the  exact  date),  it  was  held  proper  for  the  jury  to  pre- 
sume that  they  were  received  within  the  prescribed  time  of 
fifteen  days.^  If  the  policy  says  the  insured  "  shall "  furnish 
proofs  of  loss  within  a  certain  time,  but  does  not  make  it  a  con- 
dition of  the  contract,  delay  in  sending  the  proofs  will  not  work 
a  forfeiture.^     (^Waiver.)     If  the  company  proceed  to  adjust 

1  Germania  Fire  Ins.  Co.  et  ah.  v.  Boykin,  12  Wall.  (U.  S  )  433.  And  see 
also  Insurance  Companies  v.  Weides,  14  id.  375 ;  Wheeler  v.  Conn.  Mut.  Life  Ins. 
Co.,  5  Ins.  L.  J.  399  ;  Baldwin's  Case,  ante,  §  335.  The  last  two  cases  are,  how- 
ever, overruled  in  Wheeler  v.  Conn.  Ins.  Co.,  10  Ins.  L.  J.  116,  where  the  whole 
subject  is  very  elaborately  discussed.  See  further  as  to  act  of  God,  Am,  Law 
Rev.,  Oct.,  187G,  p.  186. 

2  Blakeley  v.  Phoenix  Ins.  Co.,  20  Wis.  205.     And  see  post,  §  475. 
8  [Walsh's  Admr.  v.  Vt.  Mut.  Fire  Ins.  Co.,  54  Vt.  351.] 

<  [Penn  Fire  Ins.  Co.  v.  Dougherty,  102  Pa.  St.  568.] 

6  [Universal  Ins.  Co.  v.  Weiss,  106  Pa.  St.  20.] 

6  [Gauche  v.  London  &  Lancashire  Ins.  Co.,  4  Woods  (U.  S),  102  at  106.] 

•   [Palmer,  &c.  v.  Factors',  &c.  Ins.  Co.,  33  La.  Ann.  1336,  1338.] 

8  [Peppit  V.  North  Brit.  &  Mer.  Ins.  Co.,  1  Puss.  &  Gold.  (Nova  Scotia),  219.] 

^  [Carpenter  v.  German- Amer.  Ins.  Co.,  52  Hun,  249.) 

1073 


§  465]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.        [CH.  XXV. 

the  loss,  or  otherwise  so  act  as  to  induce  the  plaintiff  as  a 
reasonable  man  to  think  no  proof  will  be  required,  and  so  he 
allows  the  time  limited  for  filing  proofs  to  pass,  the  company 
cannot  insist  on  the  time  limit.^  So  is  sending  proofs  back 
with  objections  for  correction,  but  without  objecting  that  they 
were  not  filed  in  time.^  So  if  they  refuse  to  pay  on  other 
grounds,  not  mentioning  this,^  If  without  objection  the  com- 
pany receive  and  retain  proofs  furnished  five  months  after  the 
loss,  it  waives  the  requirement  that  proofs  should  be  ren- 
dered in  sixty  days.*  Acts  of  officers  in  receiving  informal 
verbal  proofs  and  recognizing  liability  may  go  to  the  jury  on 
the  question  of  a  waiver  of  the  time  of  forwarding  proofs.^ 
When  the  secretary  of  the  company  interfered  with  the  agent 
of  the  assured,  prevented  him  from  making  proofs  within  the 
required  time,  the  company  was  held  estopped  from  setting 
this  up  as  a  defence.^  But  a  conversation  in  which  the  agent 
tells  the  assured  that  his  claim  is  all  right,  and  the  adjuster 
will  be  around  in  a  few  days  and  fix  the  thing  up  and  pay  him, 
does  not  excuse  the  furnishing  of  proofs  within  the  ten  days 
limited  therefor. "  And  when  the  assured  sent  notice  of  loss, 
a  letter  from  the  secretary  of  the  company  acknowledging  its 
receipt  and  the  request  for  proof  blanks,  and  adding,  "  We 
have  no  proof  blanks  at  hand.  It  will  probably  be  two  weeks 
before  our  adjuster  can  reach  this  case  "  was  held  not  to  be  a 
waiver  of  the  service  of  proofs  of  loss  within  the  required 
time.^  That  the  agent  acknowledges  the  receipt  of  delayed 
proofs  of  loss,  and  calls  attention  to  other  breaches  of  condi- 
tion, does  not  waive  the  breach  by  delay  in  proving  loss.^  A 
local  agent  simply  authorized  to  fix   rates  and    countersign 


1  [Gale  i'.  State  Ins.  Co.,  33  Mo.  App.  664;  Creighton  v.  Agri.  Ins.  Co.,  39 
Hun,  319.] 

2  [German  Fire  Ins.  Co.  v.  Grunert,  112  111.  74.] 

3  [State  Ins.  Co.  v.  Maackens,  38  N.  J.  L.  564] 

*  [Commercial  Union  Ass.  Co.  v.  Hocking,  115  Pa.  St.  407.] 
6  [Thierolf  r.  Universal  Fire  Ins.  Co.,  110  Pa.  St.  37.] 

6  [State  Ins.  Co.  v.  Todd,  83  Pa.  St.  272  at  278.] 

7  [Engebretson  v.  Hekla  Fire  Ins.  Co.,  58  Wis.  301.] 

8  [Birmingham  i-.  Farmers'  Joint  Stock  Ins.  Co.,  67  Barb.  595  at  597.] 

9  [Brown  V.  London  Ass.  Corp.,  40  Hun,  101.] 

1074 


CH.  XXV,]  OP   THE   NOTICE,   ETC.  [§  465 

and  deliver  policies  cannot  waive  a  provision  requiring  proofs 
within  thirty  days  after  loss.^] 

If  any  particular  facts  are  required  to  be  proved,  or  any 
particular  mode  of  proof  is  required,  the  facts  must  be  proved, 
and  in  substantially  the  mode  specified,  or  excuse  shown.  If 
hooks  of  account  and  vouchers  are  required,  they  must  be  ]3ro- 
duced,2  unless  excused,  as  where  they  were  destroyed  by  the 
fire  which  occasioned  the  loss,^  or  where  without  fault  they 
were  not  within  the  control  of  the  assured,*  or  if  it  should  ap- 
pear that  he  kept  no  books.^  [Where  the  plaintiff  cannot  get 
some  of  the  proofs  required  he  will  be  excused  from  a  literal 
compliance.^  The  law  will  not  require  an  impossible  thing, 
and  where,  owing  to  the  destruction  of  books  and  papers,  the 
insured  cannot  make  a  specific  statement  or  inventory  of  the 
property  destroyed,  the  policy  will  be  sufficiently  complied 
with  by  furnishing  such  proofs  as  are  within  the  power  of  the 
assured.''  Where  the  policy  stipulates  that  the  insured  shall 
in  case  of  loss  submit  invoices  and  vouchers,  and  also  dupli- 
cates, and  the  former  are  burned,  and  the  duplicates  cannot  be 
obtained  after  diligent  effort,  recovery  is  not  defeated  thereby.^ 
The  violation  of  such  a  stipulation  will  not  necessarily  avoid  the 
policy,  but  will  be  a  matter  for  the  consideration  of  the  jury.^  If 
the  policy  stipulates  for  an  appraisement  of  the  loss  on  demand 
of  either  party,  and  a  report  of  such  appraisement  under  oath 
as  part  of  the  proofs,  as  a  condition  precedent  to  action  the 
agreement  will  be  sustained. ^^j     ]^q  doubt  the  usual  stipula- 

-  [Bowlin  V.  Hekla  Fire  Ins.  Co.,  36  Minn.  433.] 

2  Cinqu  Mars  v.  Eq.  Ins.  Co.,  15  U.  C.  (Q.  B.)  143,  246;  Jube  v.  Brooklyn 
Fire  Ins.  Co.,  28  Barb.  (N.  Y.)  412;  Farmers'  Ins.  Co.  v.  Mispelhorn,  50  Md. 
180;    [O'Brien  v.  Commercial  Fire  Ins.  Co.,  63  N.  Y.  108  at  112.] 

3  Mechanics'  Fire  Ins.  Co.  v.  Nichols,  1  Harr.  (N.  J.)  410.  And  see  ante, 
§  335 ;  post,  §  474. 

*  Huckberger  v.  Prov.  Wash.  Ins.  Co.,  U.  S.  C.  Ct.,  North  Dist.  III.,  Davis.  J., 
1  Chicago  Legal  News,  353.     And  see  post,  §  475. 

5  Wightman  v.  West.  Mar.  &  Fire  Ins.  Co.,  8  Rob.  (La.)  442. 

6  [Eggleston  v.  Council  Bluffs  Ins.  Co.,  65  Iowa,  308.] 
T  [People's  Fire  Ins.  Co.  v.  Pulver,  127  111.  246.] 

8  [Miller  v.  Hartford  Fire  Ins.  Co.,  70  Iowa,  704.J 
^  [Insurance  Co.  v.  Starr,  71  Tex.  733.] 
"»  [Life  Ass.  V.  Goode,  71  Tex.  90.] 

1075 


§  465]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH,  XXV. 

tions  that  the  insured  shall  furnish  certain  preliminary  proofs 
of  loss,  when  loss  has  been  sustained,  are  conditions  prece- 
dent, without  compliance  with  which  no  recovery  for  a  loss 
can  be  had.  But  in  conformity  to  the  general  rule  applica- 
ble to  conditions  precedent,  a  failure  to  comply  with  which 
works  a  forfeiture,  they  will  be  construed  strictly  against  the 
insurers,  for  whose  benefit  they  are  imposed,  and  liberally  in 
favor  of  the  insured,  upon  whom  they  impose  burdens  more  or 
less  onerous ;  so  that  the  latter  will  be  held  to  nothing  in 
this  behalf  not  expressly  required  by  the  terms  of  the  condi- 
tion.i  And  if  loss  from  certain  enumerated  causes  is  excepted 
out  of  the  risks  assumed  by  the  policy,  it  is  enough  to  state 
that  the  loss  was  by  a  cause  not  excepted,  without  negativing 
the  fact  that  the  loss  was  within  the  excepted  risks.^  So  if 
it  be  required  to  state  whether  any  and  what  insurance  has 
been  made  on  the  property,  the  statement  that  the  property 
"  was  not,  nor  has  been  insured  since  the  policy  was  taken 
out,"  will  suffice.^ 

"  Due  notice  and  proof  of  death  "  is  such  notice  and  proof 
as  shall  appear  to  the  court  according  to  the  rules  of  evidence 
to  be  due,  and  not  such  as  in  the  opinion  of  the  insurers,  or 
other  insurance  companies,  may  be  due.  And  a  pamphlet 
given  to  the  assured  at  the  time  he  gives  notice  of  the  loss, 
setting  forth  the  proof  required,  has  no  binding  force  on  the 
assured,  unless  it  be  shown  that  he  has  agreed  to  it  in  some 
way,  or  was  so  well  aware  of  these  requirements  that  he  may 
be  presumed  to  have  contracted  with  reference  to  them  as 


1  Gelatly  v.  Minnesota,  &c.  Soc.  (Minn.),  Weekly  Jurist,  1880;  Catlin  v. 
Springfield  Fire  Ins.  Co.,  1  Sumner  (U.  S.),  434;  Wellcome  v.  People's  Equita- 
ble Mut.  Fire  Ins.  Co.,  2  Gray  (Mass.),  480;  Mason  v.  Harvey,  8  Wei.,  Hurl. 
&  Gor.  (Excli.)  819;  Spring  Garden  Mut.  Ins.  Co.  v.  Evans,  9  Md.  1;  Roper  v. 
Lendon,  1  Ell.  &  Ell.  (Q.  B.)  825;  Commonwealth  Ins.  Co.  v.  Sennett,  41  Pa. 
St.  161  ;  Blakeley  v.  Plicenix  Ins.  Co.,  20  Wis.  205 ;  Bumstead  v.  Dividend  Mut. 
Ins.  Co.,  2  Ker.  (N.  Y.)  81  ;  Gilbert  v.  North  American  Ins.  Co.,  23  Wend,  (N.  Y.) 
43;  Battaille  v.  Merchants'  Ins.  Co.,  3  Rob.  (La.)  384;  Great  Western  Ins.  Co. 
V.  Staaden,  26  111.  360;  antp,  §  460. 

2  Catlin  V.  Springfield  Fire  Ins.  Co.,  1  Sumner  (U.  S.),434;  Lounsbury  v. 
Prot.  Ins.  Co.,  8  Conn.  459. 

3  Lounsbury  v.  Prot.  Ins.  Co.,  8  Conn.  459. 

1076 


CH.  XXV.]  OF   THE   NOTICE,   ETC.  [§  465 

customary .1  And  a  bare  notice,  not  objected  to  before  trial, 
will  be  sufficient.^  The  proviso  will  be  liberally  construed  to 
save  a  forfeiture  ;  and  unless  the  policy  expressly  calls  for 
specific  information,  and  sets  forth  what  the  proof  shall  be, 
no  particular  kind  of  proof  can  be  insisted  on,  provided  it  fur- 
nish such  evidence,  within  the  reasonable  efforts  of  the  in- 
sured to  obtain,  as  ought  to  be  satisfactory.^  And  if  the 
policy  provides  for  satisfactory  proof  of  the  death,  and  such 
further  evidence  as  the  directors  may  think  necessary  to  es- 
tablish their  claim,  this  can  only  be  understood  to  mean  such 
evidence  as  the  directors  might  reasonably,  and  not  such  as 
they  might  unreasonably  and  capriciously,  require.''  But 
this,  if  reasonable  and  required,  must  be  produced  as  a  condi- 
tion precedent  to  suit.^  [Where  prior  to  the  death  the  com- 
pany has  declared  the  policy  forfeit  it  is  not  necessary  to 
show  that  proof  of  death  was  made  before  suit.^  Where  the 
by-law  of  a  mutual  society  requires  the  secretary  on  notice  of 
death  to  send  blanks  and  instructions  to  the  representatives 
of  the  deceased,  a  failure  to  do  so  waives  the  preliminary 
proofs  of  death.7  There  is  a  presumptioyi  of  death  after  seven 
years'  absence  during  which  time  the  person  is  not  heard  of  or 
known  to  be  living.^  But  however  long  a  person  may  be  ab- 
sent or  wherever  he  may  be,  if  he  has  had  a  known  and  fixed 
residence  during  that  time  he  ought  not  to  be  presumed  dead 

1  Taylor  v.  Mtnh  Life  Ins,  Co.,  13  Gray  (Mass.),  434.  But  see  Woodfin  v. 
Asheville  Ins.  Co.,  6  Jones  (N.  C),  558. 

2  Heath  v.  Franklin  Ins.  Co.,  1  Cush.  (Mass.)  257.  But  see  contra,  O'Reilly 
V.  Guardian  Ins.  Co.,  60  N.  Y.  169.  Probate  records  and  inquests  are  only 
prima  facie  evidence  of  death.  They  are  no  evidence  of  the  causes  of  death. 
Mutual  Ben.  Ins.  Co.  v.  Tisdale,  91  U.  S.  2.38;  Mutual  Life  Ins.  Co.  v.  Schmidt 
(Oliio),  8  Am.  L.  Record,  629.  How  far  absence  is  proof,  see  Hancock  v.  Ameri- 
can Life  Ins.  Co.,  62  Mo.  26;  Tisdale  v.  Conn.  Mut.  Life  Ins.  Co.,  26  Iowa,  170. 

3  Mason  v.  Harvey,  8  Exch.  819  ;  Walsh  v.  Wash.  Mar.  Ins.  Co.,  32  N.  Y. 
427.     And  see  also  the  two  cases  last  cited. 

*  Braunstein  v.  Accidental  Death  Ins.  Co.,  1  B.  &  S.  782 ;  Nortli  American 
Ins.  Co.  V.  Burroughs,  69  Pa.  St.  43;  Moore  v.  Woolsey,  4  El.  &  B.  243. 

5  Fawcett  v.  Liv.,  Lon.,  &  Globe  Ins.  Co  ,  27  U.  C  (Q.  B.)  225. 

6  [Girard  Life  Ins,  &c.  Co.  v.  Mut.  Life  Ins.  Co.,  97  Pa.  St.  15.] 

7  [Covenant  Mut.  Ben.  Ass.  v.  Spies,  114  111.  463.] 

8  [Tilly  V.  Tilly,  2  Bl.  Ch.  Md.  4.36;  Cofer  v.  Flanagan,  1  Ga.  538  ;  Loring  v. 
Steineman,  1  Met.  204  ;  White  v.  Mann,  26  Me.  361.] 

1077 


§  466]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.        [CH.  XXV. 

until  inquiries  have  been  made  at  that  place.^  "Where  a  man 
is  proved  to  have  been  living  within  seven  years  the  burden  of 
proving  his  death  is  on  him  who  asserts  it.^  When  a  presump- 
tion of  death  arises  after  a  seven  years'  absence,  death  must 
generally  be  supposed  to  have  taken  place  on  the  last  day  of 
that  time,  in  the  absence  of  any  evidence  on  the  point.^  On 
the  contrary,  however,  it  is  held  that  when  the  presumption 
arises  after  a  seven  years'  absence  the  law  makes  no  further 
presumption  as  to  the  particular  point  in  the  seven  years  at 
which  the  death  occurred.^  In  a  disaster  by  which  two  per- 
sons are  killed  any  means  of  ascertaining  which  perished 
first,  though  but  a  shadow,  must  be  relied  on.  Therefore 
where  in  a  ship's  boiler  explosion  A.  is  known  to  have  sur- 
vived the  explosion,  and  was  seen  a  few  minutes  later  alive, 
but  B.  was  not  seen  after  the  explosion,  and  where,  further,  B.'s 
berth  was  in  the  part  of  the  vessel  which  was  nearer  the  ex- 
plosion, the  conclusion  is  that  A.  was  the  survivor.^  But 
mere  knowledge  of  age  and  sex  of  two  persons  who  perished 
in  the  same  disaster  does  not  raise  any  presumption,  nor  are 
they  sufficient  of  themselves  to  warrant  a  finding  that  one 
perished  before  the  other.^  In  the  first  case  the  persons  were 
a  father  of  seventy  years  and  a  daughter  of  thirty-three.] 

§  466.  Preliminary  Proof  ;  Form  and  Mode  ;  Certificate  of 
Magistrate  ;  Examination  on  Oath.  —  We  have  just  said  that  the 
preliminary  proof  must  be  substantially  in  the  mode  required. 
It  has  been,  indeed,  very  generally  held  that  the  production 
of  the  certificate  of  "  the  minister,  &c.,  of  the  parish,"  that  he 
knew  and  verily  believed  that  the  loss  really  happened  by 
misfortune  and  not  by  fraud,  if  required,  was  a  condition 
precedent  to  recovery,  although  he  had  refused,  without  rea- 

1  [McCartee  v.  Camel,  1  Barb.  Ch.  455.] 

2  [Gilleland  v.  Martin,  8  McLean,  490;  Rex  v.  Harborne,2  Ad.  &  El.  543] 

3  [Burr  V.  Sim,  4  Wharton  (Pa.),  150,  170,  "  always  "  ;  Smith  v.  Knowlton, 
11  N.  H.  191,  196,  "  generally  so."] 

*  [Doe  V.  Nepean,  5  Barn.  &  Adolph.  86,  94  ;  Nepean  v.  Doe,  2  Mees.  &  Wels. 
894,  912  ;  McCartee  v.  Camel,  1  Barb.  Ch.  455 :  In  re  Benham's  Trust,  4  L.  R. 
Eq  416,  419.] 

5  [Pell  V.  Ball  Cheves  Ch.  (S.  C.)  99.] 

6  [Coye  V.  Leach,  8  Met.  371 ;  Mason  v.  Mason,  1  Meriv.  Ch.  308  (father  and 
son).] 

1078 


CH.  XXV.]  OF   THE   NOTICE,   ETC.  [§  466 

sonable  cause,  to  give  such  a  certificate.^  So,  if  a  similar 
certificate  from  the  "  nearest  magistrate,"  ^  or  from  a  "  magis- 
trate of  the  city,"  s  or  an  affidavit  of  persons  present  at  the  fire, 
be  required.*     But  in  such  cases  the  court  will  not  go  into  a 

1  Worsley  v.  Wood,  6  T.  R.  716 ;  Johnson  v.  Phoenix  Ins.  Co.,  112  Mass.  49 ; 
Edgerly  v.  Farmers'  Ins.  Co.,  48  Iowa,  644 ;  Racine  v.  Equitable  Ins.  Co.,  6 
L.  C.  Jour.  89;  O'Connor  v.  Com.  Un.  Ins.  Co.,  3  R.  &  C.  (Nova  Scotia)  119. 
In  this  case  an  acknowledgment  of  the  receipt  of  a  magistrate's  certificate, 
stated,  with  an  excuse,  to  be  other  than  the  magistrate  required,  no  objection 
being  made  to  the  irregularity,  was  held  somewhat  strictly  to  be  no  waiver.  See 
post,  §  608.  In  a  subsequent  case  m  the  same  court,  tlie  learned  Judge  James,  re- 
ferring to  O'Connor's  case,  supra,  says  :  "  I  thmis  it  still  open  to  discussion 
whether  tliere  may  not  be  circumstances  in  which  a  party  insured  might  be  per- 
mitted to  pass  by  the  most  contiguous  justice  of  the  peace,  provided  tliat  course 
were  adopted  in  good  faith,  for  good  and  reasonable  cause.  Tlie  nearest  justice 
might  be  a  lunatic,  .  .  .  or  he  might  be  unable  to  attend  to  the  duty,  or  he  might 
be  under  suspicion  himself  as  the  incendiary,  ...  or  on  terms  of  intense  hos- 
tility to  the  insured,  or  ...  a  very  ignorant  person,  or  of  intemperate  habits." 
Herkins  v.  Prov.  Ins.  Co.,  3  R.  &  C.  (Nova  Scotia)  176. 

2  Cornell  v.  Hope  Ins.  Co.,  3  Martin  (La.)  n.  s.  223;  7  Martin  (La.),  476; 
Roumage  v.  Mechanics'  Ins.  Co.,  1  Green  (N.  J.),  110;  Noonan  v.  Hartford  Fire 
Ins.  Co.,  21  Mo.  81 ;  Leadbetter  v.  JEtna  Ins.  Co.,  13  Me.  265 ;  Columbian  Ins. 
Co.  V.  Lawrence,  10  Pet.  (U.  S.)  507 ;  Moody  v.  iEtna  Ins.  Co.,  Thomson  (N.  S. 
Law),  173.  [Where  the  insured  applied  to  the  nearest  magistrates  and  tiiey 
refused,  and  he  sent  a  certificate  from  tiie  next  nearest,  it  was  held  that  the 
condition  was  broken  and  the  policy  void.  Logan  v.  Commercial  Union  Ins. 
Co.,  13  Can.  Supr.  Ct.  270.  On  the  other  hand,  a  stipulation  that  the  nearest 
magistrate  or  justice  shall  certify  to  the  loss,  &c.,  has  been  held  void,  as  the  com- 
pany has  no  right  to  require  a  public  ofl[icer  to  act  in  adjusting  its  risks.  Uni- 
versal Fire  Ins.  Co,  v.  Block,  109  Pa.  St.  535.  Where  the  policy  required  a 
certificate  from  the  magistrate  livi7ig  nearest  the  place  of  fire,  and  a  certificate 
was  obtained  from  the  magistrate  whose  place  o/busmcss  was  nearest,  the  court 
would  not  allow  the  company  to  escape  on  such  a  technicality.  Agricultural 
Ins.  Co.  V.  Bemiller,  70  Md.  400.  If  a  certificate  of  the  "  nearest  magistrate  or 
notary  "  is  required,  it  will  not  do  to  send  a  certificate  from  the  nearest  justice, 
wiien  there  are  notarie*  materially  nearer.  Williams  v.  Queen's  Ins.  Co.,  39 
Fed.  Rep.  167  (Conn.)  1889.  Where  a  statement  is  to  be  sworn  before  a  justice 
of  the  peace,  and  instead  is  sworn  before  a  notary,  it  seems  that  tiie  policy  is 
substantially  complied  with.  Ben  Franklin  Fire  Ins.  Co.  v.  Flynn,  98  Pa.  St. 
628.  But  Wisconsin  holds  that  a  notary  public  is  not  a  magistrate  within  the 
meaning  of  a  policy,  requiring  the  proofs  to  be  accompanied  by  a  magistrate's 
certificate,  but  if  the  company  receive  a  notarial  certificate  and  retain  it  without 
objection,  the  condition  is  waived.  Cayon  v.  Dwelling-House  Ins.  Co.,  68  Wis. 
570.] 

3  Prot.  Ins.  Co.  v.  Pherson,  5  Ind.  417 ;  Scott  v.  Phojnix  Ass.  Co.,  Stuart 
(L.  C.),354. 

*  Alderman  v.  West  of  Scotland  Ins.  Co.,  5  U.  C.  (Q.  B.  o.  s.)  37. 

1079 


§  406]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.        [CH.  XXV. 

nice  calculation  to  ascertain  whether  some  other  magistrate 
than  the  one  whose  certificate  is  presented  does  not  live,  or, 
if  he  does  not  live,  have  his  office  nearer  than  the  certifying 
one.  This  is  a  case  for  the  application  of  the  maxim  de 
minimis  ?ion  curat  lex.  The  spirit  of  the  condition  requires 
no  such  mathematical  precision.^  Its  object  is  completely- 
secured  by  the  proximity  of  the  certifying  magistrate.  If 
such  a  rigid  rule  were  to  be  applied,  the  condition  would 
become  impossible  of  execution  if  two  magistrates  should  be 
found  to  be  living  equidistant.^  And  where  two  magistrates 
were  nearer  than  the  one  whose  certificate  was  procured,  but 
they  were  creditors  of  the  insured,  it  was  held  that  the  magis- 
trate whose  certificate  was  obtained  was  the  proper  officer  to 
certify.^  Indeed,  in  this  latter  case,  the  court  were  inclined 
to  deny  to  the  provision  the  validity  and  effect  of  a  condition 
precedent,  but  rather  to  treat  it  as  directory  only.  In  Canada 
the  courts,  under  the  authority  of  a  statute  (Ottawa,  36  Vict. 
c.  44,  §  33),  have  declared  the  condition  unreasonable.*  And 
in  some  of  the  States  it  has  been  substantially  abrogated  by 
legislation.^  So  where  several  magistrates  had  their  places  of 
business  nearer  to  the  fire  than  the  place  of  business  of  the 
magistrate  who  certified,  though  there  was  no  evidence  that 
their  places  of  residence  were  nearer,  the  certificate  was  held 
sufficient.^  And  in  Cornell  v.  Le  Roy "  the  testimony  of  a  wit- 
ness that  he  thought  the  certifying  magistrate  lived  nearer  the 
insured  premises  than  another  magistrate  named,  but  was  not 

1  [When  the  policy  provides  that  an  affidavit  of  loss  shall  be  made  before  the 
nearest  officer,  and  there  are  several  in  the  immediate  neighboriiood,  tlie  differ- 
ence of  a  few  feet  as  to  nearness  will  not  be  consideretl.  American  Cent.  Ins. 
Co.  V.  Kothchild,  82  111.  16tj  at  167.] 

2  Turley  v.  North  American  Fire  Ins.  Co.,  2  Wend.  (N.  Y.)  379;  Williams 
V.  Niagara  Ins.  Co.,  50  Iowa,  561 ;  Dolliver  v.  St.  Josepli's  Ins.  Co.,  128  Mass. 
315. 

3  ^tna  Ins.  Co.  v.  Miers,  5  Sneed  (Tenn.),  l-OO.     And  see  post,  §  473. 

4  Shannon  v.  Hastings  Ins.  Co.,  2  Ont.  App.  Rep.  81. 
^  Aurora  Fire  Ins.  Co.  v.  Johnson,  46  Ind.  315. 

6  Longhurst  v.  Conway  Fire  Ins.  Co.,  Dist.  Ct.  (U.  S.)  Iowa,  Northern  Dlst  , 
1861,  cited  in  Digest  of  Fire  Insurance  Cases.  See  also  Peoria  Mar.  &  Fire  Ins. 
Co.  v.  Whitehill,  25  111.  4G6. 

"  9  Wend.  (N.  Y.)  163. 

1080 


CH.  XXV.]  OF   THE   NOTICE,    ETC.  [§  466 

certain,  and  did  not  know  but  other  magistrates  resided  nearer 
than  the  certifying  one,  was  held  sufficient  jorma/acie  proof  of 
the  allegation  that  the  certificate  was  that  of  the  nearest  magis- 
trate. In  ^Etna  Fire  Insurance  Company  v.  Tylcr,^  a  certificate 
which  omitted  such  important  facts,  though  required,  as  that 
the  person  certifying  was  acquainted  with  the  character  and 
circumstances  of  the  insured,  and  also  the  amount  of  damage 
sustained  by  him,  was  held  to  be  sufficient ;  the  magistrate 
having  stated  that  "  he  was  acquainted  with  him,"  and  that 
he  "  had  sustained  loss  or  damage  to  the  amount  of  the  build- 
ings therein  mentioned," — that  is,  in  the  affidavit  of  the 
insured, —  the  whole  being  in  the  opinion  of  the  court  a  sub- 
stantial equivalent.  And  in  Bilbrough  v.  Metropolis  Insur- 
ance Company ,2  it  was  held  too  late  to  make  the  objection 
that  the  certificate  was  defective  for  the  first  time  at  the 
trial.^  So  in  Ketchum  v.  Protection  Insurance  Company,*  it 
was  held  unnecessary  to  prove  that  the  magistrate  certify- 
ing was  not  related  to  the  deceased.  And  the  statement  in 
the  certificate  by  the  magistrate,  that  he  is  not  interested, 
is  prima  facie  evidence  of  the  fact  of  disinterestedness.^ 
Where  the  requirement  was  of  a  "  magistrate  most  contiguous 
to  the  place  of  the  fire,  and  not  concerned  in  the  loss,  as  a 
creditor  or  otherwise,  or  related  to  the  insured  or  sufferers," 
it  was  held  if  the  "  most  contiguous  "  magistrate  was  a  loser 

1  16  Wend.  (N.  Y.)  385. 

2  5  Duer  (N.  Y.  Superior  Ct.),  587;  Heath  v.  Franklin  Ins.  Co.,  1  Cash. 
(Mass.)  357. 

•^  [If  objection  is  not  made  within  reasonable  time  after  proofs  are  made,  the 
condition  as  to  the  nearest  magistrate,  &c.  is  waived.  Nease  v.  ^tna  Ins.  Co.,  18 
Ins.  L.  J.  541,  W.  Va.  March,  1889.  But  a  delay  of  tliirty-seven  days  before  re- 
quiring tlie  insured  to  send  a  certificate  of  the  proper  magistrate  or  notary,  is 
not  a  waiver  where  no  injury  is  sustained  thereby.  Williams  v.  Queen's  Ins. 
Co.,  39  Fed.  Rep.  167  (Conn.),  1889.  And  the  receipt  of  proofs  without  objection 
to  the  absence  of  this  certificate,  by  an  agent  whose  only  duty  was  to  transmit 
the  papers  to  the  company,  is  no  waiver  of  the  reqviirernent,  nor  is  it  a  waiver 
that  the  company  objected  to  payment  on  other  grounds,  nor  that  they  held  the 
proofs  two  years  without  calling  attention  to  the  defect.  Daniels  v.  Equitable 
Fire  Ins.  Co.,  50  Conn,  551.  The  plaintiff  knew  perfectly  well  that  the  certifi- 
cate was  a  condition  precedent  and  that  he  had  not  furnished  it.] 

<  1  Allen  (N.  B.),  136. 

6  Cornell  v.  Le  Roy,  9  Wend.  (N.  Y.)  163. 

1081 


§  466]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXV. 

by  the  same  fire  he  was  disqualified.  Whether  the  mere  fact 
of  his  being  a  creditor  would  have  disqualified  him,  was  said 
to  be  a  "  matter  of  considerable  doubt."  ^  Where  the  certifi- 
cate was  to  be  of  the  nearest  magistrate  not  "  concerned  in 
the  loss,"  and  the  nearest  magistrate  had  suffered  by  the 
fire  supposed  to  have  been  set  by  the  insured,  he  was  held 
to  be  concerned  in  the  loss  so  as  to  be  incapacitated  to 
certify.^  If  the  magistrate's  certificate  required  him  to  state 
that  he  is  acquainted  with,  or  has  inquired  into,  the  circum- 
stances, and  without  stating  either  of  these  facts  he  states 
merely  his  belief  that  there  is  no  fraud,  it  is  insufficient.^  Nor 
can  such  a  certificate  or  any  other  matter  of  proof  be  exacted 
by  a  mere  notice  that  it  will  be  required,  or  anything  short 
of  an  express  stipulation  in  the  contract.*  And  even  the  sub- 
stitution of  the  certificate  of  another  person  not  a  magistrate, 
for  that  of  the  nearest  magistrate,  which  is  required  by  the 
policy,  will  be  waived  if  received  and  assented  to  by  the 
agent  as  sufficient.^  By  statute  in  Maine  ^  the  insured  is  to 
make  oath  to  his  statement  of  loss  "  before  some  disinter- 
ested magistrate ; "  and  this  obviates  the  objection  under  con- 
tracts made  in  that  State  that  the  certificate  of  the  nearest 
magistrate,  as  is  frequently  required,  should  be  obtained. 
And  no  informality  in  the  certificate  furnished  under  the 
statute,  not  objected  to  at  the  time  when  the  certificate  is 
furnished,  can  afterwards  be  objected  to  the  claim  of  the 
plaintiff.^ 

If  the  insured  absent  himself  so  that  he  cannot,  witli  due 
diligence,  be  found,  it  is  tantamount  to  a  refusal  to  be  ex- 

,1  Ganoiig  V.  JEtnn  Ins.  Co.,  6  Allen  (N.  B.),  75. 

2  Wright  V.  Hartford  Ins.  Co.,  3G  Wis.  522.  But  see  DoUiver  v.  St.  Joseph's 
Ins.  Co.,  128  Mass.  315. 

3  Mason  v.  Andes  Ins.  Co.,  23  U.  C.  (C.  P.)  37  ;  Kern-.  British  Am.  Ass.  Co., 
32  U.  C.  (Q.  B.)  509. 

*  Taylor  v.  JEtna.  Life  Ins.  Co.,  13  Gray  (Mass.),  434;  Miller  v.  Eagle  L.  & 
H.  Ins.  Co.,  2  E.  I).  Smith  (N.  Y.  C.  C.  P.)  268 ;  Peacock  v.  N.  Y.  Life  Ins.  Co., 
1  Bosw.  (N.  Y.  Superior  Ct.)  338;  Mercantile  Ins.  Co.  v.  Holthaus,  43  Mich. 
423. 

6  Taylor  v.  Roger  Williams  Ins.  Co.,  51  N.  H.  50. 

6  1861,  c.  34,  §  5. 

7  Bailey  v.  Hope  Ins.  Co.,  56  Me.  474  ;  post,  §  474. 

1082 


CH.  XXV.]  OF   THE   NOTICE,   ETC.  [§  467 

amined  on  oath.  And  a  refusal,  after  a  partial  examination, 
to  submit  to  further  proper  examination,  will  have  the  same 
effect.^  But  where  the  examination  has  been  once  completed, 
no  new  examination  can  be  required.^  Whetlier  the  conduct 
of  the  insured  amounts  to  a  refusal  may  become  a  question  of 
fact  for  a  jury.^  The  demand  itself  for  an  examination  must 
be  made  within  reasonable  time,  and  it  is  not  reasonable  to 
Avait  till  after  action  brought,  or  till,  proofs  having  l)cen  filed, 
payment  has  become  due.^  Where  the  insurers  exercise  their 
right  to  make  an  examination  of  the  insured  on  oath,  and  say 
nothing  of  other  proofs,  this  will  be  taken  as  and  for  the 
furnishing  of  the  proofs  required.^  In  such  an  examina- 
tion the  insured  is  only  bound  to  answer  such  questions  as 
have  a  material  bearing  upon  the  insurance  and  the  loss.^  If 
the  assured  is  bound  to  produce  such  evidence  as  the  insurers 
should  reasonably  require,  it  will  perhaps  be  for  the  jury  to 
say  if  the  requirement  has  been  complied  with.^  What  is 
"sufficient  proof"  would  be  for  the  court.^ 

And  it  may  be  said,  generally,  that  the  tendency  of  the 
courts  in  the  matter  of  preliminary  proofs  is  to  hold,  as  in  the 
case  of  immaterial  statements  and  such  as  do  not  concern 
the  risk  made  warranties  by  express  stipulation,  that  a  sub- 
stantial compliance  is  all  that  is  necessary  ;  and  in  some  cases 
the  substitution  of  equivalents  has  been  allowed.^ 

§  467.  Life  Insurance  ;  Preliminary  Proof  ;  Family  Physician. 
—  That  the  insurers  may  have  an  opportunity  the  better  to 
investigate  the  causes  of  death  for  their  own  satisfaction,  if 
they  so  desire,  it  is  usually  provided  that  the  preliminary 
proofs  shall  give  the  name  or  names  of  the  attending  physician 

1  Bonner  v.  Home  Ins.  Co.,  13  Wis.  677  ;  Harris  v.  Phoenix  Ins.  Co.,  35  Conn. 
310. 

2  Moore  v.  Protection  Ins.  Co.,  29  Me.  97. 

8  Piiillips  v.  Protection  Ins.  Co.,  14  Mo.  220. 
*  Aurora  Ins.  Co.  v.  Johnson,  46  Ind.  315. 
6  Badger  v.  Piioenix  Ins.  Co.,  49  Wis.  389. 

6  Titus  V.  Glens  Falls  Ins.  Co.,  81  N.  Y.  410  ;  Insurance  v.  Weides,  14  Wall. 
(U.  S.)  375. 

'  Fawcett  v.  Liverpool,  &c.  Ins.  Co.,  27  U.  C.  (Q.  B.)  225. 
8  North  American  Life  Ins.  Co.  v.  Burroughs,  69  Pa.  St.  43. 

3  See  ante,  §  163. 

1083 


§  468]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.        [CH.  XXV. 

or  physicians ;  and  where  a  friend  and  neiglibor  of  tiie  de- 
ceased, Avho  was  a  regular  physician,  but  vvlio  had  abandoned 
the  practice  of  his  profession,  was  called  in  because  it  was 
deemed  advisable  to  have  the  advice  of  a  physician  at  once, 
and  before  the  possible  arrival  of  the  regular  family  physi- 
cian, who  had  been  summoned  and  in  due  time  attended,  it 
was  held  that  by  the  attending  physician  was  meant  the  usual 
family  physician,  and  his  name  only  need  be  given  in  the  pre- 
liminary proof.^  [An  unverified  surgeon's  certificate,  not  giv- 
ing the  extent  of  damage,  is  insufficient  proof  of  loss.^J 

§  468.  Preliminary  Proof  ;  Waiver.  —  But  the  incomplete- 
ness and  even  non-production  of  all  preliminary  proof  may 
be  waived,  and  will  be  excused  on  the  ground  of  waiver,  by 
the  insurers,  if  their  conduct  is  such  as  to  induce  delay,  ^  or  to 
render  the  production  or  correction  useless  or  unavailing,  or 
as  to  induce  in  the  mind  of  the  insured  a  belief  that  no  proofs 
will  be  required,  as  where  an  agent  of  the  insurers  has  col- 
lected the  proofs  himself,*  or  that  those  already  furnished, 
though  in  fact  defective,  are  satisfactory,  and  therefore  suf- 
ficient. If  the  insurers  intend  to  insist  upon  defects  in  the 
preliminary  proof,  they  should  indicate  their  intention  in 
such  a  way  that  the  insurer  may  not  be  deceived  into  a  false 
security,  and  at  such  time  that  he  shall  have  opportunity  to 
supply  the  defects.  If  they  wish  further  information  they 
should  point  out  in  what  respect,  or  they  will  be  presumed  to 
be  content  with  what  has  been  furnished.^  And  the  burden 
of  proof  of  notice  of  the  defect  is  on  the  insurers.  "  It  is  to  be 
observed,"  say  the  court  in  another  case,^  "  that  it  is  the  duty 
of  the  insurers,  pending  the  consideration  of  the  proofs  of  loss, 
to  bear  themselves  with  all  good  faith  towards  the  claimant, 

1  Gibson  i;.  American  Mut.  Life  Ins.  Co.,  37  N.  Y.  (10  Tiff.)  580. 

2  [Welsh  V.  Des  Moines  Ins.  Co.,  71  Iowa,  337,  Cli.  211,  Laws  of  1880,  §  3.] 

3  Hutchinson  v.  Niagara  Ins.  Co.,  39  U.  C.  (Q.  B.)  483;  Georgia  Ins.  Co.  v. 
Kinnier,  28  Grat.  (Va.)  88. 

4  Kennedy  v.  Home  Ins.  Co.  (Tenn.),  6  Ins.  L.  J.  359. 

5  Charleston  Ins.  Co.  v.  Neve,  2  McMuUan  (S.  C),  237  ;  Lewis  v  Monmouth 
Mut.  Fire  Ins.  Co.,  52  Me.  492;  Winneslieik  Ins.  Co.  v.  Schueller,  60  111.  465; 
Post  V.  iEtna  Ins.  Co.,  43  Barb.  (N.  Y.)  351  ;  Killips  v.  Putnam  Fire  Ins.  Co.,  28 
Wis.  472;  O'Conner  v.  Hartford  Fire  Ins.  Co,  31  Wis.  160. 

6  Harris  v.  Phoenix  Ins.  Co.,  35  Conn   310. 

1084 


CH.  XXV.]  OF   THE   NOTICE,   ETC.  [§  468 

and  if  they  are  dissatisfied  with  the  proof  furnished,  and 
have,  or  have  not,  the  right  to  demand  further  proof  before 
their  liability  becomes  fixed,  they  ought  to  make  l^nown  to 
the  assured  the  fact  and  the  nature  of  these  demands  without 
unnecessary  delay.  Otherwise  they  will  be  held  to  have 
waived  their  rights  in  this  regard."  As  deficiencies  in  the 
preliminary  proof  may  be  supplied  whenever  objection  to  pay 
the  loss  is  put  upon  that  ground,  good  faith  on  the  part  of 
the  insurers  requires  that,  if  they  mean  to  insist  upon  formal 
defects,  they  should  apprise  the  insured  of  the  deficiencies,  or 
put  their  refusal  upon  that  ground,  as  well  as  others,  so  as 
to  give  him  an  opportunity  to  supply  the  defect  before  it  is 
too  late.i  Thus,  where  the  insurers  refuse  to  pay  on  special 
grounds,  as  that  the  contract  was  never  completed,^  or  that 
the  insured  had  no  interest,^  or  any  other  grounds  having  no 
reference  to  the  sufficiency  or  insufficiency  of  the  preliminary 
proof,  it  is  a  waiver  of  their  right  to  object  to  any  deficiency 
in  this  particular.*  So  upon  the  ground  of  inconsistency  with 
an  intention  to  require  further  or  better  proofs,  part  payment 
of  a  loss,  or  a  promise  to  pay  it,  or  an  adjustment,  without 
objection  to  the  absence  or  sufficiency  of  preliminary  proof, 
is  a  waiver.^      Where  the  reinsurers  stipulate  that  the  re- 

1  ^tna  Fire  Ins.  Co.  v.  Tyler,  16  Wend.  (N.  Y.)  85;  Bodle  v.  Chenango 
County  Mut.  Ins.  Co.,  2  Comst.  (N.  Y.)  53;  St.  Louis  Ins.  Co.  v.  Kyle,  11  Mo. 
278;  O'Niel  v.  Buffalo  Fire  Ins.  Co.,  3  Comst.  (N.  Y.)  122;  Clark  v.  New  Eng- 
land Ins.  Co.,  6  Cush.  (Mass.)  342;  Insurance  Co.  v.  Connor,  5  Harris  (Pa.), 
136;  McMasters  v.  West  Chester  County  xMut.  Ins.  Co.,  25  Wend.  (N.  Y.)  379  ; 
post,%  488;  Hibernia  Ins.  Co.  y.  Meyer,  39  N.J.  482;  Mercantile  Ins.  Co.  v. 
Holthaus,  43  Mich.  423 ;  Planters'  Ins.  Co.  v.  Deford,  38  Md.  .382 ;  Tisdale  v. 
Mut.  Benefit  Ins.  Co.,  91  U.  S.  2-38 ;  Mason  v.  Citizens'  Ins.  Co.,  10  W.  Va. 
572 ;  Madsden  v.  Plioenix  Ins.  Co.,  1  S.  C.  n.  s.  24. 

2  Tayloe  v.  Merchants'  Ins.  Co.,  9  How.  (U.  S.)  390. 

3  Coursin  v.  Penn  Ins.  Co.,  46  Pa.  St.  323. 

*  Heath  v.  Franklin  Ins.  Co.,  1  Cush.  (Mass.)  257.  The  New  Brunswick 
Supreme  Court  holds  mere  silence  on  or  after  production  of  preliminary  proof 
to  be  no  waiver.  But  if  objection  be  made  to  payment  of  loss  on  other 
grounds,  it  is  evidence  of  a  waiver,  on  the  ground  of  defective  proof.  Mc- 
Manus  v.  Minn.  Ins.  Co.,  6  Allen  (N.  B.),  315. 

5  Westlake  v.  St.  Lawrence  County  Mut.  Ins.  Co.,  14  Barb.  (N.  Y.)  206  ; 
Hibernia  Ins.  Co.  v.  O'Connor,  29  Mich.  241  ;  Eastern  R.  R.  Co.  c.  Relief  Ins. 
Co.,  105  Mass.  570  ;  Owen  v.  Farmers',  &c.  Ins.  Co.,  57  Barb.  (N.  Y.)  518  ;  State 
Ins.  Co.  V.  Todd,  83  Pa.  St.  272. 

1085 


§  469]  INSUEANCE :    FIRE,   LIFE,   ACCIDENT,   ETC.        [CH.  XXV. 

insured  policy  is  subject  to  the  conditions  of  settlement  as  set 
forth  in  the  latter,  no  preliminary  proof  need  be  furnished  by 
the  latter  to  the  former.^ 

§  469.  Preliminary  Proof;  Waiver  ;  General  Denial  of  Lia- 
bility.—  A  distinct  denial  of  liability  and  refusal  to  pay,  on 
the  ground  that  there  is  no  contract,  or  that  there  is  no  lia- 
bility, is  a  waiver  of  the  condition  requiring  proof  of  the  loss.^ 
It  is  equivalent  to  a  declaration  that  they  will  not  pay,  thougli 
the  proof  be  furnished  ;  and  to  require  the  presentation  of 
proof  in  such  a  case,  when  it  can  be  of  no  importance  to 
either  party,  and  the  conduct  of  the  party  in  favor  of  whom 
the  stipulation  is  made  has  rendered  it  practically  superflu- 
ous, is  but  an  idle  formality,  tlie  observance  of  whicli  the  law 
will  not  require.  So  if  the  insurers  decline  to  pay  without 
giving  any  reason  upon  which  to  rest  their  refusal,  such  a 


1  Consolidated,  &c.  Fire  Ins.  Co.  v.  Cashow,  41  Md.  59. 

2  [A  refusal  to  pay  on  other  grounds  or  a  denial  of  liability  without  giving 
reasons,  waives  the  furnishing  of  proofs,  or  defects  in  them  if  tliey  have  been 
furnished.  Phoenix  Ins.  Co.  v.  Spiers,  87  Ky.  285  ;  Continental  Ins.  Co.  v.  Ruck- 
man,  127  111.  364;  Com.  Union  Ass.  Co.  v.  Scammon,  126  111.  355;  Protective 
Union  v.  Wiiitt,  36  Kans.  760  ;  Daul  v.  Firemen's  Ins.  Co.,  35  La.  Ann.  98  ;  Fire- 
men's Ins.  Co.  V.  Floss  &  Co.,  67  Md.  403 ;  O'Brien  v.  Ohio  Ins.  Co.,  52  Mich. 
131  ;  Farmers'  Mut.  Ins.  Co.  v.  Moyer,  97  Pa.  St.  441  ;  Penn  Fire  Ins.  Co.  v. 
Dougherty,  102  Pa.  St.  5G8 ;  Bennett  v.  Maryland  Ins.  Co.,  14  Blatch.  422  at 
425;  Vos  v.  Robinson,  9  Johns.  192  at  196  ;  Bascli  v.  Humbohlt  Ins.  Co.,  35  N. 
J.  L.  429  at  432  ;  Martin  v.  Fishing  Ins.  Co.,  20  Pick.  389  at  398 ;  Lebanon  Mut. 
Ins.  Co.  V.  Erb,  112  Pa.  St.  149;  Walsh's  Admr.  v.  Vermont  Mut.  Fire  Ins.  Co., 
54  Vt.  351  ;  Mosley  v.  Vermont  Mut.  Fire  Ins.  Co.,  55  Vt.  142 ;  King  v.  Helda 
Fire  Ins.  Co.,  58  Wis.  508;  Scammon  v.  Commercial  Union  Ins.  Co.,  20  Brad. 
500;  Suppiger  v.  Covenant  Mut.  Ben.  Ass.,  20  Brad.  595;  New  Home  Life  Ins. 
Ass.  V.  Hagler,  23  Brad.  457  ;  Commercial  Union  Ass.  Co.  v.  State,  113  Ind.  331  ; 
Carson  v.  German  Ins.  Co.,  62  Iowa,  433 ;  Pendleton  v.  Knickerbocker  Life  Ins. 
Co.,  5  Fed.  Rep.  238  (Tenn.),  1881  ;  Millard  v.  Supr.  Coimcil  of  American  Le- 
gion of  Honor,  81  Cal.  340 ;  McComas  v.  Covenant  Mut.  Life  Ins.  Co.,  56  Mo. 
573  at  570  ;  Mensing  v.  American  Ins.  Co.,  36  Mo.  A  pp.  602  ;  Insurance  Co.  v. 
Lee,  73  Tex.  641.  Preliminary  proof  of  death  is  not  required  if  the  insurer  on 
being  notified  denies  his  liability  wholly.  Knickerbocker  Life  Ins.  Co.  v.  Pen- 
dleton, 112  U.  S.  696.  Refusal  to  pay  waives  proof  of  loss  permanently  if  for 
a  permanent  cause.  German-American  Ins.  Co.  v.  Davidson,  67  Ga.  11.  Tem- 
porarily if  for  a  temporary  cause.  Merchants',  &e.  Ins.  Co.  v.  Vining,  67  Ga. 
661  ;  68  Ga.  197.  Proof  of  loss  is  waived  when  the  company  places  its  refusal 
to  pay  on  the  sole  ground  that  the  insured  had  no  insurable  interest.  Grange 
Mill  Co.  V.  Western  Ass.  Co.,  118  111.  396.] 

1086 


CH.  XXV.]  OF   THE   NOTICE,   ETC.  [§  469 

refusal,  by  necessary  implication,  gives  the  assured  to  under- 
stand that  the  production  of  preliminary  proof  will  be  use- 
less,—  an  idle  ceremony,  which  the  law  will  not  require  him 
to  perform.!  So,  if  the  refusal  to  pay  is  upon  the  ground  that 
the  property  lost  was  not  included  in  the  risk,^  or  that  the 
insured  has  forfeited  his  right  to  recover  by  fraud.^  Even 
where  there  has  been  no  refusal  to  pay  the  loss,  the  prelim- 
inary proof  being  insufficient,  if  without  objection  on  that 
account  the  insurers  proceed  to  investigate  the  loss  for  them- 
selves, it  has  been  held  that  the  evidence  so  obtained  shall 
inure  to  the  benefit  of  the  insured  as  part  of  his  preliminary 
proof.^  So,  if  the  insurers  throw  any  obstacles  in  the  way  of 
the  insured  in  his  efforts  to  bring  the  proofs  within  the  re- 
quirements of  the  condition.  Thus,  where  imperfect  proofs 
have  been  filed  within  the  required  time,  and  the  insured 
afterwards,  upon  being  so  informed,  requests  copies,  which, 
after  repeated  evasions,  are  finally  refused,  corrected  proofs 
filed  after  the  expiration  of  the  limited  time  will  be  suffi- 

1  Allegre  v.  Maryland  Ins.  Co.,  6  H.  &  J.  (Md.)  408 ;  Harriman  v.  Queen  Ins. 
Co.,  49  Wis.  71  ;  Tayloe  v.  Merchants'  Ins.  Co.,  9  How.  (U.  S.)  390 ;  Graves  v. 
Wash.  Mar.  Ins.  Co.,  12  Allen  (Mass  ),  391  ;  Roberts,  Adm.,  v.  Cocke,  28  Grat. 
(Va.)  207;  Girard  Agr.,  &c.  Co.  v.  Merchants'  Life,  &c.  Co.  (Pa.),  9  W.  N.  C. 
425;  Goodwin  v.  Lancashire,  &c.  Ins.  Co.,  18  L.  C.  Jur.  (Q.  B.)  1  ;  West  Rock- 
ingham Ins.  Co.  V.  Sheets,  26  Grat.  (Va.)  854;  post,  §  471;  Aurora,  &c.  Ins. 
Co.  V.  Kranich,  .36  Mich.  289;  Bank  of  Oil  City  v.  Guardian,  &c.  Ins.  Co.,  C.  C. 
P.  (Pa.),  4  Ins.  L.  J.  473;  Portsmouth  Ins.  Co.  v.  Reynolds  (Va.),  9  Ins.  L.  J. 
60fi;  Akin  v.  Liverpool,  &c.  Ins.  Co.,  C.  Ct.  (Ark.),  6  Ins.  L.  J.  341 ;  Williams- 
burg Ins.  Co.  V.  Gary,  83  111.  453;  Continental  Ins.  Co.  v.  Randolph  (Ky.),  10 
Ins.  L.  J.  387.  Whether  the  facts  and  circumstances  amount  to  a  denial  or  re- 
fusal is  for  the  jury.  Farmers'  Ins.  Co.  v.  Moyer  (Pa.),  10  Ins.  L.  J.  514.  In 
Phoenix  Ins.  Co.  v.  Stevenson  (Ky.),  8  Ins.  L.  J.  922,  it  was  held  that  where, 
upon  presentation  of  defective  proofs,  plaintiff  was  notified  that  if  he  had  a 
claim  the  proofs  must  be  made  in  accordance  with  the  conditions  of  the  con- 
tract, and  also  that  he  had  forfeited  his  right  to  recover  on  another  ground  upon 
whicii  tlie  insurers  could  rely,  there  was  no  waiver.  But  their  notice  tliat  they 
sliall  insist  upon  strict  proof  does  not  seem  to  meet  the  objection  that  the  other 
notice  shows  that  the  proofs  will  be  nugatory.  Perhaps  the  assertion  of  the 
secretary,  that  they  have  no  risk,  made  on  the  erroneous  impression  that  the 
policy  had  been  properly  cancelled,  is  no  waiver:  Bennett  i;.  Lycoming  Ins. 
Co.,  67  N.  Y.  274  ;  though,  if  it  mislead  or  hinder,  why  is  it  not  an  estoppel  ? 

2  Franklin  Fire  Ins.  Co.  v.  Coates,  14  Md.  285. 

3  Peoria  Mar.  &  Fire  Ins.  Co.  v.  Whitehill,  25  111.  466. 

^  Sexton  V.  Montgomery  County  Mut.  Ins.  Co.,  9  Barb.  (N.  Y.)  191. 
VOL.  II.  -  25  1087 


§  469]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.        [CH.  XXV. 

cient.  In  other  words,  the  insurers  will  not  be  allowed  to 
insist  upon  a  deficiency  which  they  have  contributed  to  pro- 
duce.^ [When  the  agent  admitted  the  proofs  of  loss  and  the 
money  was  paid  into  court,  the  company  cannot  afterwards 
object  to  the  sufficiency  of  the  proofs.  Payment  of  the  money 
into  court  admits  the  cause  of  action  as  stated  in  the  declara- 
tion.2]  And  the  waiver  of  the  proof  is  a  waiver  of  the  condi- 
tion that  payment  is  not  to  be  made  till  a  limited  time  after 
the  proof  ;  so  that,  in  such  case,  suit  may  be  brought  at  once 
upon  the  denial  of  liability,  although  the  time  within  which, 
after  proof  of  loss,  the  payment  would  be  demandable  may 
not  have  expired.^ 

[If  proofs  have  been  furnished  at  the  time  of  refusal  to  pay 
on  other  grounds  than  such  as  may  relate  to  the  proofs,  or 
without  stating  grounds,  defects  in  the  proofs  are  waived 
thereby.*  "  We  do  not  consider  ourselves  answerable  for  the 
claim"  is  a  waiver  of  defects  in  proofs  of  loss  furnished.^  By 
asserting  a  cancellation  of  the  policy,  the  company  waives  the 
right  to  insist  on  better  proofs  of  loss.^  Where  the  claim  is 
disputed  by  the  company  on  other  grounds,  and  no  notice  is 
given  of  the  insufficiency  of  the  proofs  of  loss,  it  is  error  to 
dismiss  the  complaint  on  the  ground  that  the  proofs  are  de- 
fective.    The  company  should  have  given  notice  of  the  defects, 

1  Cornell  i'.  Le  Roy,  9  Wend.  (X.  Y.)  163.    And  see  ante,  §  361. 

2  [.Johnston  v.  Columbian  Ins.  Co.,  7  Johns.  315  at  318.] 

3  Nor.  &  N.  Y.  Trans.  Co.  v.  Western  Mass.  Ins.  Co.,  34  Conn.  561 ;  Williams- 
burg Ins.  Co.  V.  Cary,  83  111.  453.  The  case  of  Columbia  Ins.  Co.  v.  Lawrence, 
2  Pet.  (U.  S.)  25,  to  the  contrary,  has  not  been  followed  in  the  State  courts, 
except  in  Roumage  v.  Mechanics'  Ins.  Co.,  1  Green  (N.  J.),  where  it  was  held,  by 
a  divided  court,  that  a  refusal  to  pay  on  the  general  ground  that  the  claim  was 
believed  to  be  fraudulent  was  no  waiver.  But  in  Columbia  Ins.  Co.  v.  Law- 
rence, 10  Pet.  (U.  S.)  507,  tlie  insured  was  held  to  have  complied  Avitli  the 
condition  to  furnish  proof  within  reasonable  time,  though  five  years  after  tlie 
fire,  because  the  company,  by  not  objecting  before  the  first  trial,  had  misled  the 
insured  into  a  belief  of  the  sufficiency. 

*  [Whittle  t'.  Farmville  Ins.  &c.  Co.,  3  Hughes,  421  at  422;  Continental  Life 
Ins.  Co.  y.  Rogers,  119  111.  474;  Lycoming  Insurance  Co.  i'.  Dunmore,  75  111. 
14  at  16.] 

5  [Maryland  Ins.  Co.  v.  Bathurst,  5  G.  &  J.  159  at  238 ;  La  Socie'te',  &c.,y. 
Morris,  34  La.  Ann.  347  at  348.] 

6  [Ball,  &c.,  w.  Aurora  Ins.  Co.,  20  Fed.  Rep.  232  at  2.36.] 

1088 


CH.  XXV.]  OF    THE    NOTICE,    ETC.  [§  469  a 

SO  that  they  could  have  been  corrected. ^  Entire  repudiation  of 
a  policy  without  objection  to  the  proofs  implies  a  waiver  of 
defects  in  them.^  So,  receiving  proofs  without  objection  and 
defending  in  other  grounds,^  and  failure  to  designate  the  error 
on  wliich  the  company  bases  its  refusal  to  pay."*] 

§  469  a.  A  single  case  in  New  York  has  recently  led  to 
much  discussion,  and,  as  it  appears  by  the  case  itself,  to 
much  broader  apparent  decisions  than  were  called  for  by  the 
facts,  and  surprisingly  contradictory,  considering  tliat  the 
facts  appeared  to  be  substantially  the  same.  In  the  first, 
where  preliminary  proofs,  which  were  to  be  given  "  as  soon  as 
possible  "  after  notice,  were  not  furnished  for  more  than  two 
months  and  a  half,  during  which  the  insurers  repeatedly  inti- 
mated there  was  fraud,  it  was  held  that  upon  the  undisputed 
facts  the  question  of  reasonable  time  was  for  the  court ;  that, 
there  being  no  hindrances  or  delays,  the  proofs  were  not 
offered  within  a  reasonable  time  ;  that,  till  they  were  offered, 
the  msurers  had  a  right  to  keep  silent ;  and  that  their  refusal 
after  they  were  offered  to  pay  solely  on  the  ground  of  fraud 
was  no  estoppel  to  such  a  defence,  since  at  the  time  of  the 
refusal  the  insured  had  lost  all  rights  without  fault  of  the 
insurers,  and  were  in  no  way  prejudiced  or  misled,  and  that 
no  liability  can  be  reimposed  by  a  mere  waiver,  but  only 
by  a  new  agreement  upon  a  new  consideration,  or  by  acts 
which  operate  as  an  estoppel  against  the  insurer.^  Brink's 
case  ^  was  again  before  the  court,  where  it  was  said  that  it 
was  formerly  sent  back  for  trial,  on  the  sole  ground  that 
it  was  thought  by  a  majority  of  the  court  that  the  charge 
of  the  trial  judge,  to  the  effect  that  "  if  at  any  time  the  de- 
fendant objected  to  paying  the  loss  upon  the  ground  of  fraud, 
no  proofs  of  loss  need  be  served,"  was  too  broad,  and  might 
include  mere  incidental  declarations  not  indicating  a  fixed 

1  [Karelsen  v.  Run  Fire  Office,  45  Hun,  144,  147  ] 

2  [Rumsey  v.  Phoenix  Ins.  Co.,  1  Fed  Rep.  396  (N.  Y.)  1880.] 

3  [Donahue  v.  Windsor  Co.  Mut.  Fire  Ins.  Co.,  56  Vt.  374.] 
*  [Araer.  Cent.  Ins.  Co.  v.  Brown,  29  111.  App.  602.] 

5  Brink  v.  Hanover  Fire  Ins.  Co.,  70  N.  Y.  593,  citing  Beatty  v.  Lycoming 
Ins.  Co.,  66  Pa  St.  9. 

6  80  N.  Y.  108. 

1089 


§  469  B]       INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.         [CH.  XXV. 

purpose  on  the  part  of  the  company,  or  rehed  on  by  the  in- 
sured ;  that  the  facts  were  such  that  a  jury  would  be  justified 
in  finding  that  proof  was  made  "  as  soon  as  reasonably  pos- 
sible under  the  circumstances,"  and  that  the  defendants  of- 
fered hindrances  and  delays  whereon  they  could  be  estopped  ; 
and  that  it  is  now  the  established  doctrine  of  the  court  that 
no  new  consideration  is  necessary  to  support  a  waiver  which 
may  exist  when  there  is  no  technical  estoppel,  if  the  facts 
show  an  intention  to  waive. ^ 

[§  4(39  B.  Defects  -waived  by  Omission  of  the  Insurer  to  call 
attention  to  them  promptly  and  specifically,  and  give  Oppor- 
tunity for  Correction.^ — The  company  must  object  to  the  proofs 
within  a  reasonable  time,  and  what  is  a  reasonable  time,  being 
a  mixed  question  of  law  and  fact,  should  be  given  to  the  jury 
under  proper  instructions.'^  An  objection  to  the  proofs  comes 
too  late  at  the  trial.*  When  the  preliminary  proofs  contained 
"  James,"  etc.  instead  of  "  Joshua,"  but  no  objection  thereto  was 
then  made,  it  was  held  waived.  Good  faith  and  honest  deal- 
ing required  that  the  company  should  call  the  attention  of 
the  assured  to  defects  if  it  intended  to  rely  upon  them.^ 
When  the  agent  of  the  insurers  on  receiving  the  proofs  of 
loss  made  only  a  general  objection  thereto  pointing  out  no 
specific  defect,  the  company  cannot  thereafter  set  up  a  defect 
therein.^  An  objection  by  the  company  that  the  proofs  are 
*'  deficient  both  in  form  and  substance  "  is  too  general."     A 

1  Citing  Goodwin  v.  Mass.  &c.  Ins.  Co.,  73  N.  Y.  480,  and  Prentice  v.  Knick- 
erbocker Ins.  Co.  (N.  y.),  8  Ins.  L.  J.  708. 

2  [Ligon's  Adra'rs  v.  Insurance  Co.,  87  Tenn.  341  ;  Basch  v.  Humboldt  Mut. 
Fire  &  Mar.  Ins.  Co.,  35  N.  J.  L.  429;  Bartlett  v.  Union  Mut.  Fire  Ins.  Co.,  46 
Me.  500,  502 ;  Firemen's  Ins.  Co.  v.  Crandall,  33  Ala.  9  at  15 ;  Lycoming  v. 
Dunmore,  75  III.  14  at  16;  Rogers  v.  Traders'  Ins.  Co.,  6  Paige,  583  at  585; 
Thierolf  v.  Universal  Fire  Ins.  Co.,  110  Pa.  St.  37.  Company  must,  on  finding 
proofs  objectionable,  return  them  with  information  of  defects.  Universal 
Fire  Ins.  Co.  v.  Block,  109  Pa.  St.  535 ;  Insurance  Co.  v.  Cusick,  id.  157 ;  Ben 
Franklin  Fire  Ins.  Co.  v.  Flynn,  98  Pa.  St.  628 ;  Girard  Life  Ins.  &c.  Co.  v.  Mut. 
Life  Ins.  Co.,  97  Pa.  St.  15  ;  Travis  v.  Continental  Ins.  Co.,  32  Mo.  App.  198.] 

s  [Fire  Ins.  Cos.  r.  Felratli,  77  Ala.  194.] 

4  [Breckinridge  v.  Amer.  Cent.  Ins.  Co.,  87  Mo.  62.] 

5  [Works  V.  Farmers'  Mut.  Fire  Ins.  Co.,  67  Me.  281  at  282-283.] 
*  [Insurance  Co.  of  N.  A.  v.  Hope,  58  111.  75  at  78]. 

■^  [Myers  i\  Council  Bluffs  Ins.  Co.,  72  Iowa,  170.] 

1090 


CH.  XXV.]  OF   THE   NOTICE,   ETC.  [§  469  B 

delay  of  several  weeks  in  pointing  out  objections  waives 
them.i  Even  three  or  four  days  may  be  too  long  for  silence. 
Immediate  notice  of  defective  notice  or  proofs  must  be  given.^ 
If  the  company  refuse  to  point  out  defects  and  afford  proper 
facilities  for  the  correction  of  proofs,  the  imperfections  are 
waived,  and  the  correspondence  between  the  company  and 
the  attorney  of  the  assured  is  competent  evidence.^  If  proofs 
designating  the  policy  by  a  wrong  number  are  received  by  the 
company,  and  it  neglects  to  reply  to  an  inquiry  whether 
the  proofs  are  sufificient,  the  defect  is  waived.*  If  the  com- 
pany knowing  all  material  facts  makes  no  objection  to  the 
form  or  sufficiency  of  the  proofs  or  to  the  source  whence  they 
came,  until  after  a  satisfactory  adjustment  is  reached,  all  such 
objections  are  waived.^  A  loss  occurred  February  4.  Proofs 
were  sent  to  the  insurers  February  18.  They  were  received  by 
the  companies,  and  no  objection  was  made  to  their  sufficiency. 
During  the  same  month  the  plaintiffs  and  the  agents  of  the 
several  companies  met  and  adjusted  the  loss.  Afterward  the 
companies  repudiated  the  adjustment  on  the  ground  that 
the  agents  had  no  authority  to  make  it,  still  making  no  objec- 
tion to  the  proofs.  At  the  trial,  however,  it  was  put  forth  in 
defence  that  the  proofs  w^ere  informal  and  insufficient,  but  it 
was  held  that  the  above  facts  warranted  the  jury  in  finding 
a  waiver  of  the  imperfection.^  Negotiations  for  adjustment 
without  mentioning  defects  of  proofs,  are  a  strong  waiver.''  So 
is  subjecting  the  insured  to  a  private  examination.^  So,  where 
a  company  receives  proofs  of  loss  without  objection,  and 
though  twice  asked  in  writing  if  anything  more  were  required 


1  [People's  Fire  Ins.  Co.  v.  Pulver,  127  111.  246.] 

2  [Jones  V.  Mechanics'  Ins.  Co.,  -'36  N.  J.  L.  29  at  37  ;  Patterson  v.  Triumph  Ins. 
Co.,  64  Me.  500  at  504;  Works  v.  Farmers'  Mut.  Fire  Ins.  Co.,  57  Me.  281  at 
283;  Swan  v.  Liv.,  Lond.,  &  G.  Ins.  Co.,  52  Miss.  704;  Savage  v.  Corn  Exch.  &c. 
Ins.  Co.,  4  Bosw.  1  at  13.] 

3  [Birmingham  Fire  Ins.  Co.  v.  Pulver,  126  111.  329.] 
*  [Parks  V.  Conn.  Ins.  Co.,  26  Mo.  Apn.  511.] 

6  [Biddeford  Sav.  Bank  v.  Dwelling-House  Ins.  Co.,  81  Me.  566.] 
^  [Butterworth  v.  Western  Ass.  Co.,  1.32  Mass.  402.] 
^  [Little  V.  Phoeni.x  Ins  Co.,  123  Mass.  380  at  387.] 
8  [Zielke  v.  London  Ass.  Co ,  64  Wis.  442.] 

1091 


§  469  C]        INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.        [CH,  XXV. 

made  no  reply .^  So  refusal  to  return  proofs  for  correction 
when  requested,  waives  their  defects.^  As  to  the  definiteness 
of  specification  necessary,  it  has  been  held  that  an  insurer 
who  rejects  the  proofs,  referring  the  plaintiff  to  the  condition 
of  the  policy  which  defines  what  they  must  contain,  and  say- 
ing that  he  insists  on  an  exact  compliance  with  that  condi- 
tion, sufficiently  specifies  the  defects  in  the  proofs,  and  there 
is  no  waiver."^] 

[469  C.  Waiver  by  Proceeding  to  investigate  Loss  and  Ad- 
just it,  &c.  —  Any  action  of  the  company  based  on  facts 
known  to  them,  inducing  the  insured  to  believe  that  the  ren- 
dition of  proofs  would  be  a  vain  act,  is  equal  to  an  ex])ress 
waiver,  even  though  the  duty  to  furnish  proofs  is  imposed  by 
statute  as  well  as  agreement.*  Where  on  notice  of  total  loss, 
the  secretary  went  to  the  place,  got  a  carpenter's  estimate  for 
rebuilding,  made  the  insured  an  offer,  and  agreed  witli  the 
agent  of  another  company  as  to  their  proportions  of  the  loss, 
the  facts  properly  went  to  the  jury  on  the  question  of  waiver 
of  formal  proofs.^  When  an  adjuster  visits  the  scene  soon 
after  the  loss  and  makes  an  offer  of  compromise,  and  blank 
proofs  are  filled  uj)  by  the  assured  in  presence  of  the  com- 
pany's officers,  the  facts  properly  go  to  the  jury  on  the  ques- 
tion of  a  waiver  of  strict  proof  of  loss.^  If  tlie  company  takes 
notice  of  a  loss  and  prepares  such  proofs  as  it  deems  necessary 
to  an  adjustment,  the  assured,  until  notice  to  the  contrary, 
may  assume  that  further  notice  and  proof  are  not  required.'' 
Refusal  to  supply  blanks  for  proof  of  loss  on  application  within 
the  proper  time  is  evidence  of  waiver  to  goto  the  jui-y.^  If 
the  agent,  though  objecting  to  the  proofs  of  loss  as  insuffi- 
cient, proceeds  with  an  investigation  and  made  a  full  report, 

1  [Eliot  Five  Cent  Savings  Bk.  v.  Commercial  Ass.  Co.,  142  Mass.  142. J 
~  [Findersen  v.  Metropole  Fire  Ins.  Co.,  57  Vt.  620.] 
3  [Gauclie  v.  Lond.  &c.  Ins.  Co.,  10  Fed.  Rep.  847  ;  4  Woods,  102.] 
*  [Boyd  V.  Cedar  Rapids  Ins.  Co.,  70  Iowa,  325  ] 

5  [Susqnelianna  Mut.  Fire  Ins.  Co.  v.  Staats,  102  Pa.  St.  529;  New  Orleans 
Ins.  Ass.  V.  Matthews,  65  Miss.  301.] 

6  [Argall  V.  Insurance  Co.,  84  N.  C.  355.] 

1  [Amer.  Cent.  Ins.  Co.  v.  Sweetser,  116  Ind.  .370.] 
8  [Dial  V.  Valley  Mut.  Life  Ass.,  29  S.  C.  560.] 

1092 


CH.  XXV.]  OF   THE   NOTICE,   ETC.  [§  470 

the  question  of  waiver  of  the  defect  in  the  proofs  is  for  the 
jury.^  If  an  authorized  agent  waives  further  proofs  and 
promises  to  settle,  the  company  is  estopped  from  setting  up 
faihire  of  proofs. ^  Acts  relied  on  as  a  waiver  of  proofs  nmst 
take  place  before  suit.^  Waiver  of  proofs  rests  on  the  doc- 
trine of  estoppel.*] 

[469  D,  Who  may  Waive.  —  An  express  waiver  by  an  au- 
thorized agent  is  conclusive.^  An  adjusting  agent  may  waive 
proofs  of  loss  by  refusing  to  pay  solely  on  other  grounds^  or 
by  stating  that  nothing  further  will  be  required.'^  A  general 
agent,  unless  his  power  is  restricted  to  the  knowledge  of  the 
plaintiff,  has  power  to  waive  proofs  of  loss,  but  he  cannot 
give  an  oral  waiver  when  the  policy  requires  a  written  one. 
And  a  local  agent  who  has  never  been  held  out  as  possessing 
any  authority  except  to  receive  proposals,  fix  rates,  and 
issue  policies,  cannot  waive  the  condition  as  to  proofs.^ 
When  it  appears  that  the  agent  had  authority  to  receive 
applications,  take  risks,  settle  rates  of  premium,  and  issue 
policies,  this  will  not  tend  to  show  that  he  was  a  general 
agent  who  could  waive  preliminary  proofs  of  loss.^] 

§  470.  Preliminary  Proof;  Particular  Defects  pointed  out; 
Waiver  of  others.  —  So  where  the  insurers  place  their  refusal 
to  pay  the  loss  expressly  upon  some  particular  defect  in  the 
preliminary  proofs,  they  cannot  afterwards  object  to  other 
defects  not  then  specified  ;^°  or  upon  grounds  entirely  distinct 
from  such  defects,  making  no  objection  to  these,  as  where  the 
insured  gives  notice  of  his  loss,  and,  having  lost  his  policy, 

1  [Enterprise  Ins.  Co.  v.  Parisot,  3-5  Ohio  St.  3-5.1 

2  [East  Tex.  Fire  Ins.  Co.  v.  Dyches,  56  Tex.  565.] 

3  [Smith  V.  State  Ins.  Co.,  64  Iowa,  716.] 

*  [Hanna  v.  Amer.  Ins.  Co.,  36  Mo.  App.  538.] 

5  [Perry  v.  Mechanics'  Mut.  Ins.  Co.,  11  Fed.  Rep.  478  (R.  I.)  1882.] 

6  [A^tim  Ins.  Co.  v.  Shryer,  85  Ind.  362.] 

7  [Ind.  Ins.  Co.  v.  Capehart,  108  Ind.  270.-] 

8  [Smith  );.  Niagara  Fire  Ins.  Co.,  60  Vt.  682.] 

9  [Lohnes  v.  Insurance  Co.  of  N.  A.,  1'21  Mass.  4-30  at  441  ] 

10  Pliillips  V.  Prot.  Ins.  Co.,  14  Mo.  220;  Rippstein  v.  St.  Louis  Ins.  Co.,  57 
Mo.  86 ;  [Fire  Ins.  Cos.  v.  Felrath,  77  Ala.  194.  An  objection  only  to  tlie  cer- 
tificate of  the  magistrate  before  wliom  the  prehminary  proofs  were  made,  is  a 
waiver  of  any  defect  in  their  form.   Bailey  v.  Hope  Ins.  Co.,  56  Me.  474  at  482.] 

1093 


§  471]  INSUEANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.        [CH.  XXV. 

requests  a  copy,  for  which  he  expresses  his  willingness  to 
pay,  in  order  that  he  may  furnish  the  necessary  proofs,  but 
receives  a  reply  stating  that  his  claim  is  rejected  for  the 
reason  that  the  policy  had  been  cancelled  for  non-payment  of 
assessments.  Such  action  on  the  part  of  the  insurers  relieves 
the  insured  from  the  necessity  of  furnishing  any  preliminary 
proof.i 

§  471.  Preliminary  Proof;  "What  is  not  a  Waiver. — But  a 
general  statement  of  a  travelling  agent,  to  the  insured,  that 
"  the  matter  would  be  all  right  with  the  company,"  will  not 
amount  to  a  waiver  of  "  notice  specifying  the  amount  of  loss, 
the  manner  of  it,  and  other  particulars."  ^  Nor  will  a  reply 
by  the  president  of  the  company  to  the  question.  What  fur- 
ther proof  is  required  ?  that  the  policy  will  show,  be  a  waiver 
of  proof  or  of  defects  therein.^  Nor  is  a  reply  of  the  presi- 
dent to  an  explanation  of  the  reason  of  failure  to  give  notice, 
that  the  company  would  be  disposed  to  do  what  is  right, 
amount  to  such  waiver ;  *  nor  a  mere  proposal  to  arbitrate, 
the  proposition  being  accompanied  by  a  statement  that  the 
party  proposing  has  no  power  to  waive  ;  °  nor  a  letter  from  the 
secretary,  denying  responsibility,  stating  that  the  proofs  are 
unsatisfactory,  and  reserving  all  objections  to  a  recovery.^ 
And  a  waiver  of  notice  is  not  a  waiver  of  the  preliminary  proof, 
or  of  the  particular  account,  when  they  are  treated  by  the 
policy  as  distinct  and  separate  acts.'^  Where  proofs  are  not 
forwarded  until  after  the  expiration  of  the  time  limited,  and 
then  liability  is  denied  explicitly  on  the  ground  of  the  neg- 
lect to  forward  proofs  in  due  time,  as  well  as  upon  other 
grounds,  this  is  no  waiver  of   the  first  ground.^     Nor  is  an 

1  Blake  v.  Exchange  Mut.  Ins.  Co.,  12  Gray  (Mass.),  265;  Hartford  Prot.  Ins. 
Co.  V.  Harmer,  22  Ohio,  452 ;  Noyes  v.  Washintjton  County  Mut.  Ins.  Co.,  30  Vt. 
659;  Turley  v.  North  Am.  Fire  Ins.  Co.,  25  Wend.  (N.  Y.J  374;  Unthank  y. 
Travellers'  Ins.  Co.,  C.  Ct.  (Ind.),  4  Bissell,  357. 

2  Boyle  V.  North  Carolina  Mut.  Ins.  Co.,  7  Jones,  Law  (N.  C),  373. 

3  Spring  Garden  Mut.  Ins.  Co.  v.  Evans,  9  Md.  1. 

*  Smith  V.  Haverhill  Mut.  Fire  Ins.  Co.,  1  Allen  (Mass.),  297. 
6  Niagara  Dist.  Mut.  Fire  Ins.  Co  v.  Lewis,  12  U.  C.  (C.  P.)  15. 

6  Citizens'  Ins.  Co.  v.  Doll,  35  Md.  89. 

7  Desilver  v.  State  Mut.  Ins.  Co.,  38  Pa.  St.  130. 

8  Blossom  V.  Lycoming  Ins.  Co.,  64  N.  Y.  162  ;  a7ite,  §  464. 

1094 


CH.  XXV.]  OF   THE   NOTICE,    ETC.  [§  472 

examination  of  the  premises,  accompanied  by  notice  to  pro- 
duce the  proofs.^ 

[Where  no  word  or  act  has  been  said  or  done  by  the 
assurer  to  mislead  the  assured  or  throw  him  off  his  guard, 
mere  silence  is  not  enough  to  infer  waiver  of  certificate 
of  loss.2  Where  the  assured  claimed  payment  for  the  loss 
of  a  horse  insured  against  lightning,  although  he  died  of 
disease,  a  refusal  to  pay  if  the  horse  died  from  any  other  cause 
than  lightning  is  not  a  waiver,  but  rather  a  demand  of  proofs 
of  loss  by  the  cause  insured  against.^  That  the  agent  has  esti- 
mated the  damage,  and  the  estimate  is  accepted  by  the  assured, 
is  no  waiver  of  the  proofs.^  Nor  acceptance  of  an  inventory  or 
other  such  act  by  the  agent,  if  at  the  same  time  lie  tells  the  in- 
sured that  the  stipulated  proofs  must  be  furnished.^  Evidence 
of  a  submission,  by  the  assured  and  the  insurers,  of  the 
amount  of  the  loss  to  arbitrators,  is  not  a  waiver  of  proofs  of 
loss  by  the  latter,  so  as  to  let  in  a  trustee  process,  if  the  company 
states  in  its  answer  that  it  has  never  waived  the  conditions  of 
the  policy.^] 

§  472.  Preliminary  Proof  ;  Evidence.  —  In  Hincken  v.  Mutual 
Benefit  Life  Insurance  Company,''  a  question  arose  as  to  the 
amount  of  evidence  necessary  to  sustain  a  verdict  in  favor  of 
the  insured  upon  the  allegation  of  having  furnished  the  re- 
quired preliminary  proof.  And  it  was  held  that,  when  at  the 
trial  a  witness  testified  that  he  had  delivered  the  preliminary 
proofs  within  the  required  time,  but  nothing  further  appears 
as  to  what  they  were,  except  that  they  then  were  in  the  pos- 
session of  the  insurers,  and  that  no  objection  had  been  made 
known,  this  was  evidence  that  the  preliminary  proofs  were  in 
accordance  with  the  requirements  of  the  policy,  and  sufficient 
to  sustain  the  verdict.^ 

1  Brush  V.  Insurance  Co.,  6  Phila.  252. 

2  [Muellers.  South  Side  Fire  Ins.  Co.,  87  Pa.  St.  399  at  405;  Cent.  City 
Ins.  Co.  V.  Gates,  18  Ins.  L.  J.  761  (Ala.),  May  2,  1889.] 

3  [Cornett  i\  Phenix  Ins.  Co.,  67  Iowa,  .388.] 

*  [McKean  v.  Commercial  Union  Ins.  Co.,  21  N.  B.  R.  583.] 

5  [Life  Ass.  V.  Goode,  71  Tex.  90.] 

6  [Pettingill  v.  Hinks,  9  Gray,  169  at  170.] 
^  50  N.  Y.  657  ;  affirming  s.  c.  6  Lans.  21. 

8  See  also  Warner  v.  Peoria  Mar.  &  Fire  Ins.  Co.,  14  "Wis.  318. 

1095 


§  473]  INSURANCE  :    FIRE,  LIFE,   ACCIDENT,   ETC.        [CH.  XXV. 

§  473.  Preliminary  Proof  ;  Stipulation  as  to  Waiver.  —  And 
the  insurers  have  been  held  to  have  waived  their  right  to  in- 
sist upon  defects  in  preliminary  proof,  even  though  in  one  of 
the  by-laws  it  is  expressly  agreed  and  declared  by  the  parties 
that  no  condition,  stipulation,  or  clause  contained  in  the  policy 
shall  be  waived,  except  by  writing  indorsed  on  the  policy,  and 
all  the  by-laws  are  printed  as  conditions  of  insurance,  and 
payment  of  loss  is  made  subject  to  proof  thereof  in  con- 
formity to  the  conditions,  it  appearing  that  after  informal  and 
defective  preliminary  proofs  had  been  delivered  in,  the  presi- 
dent and  secretary  of  the  company  examined  the  premises, 
and  had  interviews  with  the  insured  before  the  expiration  of 
the  time  within  which  said  proofs  were  to  be  given,  and 
neither  they  then,  nor  the  insurers  afterwards,  made  any 
objection  to  the  form  or  sufficiency  of  the  preliminary  proofs, 
while  there  was  yet  time  to  remedy  defects,  but  put  their  re- 
fusal to  pay  on  other  and  distinct  grounds.  Regarding  the 
case  as  one  of  some  difficulty,  the  court  say :  "  How  far  the 
provisions,  the  form  of  the  notice  and  proofs  of  loss,  after  a 
valid  contract  has  been  made  and  a  loss  taken  place  under  it, 
can  be  regarded  as  conditions  of  the  contract  itself,  it  is  not 
necessary  to  determine,  nor  whether  their  being  classed  under 
the  designation  of  conditions  of  insurance  could  change  the 
nature  and  purpose  of  the  stipulations  themselves ;  for  it 
seems  to  us  that  the  question  is  not  as  to  the  provisions  of  the 
contract,  but  as  to  the  performance  of  the  provisions.  The 
plaintiff  is  not  seeking  to  set  up  a  contract  from  which  a 
material  provision  has  been  omitted  by  the  oral  consent  of 
the  officers  of  the  company.  The  policy  contained  the  usual 
provisions  as  to  notice  and  proofs  of  loss.  Upon  the  happen- 
ing of  the  loss  the  plaintiff  sent  to  the  defendants  certain 
notices  and  proofs,  in  pursuance  of  the  requisition  of  the  by- 
laws upon  the  subject.  If  the  notices  were  defective,  good 
faitli  on  the  ])art  of  the  underwriters  required  them  to  give 
notice  to  the  insured.  If  they  failed  to  do  so ;  if  they  pro- 
ceeded to  negotiate  with  the  plaintiff  without  adverting  to 
the  defects ;  if,  still  further,  they  put  their  refusal  to  pay  on 
other  and  distinct  grounds,  —  they  are,  upon  familiar  princi- 
1096 


CH.  XXV.]  OF    THE    NOTICE,    ETC.  [§  473  A 

pies  of  law,  estopped  to  set  up  and  rely  upon  the  defective 
notices.  The  law  assumes  that  the  notices  were  correct,  and 
will  not  listen  to  the  defendant  when  he  seeks  to  show  the 
contrary.!  If  the  defendant  relied  upon  any  exemption  from 
the  obligations  of  the  policy,  or  any  modification  of  them  by 
the  agents  or  officers  of  the  company,  or  any  addition,  lie 
must  show  such  exemption,  modification,  or  addition  by  in- 
dorsement upon  the  policy.  But  the  question  whether  a 
stipulation  as  to  notice  and  proofs  of  loss  has  been  fulfilled, 
or  whether  the  defendant  is  in  a  condition  to  be  heard  upon 
that  question,  must  be  tested  by  the  ordinary  rules  of  law. 
There  is  a  time  when  objections  in  matters  of  form  must  be 
taken.  If  they  are  not  then  made,  they  never  can  be  made. 
The  law  does  not  say  the  procedure  was  perfect,  but  that  the 
question  is  not  open.  The  adherence  to,  and  liberal  applica- 
tion of  this  principle,  are  necessary  to  the  maintenance  of 
good  faith  and  fair  dealing  in  judicial  proceedings."^  It  is 
worthy  of  observation  that  this  is  the  language  of  a  court 
which  has  resolutely  resisted  what  appears  to  be  the  general 
tendency  to  apply  the  doctrines  of  waiver  and  estoppel  in 
favor  of  the  insured,  where  there  has  been  a  clear  failure  to 
comply  with  the  express  and  essential  conditions  of  the  con- 
tract, but  where,  nevertheless,  it  would  be  inequitable  to 
permit  the  insurers  to  avail  themselves  of  such  a  failure  in 
defence  of  a  claim  for  damages. 

[§  473  A.  Provision  in  Policy  against  Waiver  except  by 
Writing,  inoperative  as  to  Notice  and  Proofs. — A  clause  to  the 
effect  that  no  act  of  the  company,  except  an  express  written 
declaration,  shall  waive  the  requirements  in  regard  to  proofs, 
will  not  prevent  the  company  from  estopping  itself,  by  act  in 
pais.  So  far  as  the  clause  is  intended  to  have  such  effect  it  is 
void,  for  a  man  cannot  contract  not  to  make  an  agreement 
that  the  law  allows  him  to  make  with  the  covenantee.^     A 

1  Vos  V.  Robinson,  9  Johns.  (N.  Y.)  192;  ^tna  Fire  Ins.  Co.  v.  Tyler,  IG 
Wend.  (N.  Y.)  401;  Heath  v.  Franklin  Ins.  Co.,  1  Cusli.  (Mass.)  257;  Clark  v. 
New  England  Mut.  Fire  Ins.  Co.,  6  id.  342.  See  also  Farmers',  &c.  Ins.  Co.  v. 
Meckes  (Pa.),  12  Reptr.  314  (1881).     And  see  ante,  §§  140,  363;  post,  §  611. 

■•^  Blake  v.  Exchange  Mnt.  Ins.  Co.,  12  Gray  (Mass.),  2G5. 

3  [Bowes  V.  Nat.  Life  Ins.  Co.,  20  N.  B.  R.  438.] 

1097 


§  474]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.        [CH.  XXV. 

provision  in  the  policy  that  no  condition  shall  be  waived  or 
annulled  except  by  indorsement  upon  it,  will  not  prevent  the 
waiver  of  proofs  of  loss  if  the  insurer  without  objecting  to 
their  absence  joins  in  proceedings  for  adjustment.^  In  spite  of 
such  a  condition  the  agent  may  have  authority  to  orally  waive 
proof  of  loss,  and  the  question  should  go  to  the  jury.^  Such 
a  provision  is  held  not  to  refer  to  stipulations  to  be  performed 
after  loss,  such  as  giving  notice  and  proof.-^] 

§  474.  Particular  Account.  —  The  particular  account  of  the 
loss  or  damage,  usually  required  as  a  part  of  the  preliminary 
proof,  demands  some  attention.  What  and  how  particular 
this  must  be  will  depend  upon  the  nature  of  the  property  in- 
sured. If,  for  instance,  it  be  a  dwelling-house,  a  statement 
that  it  was  totally  destroyed  on  a  given  day  will  be  sufficient, 
if  there  was  in  fact  a  total  loss.  If,  however,  there  is  a  par- 
tial loss,  the  extent  of  the  damage  should  be  stated.  So  in 
cases  of  insurance  upon  merchandise  and  personal  effects 
generally,  where  the  loss  is  only  partial,  the  particulars  of  the 
nature,  quality,  and  quantity  of  the  effects  and  of  the  dam- 
age sustained  should  be  given,  in  order  to  aid  the  insurers  to 
form  a  judgment  as  to  the  amount  of  the  loss.  It  is  an 
account,  in  its  technical  sense,  of  the  amount  that  is  re- 
quired, and  not  a  statement,  conjectural  or  otherwise,  of  the 
real  or  supposed  causes  of  the  loss  or  damage.  In  other 
words,  the  particular  account  is  to  be  an  account,  and  not  an 
accounting  for  the  loss  or  damage.  If  this  were  not  clear 
upon  the  words  themselves,  the  usual  subsidiary  clause  making 
it  compulsory  upon  the  insured  to  produce,  in  addition  to  his 
account,  if  required,  his  books  of  account  and  other  vouch- 
ers, would  seem  to  leave  no  doubt^upon  the  true  construction 
of  the  provision.  Of  course  it  should  be  stated  what  was  the 
cause  of  the  loss  or  damage,  so  far  as  to  bring  it  within  the 
risk  insured  against,  as  that  it  was  by  fire,  or  by  death,  or  by 
flood,  or  by  storm,  or  by  some  particular  accident,  as  the  case 

1  [Carroll  v.  Girard  Fire  Ins.  Co.,  72  Cal  297  ] 

2  [Lowry  v.  Lancashire  Ins.  Co.,  32  Hun,  329.] 

3  [Wheaton  v.  North  Brit.  &  Mer.  Ins.  Co.,  76  Cal.  415;  Ind.  Ins.  Co.  v.  Cape- 
hart,  108  Ind.  270.] 

1098 


CH.  XXV.]  OF   THE   NOTICE,    ETC.  [§  475 

may  be,  but  not  to  tlie  extent  of  stating  how  it  happened  or 
was  occasioned.^  It  is  also  to  be  borne  in  mind  that,  with  refer- 
ence to  notice,  particular  accounts,  and  preliminary  proofs  gen- 
erally, courts  will  not  require  the  insured  to  do  more  than  is 
clearly  required  by  the  terms  of  the  contract ;  and,  whether 
these  be  general  or  particular,  will  treat  them  as  condi- 
tions imposing  burdens,  to  be  for  that  reason  construed 
liberally  in  favor  of  those  upon  whom  the  burdens  are  im- 
posed.2  And  they  will  give  due  weight  to  the  fact  whether, 
in  the  particular  case,  the  insurers  have  greater  or  less  facili- 
ties for  obtaining  the  required  information  irrespective  of  the 
communications  of  the  insured.  Thus,  in  fire  insurance, 
where  the  insurers  or  their  agents  may  make  personal  in- 
spection, they  will  not  require  so  great  particularity  as  in 
marine  insurance,  where  not  unfrequently  the  inspection  is 
wholly  impracticable.^ 

§  475.  Particular  Account  ;  What  is  required.  —  The  "  particu- 
lar account  of  loss  or  damage  "  is  always  liberally  construed  in 
favor  of  the  insured,  as  he  must  often  render  it  under  the 
disadvantage  of  the  loss  of  the  means  for  rendering  it,  nor 
does  it  require  a  statement  of  the  manner  in  which  the  loss 
happened,  or  of  the  cause  or  the  occasion  of  it ;  nor  need  it 
negative  excepted  causes  of  loss.  The  fact  of  loss  within  the 
risk,  the  subject-matter,  and  the  amount  of  injury  sustained  are 
all  that  are  necessary.*  Nor  need  it  state  the  interest  of  the  in- 
sured, unless  specially  required.*     [The  particular  account  of 

1  Catlin  V.  Springfield  Fire  Ins.  Co.,  1  Suraner  (U.  S.  C.  Ct.),  434.  In  Wood- 
fin  I'.  Asheville  Mut.  Ins.  Co.,  the  failure  to  give  tlie  particular  account  was 
held  to  be  fatal,  although  no  penalty  was  by  the  policy  attached  to  the  failure. 
But  this  cannot  be  good  law.  It  is  favoring  forfeitures.  See  Taylor  v.  JEtnn 
Life  Ins.  Co.,  and  Heath  t:  Franklin  Ins.  Co.,  ante,  §  465,  and  Bilbrough  v. 
Metropolis  Ins.  Co.,  ante,  §  466. 

2  Heath  v.  Franklin  Ins.  Co.,  1  Cush.  (Mass.)  257;  Catlin  v.  Springfield  Fire 
Ins.  Co.,  1  Sumner  (U.  S.  C.  Ct.),  4-34;  Lawrence  v.  Ocean  Ins.  Co.,  11  Johns. 
(N.  Y  )  241,  260;  Norton  v.  Rensselaer  &  Saratoga  Ins.  Co.,  7  Cow.  (N.  Y.)  645; 
Harkins  v.  Quincy  Mut.  Fire  Ins.  Co.,  16  Gray  (Mass.),  591. 

3  Haff  V.  Mar.  Ins.  Co.,  4  Johns.  (N.  Y.)  132. 

*  Catlin  V.  Springfield  Ins.  Co.,  1  Sumner  (U.  S.  C.  Ct.),434. 
5  Gilbert  v.  North  American  Ins.  Co.,  28  Wend.  (N.  Y.)  43;  Miller  v.  Eagle 
Life  Ins.  Co.,  2  E.  D.  Smith,  268. 

1099 


§  475]  INSURANCE  :    FTRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXV. 

loss  sliould  be  reasonahly  specific  under  all  the  circumstances 
of  the  case.^  When  the  assured  claimed  a  total  loss  and  stated 
value  of  property  lost,  and  the  nature  of  his  interest  therein, 
not  knowing  that  any  part  of  the  same  was  saved,  a  by-law 
calling  for  a  particular  account,  stating  amount  lost  and 
amount  saved,  is  complied  with.  The  account  is  as  particular 
as  he  can  make  on  the  facts  known  to  him.^  A  mere  refer- 
ence to  the  books  and  invoices  is  not  enough,  although  they 
have  been  in  the  possession  of  the  company  since  the  loss,  for 
it  is  the  duty  of  the  insured  to  make  out  the  particular  state- 
ment, enumerating  the  articles  lost  and  stating  their  value.^] 
A  general  statement  of  the  aggregate  value  of  the  property 
lost,  wdiich  consisted  of  divers  articles,  has  been  held  to  be  an 
excuse  for  an  insufficient  "  particular  account,"  where  from 
the  loss  of  books  and  accounts,  or  for  other  causes,  no  better 
or  more  detailed  statement  could  be  made.*  Even  under  such 
circumstances,  this  must  be  more  than  a  mere  repetition  of 
the  description  in  the  policy,  as  more  or  less  particulars  may 
always  be  remembered ;  and  where  books  and  vouchers  are 
lost,  a  statement  that  the  account  is  as  particular  as  it  is  pos- 
sible to  give  is  liable  to  impeachment  by  showing  to  the  con- 
trary.^ If  there  is  some  particularity,  the  jury  may  say  if 
there  is  enough.  If  there  is  none,  the  court  will  not  allow  it 
to  go  to  the  jury .6  ["  Household  furniture,  -$3671 ;  groceries, 
$233,"  is  not  sufficient  as  a  particular  statement."]  Whether 
proof  is  furnished  is  for  the  court ;  whether  it  is  sufficient  is 


1  [Erwin  ?•.  Springfield  Fire  &  Mar.  Ins.  Co.,  24  Mo.  App.  145.] 

2  [Harkins  v.  Quincy  Mut.  Fire  Ins.  Co.,  16  Gray,  591  at  592.] 

3  [Gauche  v.  Lond.  &c.  Ins.  Co.,  1  Fed.  Rep.  347,5tli  Cir.  (La.)  1881.] 

*  McLauglilin  r.  Washington  County  Ins.  Co.,  23  "Wend.  (N.  Y.)  525  ;  Norton 
r.  Rensselaer  &  Saratoga  Ins.  Co.,  7  Cow.  (N.  Y.)  G4o;  Bumstead  v.  Dividend 
Mut.  Ins.  Co.,  2  Ker.  (N.  Y.)  81 ;  Hoffman  v.  ^tnaFire  Ins.  Co.,  1  Robt.  (N.  Y.) 
501  ;  s.  c.  32  N.  Y.  405;  Home  Ins.  Co.  v.  Cohen,  20  Grat.  (Va.)  312;  Aurora 
Fire  Ins.  Co.  v.  Johnson,  46  Ind.  315. 

6  Banting  v.  Niagara  Ins.  Co.,  25  U.  C.  (Q.  B.)  431 ;  Beatty  v.  Lycoming  Ins. 
Co.,  66  Pa.  St.  9. 

6  Beatty  v.  Lycoming  County  Mut.  Ins.  Co.,  66  Pa.  St.  9 ;  Banting  v.  Niag- 
ara, &c.  Ins.  Co.,  25  U.  C.  (C.  B.)  431. 

^  [Beattv  y.  Lycoming  Co.  Mut.  Ins.  Co..  66  Pa.  St.  9  at  17.] 

lioo 


CH.  XXV.]  OF   THE   NOTICE,   ETC.  [§  476 

for  the  jury.i  And  the  burden  of  proof  is  on  the  insured  to 
show  that  he  has  complied  with  the  requirement.^  The  ac- 
count should  not  fail  to  give  the  amount  of  loss,  and  to  state 
the  fact  that  it  was  upon  the  property  insured."^  Every  partic 
ular  fact  required  should  be  stated,  or  an  excuse  given  for  not 
stating  it*  If  by  the  terms  of  the  policy  it  is  to  be  signed, 
verified,  or  supported  in  any  particular  way,  these  require- 
ments must  be  complied  with.^  A  builder's  estimate  of  the 
cost  of  rebuilding  is  not  proof  of  the  actual  cash  value  of  the 
property  lost ;  ^  and  a  statement  that  the  loss  is  total  is  not  a 
certificate  of  the  amount  of  loss.'''  But  only  such  particulars 
of  loss  and  only  such  books,  vouchers,  &c.,  as  are  reasonably 
in  the  power  of  the  insured  to  furnish  can  be  demanded.  If 
goods,  counters,  shelving,  &c.,  are  paid  for  in  cash,  without 
taking  vouchers,  he  is  not  bound,  at  the  demand  of  the  in- 
surer, to  procure  from  the  persons  furnishing  them  certified 
statements  of  their  account.^  [The  condition  requiring  a  par- 
ticular account  of  loss,  as  soon  as  possible,  is  waived  by  the 
insurer's  proceeding  at  once  with  the  co-operation  of  the 
insured  to  ascertain  for  himself  the  full  details  of  the  loss.^ 
It  is  held  in  Ireland  that  the  furnishing  of  the  particular  ac- 
count within  the  exact  time  prescribed  is  not  an  essential  con- 
dition precedent  to  recovery.^''] 

§  476.  Loss ;  Personal  Examination  ;  When  Suit  may  be 
brought ;  When  Proof  made.  —  If  the  loss  be  made  payable 
at  a  certain  specified  time  after  the  rendition  of  the  requisite 
preliminary  proof,  no  action  brought  before  the  lapse  of  that 

1  Citizens'  Fire  Ins.  Co.  v.  Doll,  35  Md.  89. 

2  Mispelliorn  v.  Farmers'  Ins.  Co.  (Md.),  9  Ins.  L.  J.  411. 

3  Lycoming  County  Mut.  Ins.  Co.  v.  Updegraff,  40  Pa.  St.  311. 

4  Markle  v.  Niagara  Ins.  Co.,  28  U.  C.  (Q.  B.)  525;  Battaille  i'.  Merchants' 
Ins.  Co.,  3  Rob.  (La.)  384  ;  ante,  §  465. 

5  Greaves  r.  Niagara  Dist.  Mut.  Fire  Ass.  Co.,  25  U.  C.  (Q.  B.)  127;  Carter 
V.  Niagara  Dist.  Mut.  Fire  Ass.  Co.,  19  U.  C.  (C.  P.)  143 ;  Mulvey  i;.  Gore  Dist. 
Mut.  Fire  Ins.  Co.,  25  U.  C.  (Q.  B.)  424. 

6  Citizens'  Ins.  Co.  v.  Doll,  35  Md.  89. 

7  Borden  v.  Provincial  Ins.  Co.,  2  P.  &  B.  (N.  B.)  381,  382. 

8  Goldsmith  v.  Gore  Dist.  Ins.  Co.,  27  U.  C.  (C.  P.)  435. 

9  [Ligon's  Adm'rs  v.  Insurance  Co.,  87  Tenn.  341.] 

10  [Weir  v.  Northern  Counties'  &c.  Ins.  Co.  Ir.  L.  R.,  4  C.  P.  689.] 

1101 


§  477]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.        [CH.  XXV. 

time  can  be  maintained ;  ^  and  the  time  is  to  be  reckoned  from 
the  delivery  of  the  proof.  As  the  "personal  examination" 
which  it  is  sometimes  required  the  assured  shall  submit  to,  is 
at  the  option  of  the  insurer,  it  constitutes  no  part  of  the 
proof,  and  is  without  effect  in  determining  the  time  wlien  suit 
may  be  brought.  If  this  were  not  so,  the  defendants,  by  re- 
fusing to  make  any  examination,  might  avoid  payment  entirely. 
And  the  personal  examination  must  be  confined  to  matters 
pertinent  to  the  loss ;  nor  will  a  refusal  to  answer  or  to  pro- 
duce papers  prevent  recovery,  unless  strictly  within  the  stipu- 
lations of  the  policy.  And  a  statement  under  oath  that  the 
property  was  sold  before  the  loss  is  open  to  explanation  at 
the  trial.2  If  new  proofs  are  furnished  in  the  place  of  defec- 
tive ones,  the  time  within  which  the  action  may  be  brought 
is  to  be  reckoned  from  the  presentation  of  the  new  proofs ;  ^ 
but  if  the  policy  requires  notice  of  loss,  making  no  mention 
of  the  proof  or  time  of  payment,  the  loss  will  be  payable 
in  a  reasonable  time  after  notice.*  If  the  policy  require 
that  the  particular  account  shall  be  delivered  in,  the  insured 
may  send  it  by  mail,  if  there  be  a  general  request  of  the  com- 
pany that  all  communications  and  notices  be  addressed  to 
them,  post-paid.^  [A  stipulation  in  a  fire  policy  that  the  insured 
shall  submit  to  a  private  examination  in  case  of  loss,  if  re- 
quired by  the  company,  is  so  far  against  public  policy  that  a 
notice  that  the  company  desired  such  examination  will  not 
be  received  in  evidence.*^] 

§  477.  Preliminary  Proof ;  Fraud  and  False  Swearing ;  Pay- 
ment by  Mistake.  —  The  fraud  and  false  swearing  in  the  i»re- 
liminary  proof,  which  it  is  sometimes  provided  shall  prevent 

1  Harris  v.  Prot.  Ins.  Co.,  1  Wright  (Ohio),  548;  Winnesheik  Ins.  Co.  ?'. 
Sehueller,  60  111.465;  Insurance  Companies  v.  Weides,  14  Wall.  (U.  S.)  375. 
Miller  v.  Eagle  Life  &  Health  Ins.  Co.,  2  E.  D.  Smith  (N.  Y.  C.  Ct.),  apparently 
to  the  contrary,  is  not  so  upon  its  facts. 

2  Germania  Fire  Ins.  Co.  v.  Curran,  8  Kans.  9 ;  post,  §  477. 

3  Kimball  v.  Hamilton  Ins.  Co.,  8  Bosw.  (N.  Y.  Superior  Ct.)  495. 

*  Hartford  Passenger  Assurance  Co.  (U.  S.  C.  Ct.,  Southern  Dist.  111.),  2 
Ins.  L.  J.  276. 

5  Hodgkins  v.  Mont.  County  Mut.  Ins.  Co.,  41  N.  Y.  620,  reversing  s.  c.  34 
Barb.  213. 

6  [McGraw  r.  Germania  Fire  Ins.  Co.,  54  Mich.  146.] 

1102 


CH.  XXV.]  OF   THE   NOTICE,   ETC.  [§  477 

a  recovery,  is  intentional,  and  with  the  purpose  of  defrauding, 
and  may  be  with  reference  to  any  material  matter,  —  by  over- 
valuing the  loss,i  by  undervaluing  what  is  saved,  by  swearing 
to  the  loss  of  property  wliich  was  not  in  existence,  and  in 
divers  other  ways,  all  open,  however,  to  explanation.^  [Where 
a  policy  provides  for  an  examination  under  oath  after  loss, 
and  that  false  swearing  in  this  examination  shall  forfeit  the 
policy,  such  false  swearing  as  to  material  facts  (the  owner- 
ship and  value  of  the  goods)  will  avoid  the  policy,  although 
the  motive  of  the  insured  was  not  to  deceive  the  insurers, 
but    to    cover     up    false     statements     previously    made    to 

1  [A  statement  of  the  value  of  a  house  burned,  in  proving  the  loss,  without 
actual  fraud  appearing,  is  but  an  opinion  vviiich,  if  excessive,  is  not  false  swear- 
ing. Jersey  City  Ins.  Co.  v.  Nichol,  ^5  N.  J.  Eq.  291  at  302.  Tlie  fact  that 
the  assured  swore  in  his  proofs  and  on  the  trial  that  his  loss  was  some  $3000 
more  than  the  referees  found  is  not  even  presumptive  evidence  of  fraud  or  false 
swearing.  Unger  v.  People's  Fire  Ins.  Co.,  4  Daly,  96  at  98.  An  innocent  mis- 
take in  swearing  to  tiie  proofs  of  loss,  made  out  by  the  company's  agent,  and 
inaccurately  stating  the  names  of  the  owners,  but  supposed  by  the  insured  to 
be  correct,  does  not  prevent  a  recovery.  Parker  v.  Amazon  Ins.  Co.,  34  Wis.  363 
at  371.  But  if  the  insured  allows  his  wife  to  make  an  inventory  of  household 
goods,  and  signs  and  swears  to  it  without  scrutiny  and  it  contains  false  state- 
ments, he  makes  the  fraud  his  own.  Mullin  v.  Vt.  Mut.  Fire  Ins.  Co.,  58  Vt. 
113.  Where  there  is  a  large  discrepancy  between  the  statements  in  the  proofs 
of  loss  and  the  findings,  tlie  former  making  the  loss  three  times  as  much  as  the 
latter,  and  there  is  no  ground  to  suppose  the  misstatements  arose  from  mistake, 
there  is  fraud  as  a  matter  of  law,  and  the  jury  should  not  find  for  the  plaintiff 
in  any  sum,  but  should  render  a  verdict  for  the  defendant.  Sternfield  v.  Park 
Fire  Ins.  Co,  50  Hun,  262.  If  the  pohcy  is  to  be  void  for  "wilful  misstate- 
ment with  intent  to  deceive  the  company  as  to  the  amount  of  the  loss,"  and  the 
insured  in  his  statement  of  loss  claims  $2000  whereas  the  property  proves  to 
have  been  worth  only  $500,  a  verdict  in  his  favor  will  be  set  aside.  McLeod  v. 
Citizens'  Ins.  Co.,  1  Russ.  &  Geld.  (Nova  Scotia)  21.] 

2  Moadinger  v.  Meciianics'  Mut.  Ins.  Co.,  2  Hall  (Superior  Ct.  N.  Y.),  490; 
Marion  v.  Great  Rep.  Ins.  Co.,  35  Mo.  148;  Franklin  Fire  Ins.  Co.  v.  Updegraff, 
43  Pa.  St.  350;  Maher  v.  Hibernia  Ins.  Co.,  67  N.  Y.  283,  Commercial  Ins.  Co! 
V.  Huckberger,  52  111.  464  ;  Beck  v.  Germania  Ins.  Co.,  23  La.  Ann.  510;  McMas. 
ters  V.  Ins.  Co.  of  North  America,  55  N.  Y.  222  ;  Hubbard  v.  Hartford  Fire  Ins. 
Co.,  33  Iowa,  325  ;  Insurance  Companies  v.  Weides,  14  Wall.  (U.  S.)  375;  St. 
Louis  Ins.  Co.  v.  Kyle,  11  Mo.  278;  Clark  v.  Phoenix  Ins.  Co.  36  Cal.  168;  Ma- 
son V.  Agr.  Ins.  Co.,  18  U.  C.  (C.  P.)  19  ;  Howell  v.  Hartford  Fire  Ins.  Co.,  C.  Ct. 
(111.)  3  Ins.  L.  J.  649;  Park  v.  Phcenix  Ins.  Co.,  19  U.  C.  (Q.  B.)  110;  ante,  §  116. 
And  fraud  as  to  the  value  of  personal  property  will  avoid  the  policy  as  to  realty, 
especially  if  tlie  provision  be  that  "  all  fraud  shall  cause  a  forfeiture."  Moore 
i^.  Virginia,  &c.  Ins.  Co.,  28  Grat.  (Va.)  608. 

VOL.  II. —  26  1103 


§  477]  INSURANCE  :    FIRE,    LIFE,   ACCIDENT,   ETC.        [CH,  XXV. 

others.^]  Untrue  statements  as  to  matters  about  which  no  state- 
ment is  I'equired  are  no  farther  material  than  as  they  may  be 
used  adversely  as  evidence,  and  will  require  explanation  at  the 
trial.2  [The  defence  of  false  swearing  in  the  proofs  requires 
that  it  be  knowingly  and  wilfully  false,  with  intent  to  deceive 
and  damage  the  company.^  The  clause  in  the  proofs  against 
misrepresentation  or  false  swearing  does  not  include  an  hon- 
est mistake  in  omitting  an  incumbrance  which  the  insured 
did  not  believe  was  a  lien  on  the  property.*  In  spite  of  the 
absence  of  the  oath  and  signature  of  one  of  the  assured,  and  a 
question  of  unreasonable  delay,  the  jury  may  declare  the  proofs 
substantially  a  sufficient  compliance  with  the  conditions  of  the 
policy.^]  A  claim  honestly  made  is  not,  under  the  condition 
against  fraud,  invalidated  on  account  of  error,  or  even  some 
degree  of  exaggeration  or  overestimate ;  but  if  the  insured, 
with  reference  to  the  quantity  or  the  value  of  the  goods  in- 
sured, makes  a  claim  which  he  knows  to  be  false  and  unjust, 
and  which  may  defraud,  then  he  cannot  recover  anything.^ 
But  a  mere  wilful  false  statement  which  cannot  defraud  will 
not  prevent  recovery,'^  The  failure,  however,  to  mention  cir- 
cumstances known  to  the  plaintiff,  tending  to  show  that  the 
fire  was  purposely  set,  may  be  fraudulent.^  So  is  a  known 
over-valuation,  made  with  a  purpose  to  induce  a  speedy  settle- 
ment and  to  prevent  controversy,  about  the  claim  for  the  full 
amount  insured.^  The  mere  fact  that  the  amount  of  loss,  as 
found  by  the  jury,  is  less  than  that  stated  by  the  insured  in 

1  [Claflin  V.  Commonwealth  Ins.  Co.,  110  U.  S.  81,  9G.] 

2  Koss  V.  Com.  Un.  Ass.  Co.,  20  U.  C.  (Q.  B.)  552 ;  Rice  v.  Prov.  Ins.  Co.,  7 
U.  C.  (C.  P.)  548;  Day  v.  Mut.  Benefit  Ins.  Co.,  5  Big.  Life  &  Ace.  Ins  Cas. 
53  ;  Crowley  v.  Agr.  Ins.  Co.,  21  U.  C.  (C.  P.)  567;  Connecticut  Mut.  Ins.  Co. 
V.  Siegel,  9  Bush  (Ky.),  157. 

3  [Erman  v.  Sun  Mut.  Ins.  Co.,  35  La.  Ann.  1095 ;  Dual  v.  Firemen's  Ins. 
Co.,  35  La.  Ann.  98.] 

*  [Thierolf  u.  Universal  Fire  Ins.  Co.,  110  Pa.  St.  37.] 

5  [Martliinson  v.  North  Brit.  &  Mer.  Ins.  Co.,  64  Mich.  872.] 

6  Per  Cockburn,  C.  J.,  Nisi  Prius,  Chapman  v.  Pole,  22  L.  T.  n.  s.  307;  Sib- 
ley V.  St.  Paul,  &c.  Ins.  Co.,  C  Ct.  (111.),  8  Ins.  L.  J.  461 ;  Dogge  v.  N.  W.  Ins. 
Co.,  49  Wis.  501. 

7  Shaw  V.  Scottish  Ins.  Co.,  C.  Ct.  (Me.),  1  Fed.  Rep.  761. 
^  Smith  V.  Queen  Ins   Co.,  1  Hannay  (N.  B),  311. 

^  Sleeper  v.  New  Hampshire  Ins.  Co.  (N.  H.),  5  Ins.  L.  J.  539. 

1104 


CH,  XXV.]  OP   THE   NOTICE,   ETC.  [§  477 

his  preliminary  proof,  is  not  sufficient  to  sustain  the  defence 
of  false  swearing,^  even  though  the  discrepancy  be  so  con- 
siderable as  to  amount  to  two-fifths ;  ^  though  such  a  dis- 
crepancy would  be  evidence  bearing  upon  such  issue,  which 
the  insured  would  be  called  upon  to  explain.^  But  in  Levy  v. 
Baillie,*  a  rule  nisi  for  a  new  trial  was  made  absolute  where 
the  claim  sworn  to  was  .£1085,  and  the  amount  found  by  the 
jury  was  £500,  on  the  ground  that  tliat  was  in  effect  a  ver- 
dict for  the  defendant  under  the  condition.  And  if  the  sworn 
statement  discloses  a  ground  of  defence  for  the  insurer,  he 
may  avail  himself  of  it,  and  the  insurer  will  be  bound  by  his 
statement  at  the  trial,  unless  an  amended  statement  is  fur- 
nished to  the  insurers  before  that  time,^  —  in  which  case,  the 
fact  constituting  a  defence  may  be  shown  to  have  been  so 
stated  by  mistake.^  In  fact,  in  this  case  the  explanation  was 
admitted  without  a  previously  amended  statement,  the  mis- 
statement having  been  voluntary.  And  if  payment  of  the 
loss  be  obtained  by  means  of  fraudulent  proofs,  the  money 
may  be  recovered  back  in  an  action  for  the  deceit.  In  such 
an  action  it  was  ruled  that  the  defendants  might  be  held  lia- 
ble, even  though  the  plaintiffs  did  not  rely  exclusively  upon 
their  statements,  but  were  partly  induced  by  other  statements 
'  or  proofs  to  make  the  payment.  It  is  sufficient,  upon  this 
point,  "  if  the  plaintiffs  so  far  relied  on  these  statements  (of 
the  defendants)  that  they  would  not  have  paid  the  money,  had 
it  not  been  for  these  statements."    If  the  representations  of  the 

1  Franklin  Ins.  Co.  v.  Culver,  6  Ind.  137. 

2  Moore  v.  Prot.  Ins.  Co.,  29  Me.  97 ;  Cann  v.  Imperial,  &c.  Ins.  Co.,  1  R.  & 
C.  (Nova  Scotia)  240,  244. 

^  Hoffman  v.  West.  Mar.  Fire  Ins.  Co.,  1  La.  Ann.  216;  Marchesseau  v.  Mer- 
chants' Ins.  Co.,  1  Rob.  (La.)  438.     See  also  post,  §  584. 

*  7  Bing.  349.  The  doctrine  of  tliis  case,  however,  is  extreme,  and  has  been 
denied  to  be  sound  in  a  recent  well-considered  case.  Gerhauser  v.  North  Brit. 
&.  Mer.  Ins.  Co.,  6  Nev.  15.  And  see  ante,  §  443.  But  where  the  claim  for  loss 
was  .$2000,  and  the  verdict  for  -$500,  the  verdict  was  set  aside  in  McLeod  v. 
Citizens'  Ins.  Co.,  3  R.  &  C.  (Nova  Scotia)  156.  As  to  over-valuation  of  insur- 
able interest,  see  ante  §§  373-376. 

5  Campbell  v.  Charter  Oak  Fire  Ins.  Co.,  10  Allen  (Mass  ),  213;  Irving  v. 
Excelsior  Fire  Ins.  Co.,  1  Bosw.  (N.  Y.  Superior  Ct.)  507. 

6  Hayes  v.  Union  Ins.  Co.,  U.  C.  (Q.  B.),  9  Ins.  L.  J.  80. 

1105 


§  477]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXV. 

defendants  were  calculated  and  intended  to  induce  the  plain- 
tiffs to  alter  their  condition  by  parting  with  their  money,  and 
had  that  effect,  it  would  be  immaterial  that  other  representa- 
tions and  influences  were  also  brought  to  bear,  which  may 
have  had  a  tendency  towards  the  same  general  results.^  So  if 
a  purchaser  of  a  policy  is  induced  by  representations  that  the 
loss  will  be  paid,  the  insurers  will  be  estopped  from  setting 
up  against  the  purchaser  a  defence  which  might  have  been 
made  to  the  note  in  the  hands  of  the  beneficiary  named  in  the 
policy.2 

1  Hartford  Live  Stock  Ins.  Co.  v.  Mathews  and  Another,  102  Mass.  221 ; 
Northwestern  Life  Ins.  Co.  v.  Elliott,  C.  Ct.  (Or.),  10  Ins.  L.  J.  333. 

2  France  v.  Miua.  Life  Ins.  Co.  (C.  C.  U.  S.,  East.  Dist.  Pa.),  2  Ins.  L.  J. 
657. 

1106 


CH.  XXVI.]       LIMITATION   OF   SUIT   AS   TO   TIME   AND   PLACE. 


CHAPTER  XXVL 

LIMITATION   OF   SUIT   AS  TO   TIME   AND   PLACE. 

Analysis. 

§  478  A.  Time. 

A  condition  that  suit  must  be  brought  within  a  certain  time 
is  valid  even  against  minor  beneficiaries  (unless  un- 
reasonable, §  482). 
It  controls  the  general  statute  of  limitations. 
Limitation  in  by-law. 
Such   conditions   do   not  apply   to    a   suit    to   recover 

premiums. 
A  condition   that  no   suit   shall  be  brought  until    de- 
fendant does  some  act  is  void  (also  §  479). 
§  479.  The  period  begins  to  run  from  the  time  the  loss  becomes  due 

and  payable,  and  the  right  of  action  accrues.     There 
is  no  right  of  action  until  the  sixty  days  or  ninety  days 
after  proof  allowed  the  company  for  payment;  wherefore 
the  limitation  does  not  begin  to  run  until  that  time  has 
expired,  although  the  language  of  the  policy  is  em- 
phatic that  it  shall  run  from  the  time  of  the  fire,  §  479. 
Contra,  §  479,  and  note. 
Canada  statutes,  §  479. 
If  sixty  days  are  given  for  payment  they  run  from  the 

time  of  proof,  §  479. 
If  the  last  day  is  Sunday,  suit  on  following  day  sufficient. 
§  480.  Limitation  of  the  issuing  of  execution  against  the  company 

is  valid. 
§  481.  Reinsurance  under  a  policy  containing  time  limitations. 

§  482.  A  new  promise  will  not  revive  a  cause  of  action  once  dead 

under  a  clause  of  limitation. 
§  483.  Non-suit  or  arrest  of  judgment  in  suit  brought  within  time  will 

not  permit  a  new  suit  after  time,  nor  will  a  suit  in  a  couit 
without  jurisdiction  stop  the  running  of  the  period.    But 
an  amendment  in  the  name  of  the  defendant  may  be  made 
after  the  time  has  expired,  or  a  new  party  may  be  added. 
§§  484-488.     Excuse  for  failing  to  sue  within  the  time. 

Faiilt  of  insurer  is  an  excuse,  §§  484,  488. 
Negotiations  in  bad  faith  or  other  action  lulling  the  insured 
into  security,  and  leading  him  to  suppose  as  a  prudent 
man  that  suit  is  unnecessary,  §  488. 
Otherwise  if  the  negotiations  are  in  good  faith,  or  cease  be- 
fore the  limitation  expires,  §  485. 
Refusal  to  pay  does  not  waive  the  outer  limitation  of  suit,  l)nt 
does  waive  the  sixty  or  ninety  days  allowed  the  company 
for  payment,  and  suit  may  be  brought  at  once,  §  488. 

1107 


§  478]  INSUEANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXVI. 

Demanding  proofs,  or  otherwise  recognizing  the  policy  after 
the  period  lias  expired,  is  a  waiver,  §  488. 

Clause  requiring  writing  for  a  waiver,  §  488. 

Payment  to  mortgagee  does  not  waive  the  limit  as  to  the 
mortgagor,  §  488. 

Arrest  for  arson  not  at  instance  of  company  no  excuse,  §  4S8. 

Intervening  war  may  excuse,  §  486. 

Other  conditions  inconsistent  with  the  time  limit,  §  487. 
§§  490,  491.     Place.     Limitation  as  to  venue. 

§  478.  Limitation  as  to  Time;  From  Loss.  —  A  condition  in 
a  policy  of  fire  insurance,  that  no  action  against  the  insurers 
for  the  recovery  of  any  claim  upon  the  policy  shall  be  sus- 
tained, unless  commenced  within  a  certain  period  after  the 
loss  shall  have  occurred,  and  that  the  lapse  of  this  period 
shall  be  conclusive  evidence  against  the  validity  of  any  claim 
asserted,  if  an  action  for  its  enforcement  be  subsequently 
commenced,  is  valid,^  and  is  generally  held  not  to  be  in  con- 
travention of  the  policy  of  statutes  of  limitation.  It  stands 
upon  the  same  grounds  as  other  conditions  precedent. 

There  is  no  principle  of  common  law  foi'bidding  such  a 
condition.  Originally  there  was  no  limitation  to  actions. 
The  first  statute  of  limitations,  which  has  been  substantially 
followed,  provided  that  suits  in  certain  cases  should  be 
brought  within  six  years,  and  not  afterwards.  But  there  is 
nothing  in  the  act  which  forbids  a  limitation  short  of  this 
period,  by  agreement  of  parties.  It  only  prohibits  the  suit 
after  six  years.  There  can  be  no  doubt  that,  prior  to  the 
statute,  it  would  have  been  competent  for  the  parties,  by  a 
clause  in  their  contract,  to  limit  the  time  within  which  suit 
might  be  brought.     There  is  nothing  in  the  act,  necessarily 

1  [Moore  v.  State  Ins.  Co.,  72  Iowa,  414 ;  Plioenix  Ins.  Co.  v.  Lebcher,  20 
Brad.  450;  Ohio  y.  Western  Ass.  Co.,  65  Miss.  532;  Universal  Ins.  Co.  v. 
Weiss,  106  Pa.  St.  20;  Farmers'  Mutual  Fire  Ins.  Co.  v.  Barr,  94  Pa.  St.  345; 
Tasker  v.  Kenton  Ins.  Co.,  58  N.  II.  4(39  at  469;  Davidson  v.  Phoenix  Ins.  Co  ,  4 
Sawyer  (U.  S.),  594  at  596;  Merchants'  Ins.  Co.  v.  La  Croix,  35  Texas,  249  at 
261  ;  Higgins  /;.  Windsor  Co.  Mut.  Fire  Ins.  Co.,  54  Vt.  270.  The  clause  "  all 
claims  are  barred  unless  prosecuted  within  one  year,  &c  ,"  is  not  doubtful  nor 
ambiguous,  and  means  precisely  its  literal  interpretation.  Carraway  v.  Mer- 
chants' Mut.  Ins.  Co.,  26  La.  Ann.  298  at  209.  A  limitation  of  suit  in  the  policy 
to  one  year  after  loss  controls  the  general  statute  of  limitation,  and  is  good  even 
against  minor  beneficiaries.  Suggs  v.  Insurance  Co.,  71  Tex.  579  ;  O'Laughlin 
V.  Union  Cent.  Life  Ins.  Co.,  11  Fed.  Rep.  280;  3  McCrary,  543  (Mo.)  1882.] 
1108 


CH.  XXVI.]       LIMITATION  OP  SUIT  AS  TO  TIME  AND  PLACE.        [§  478 

or  by  fair  construction,  taking  away  the  right.  And  the 
adoption  of  such  a  condition  is  based  upon  grounds  of  pru- 
dence and  policy  which  must  challenge  the  general  approval. 
Insurance  comj)anics  are  always  liable  to  be  imposed  upon 
by  fraud.  It  is  often  very  difficult  to  detect  the  fraud,  and 
to  obtain  evidence  to  substantiate  it  in  a  court  of  justice ; 
and  the  greater  the  lapse  of  time  the  greater  the  difficulty. 
It  is  therefore  a  wise  and  provident  precaution  to  take,  — 
one  which  the  law  ought,  if  possible,  to  uphold,  —  to  limit, 
by  the  terms  of  their  policies,  the  time  within  which  actions 
shall  be  brought,  as  a  necessary  protection  to  themselves 
against  fraud ;  and  they  have  the  same  right  to  introduce 
such  a  stipulation  as  to  introduce  any  other.i  Even  language 
less  explicit,  as  that  the  insured  may  bring  his  action  within 
a  limited  time,  has  been  held  to  bar  an  action  brought  after 
that  time  ;  ^  and  so  has  a  condition  that  suit  should  be  brought 
at  the  next  term  of  court  after  refusal  to  i)ay  on  penalty  of 

1  Ketehum  v.  Prot.  Ins.  Co.,  1  Allen  (New  Brunswick),  136;  Amesbury  et  al. 
V.  Bowditch  Mut.  Fire  Ins.  Co.,  6  Gray  (JIass.),  596;  Glass  v.  Walker,  66  Mo. 
32  ;  6  Reptr.  148  ;  Riddlesbarger  r.  Hartford  Ins.  Co.,  7  Wall.  (U.  S.)  386 ;  Cray 
V.  Hartford  Ins.  Co.,  1  Blatch.  (U.  S.  C  Ct.)  280 ;  Brown  v.  Roger  Williams  Ins. 
Co.,  7  R.  I.  301;  s.  c  5  id.  304;  Wilson  v.  .^tna  Ins  Co  ,  27  Vt.  99,  Williams 
et  al.  V.  Vermont  Mut.  Ins.  Co.,  20  id.  222 ;  Peoria  Ins.  Co.  v.  Whitehill,  25  111. 
466 ;  North  Western  Ins.  Co.  v.  Piioenix  Oil  &  Candle  Co.,  31  Pa.  St.  449 ; 
Brown  et  nx.  v.  Savannah  Mut.  Ins.  Co.,  24  Ga.  97  ;  Portage  County  Mut.  Ins. 
Co.  y.  West,  6  Ohio  St.  599;  Carter  v.  Hu.-nbolt  Fire  Ins.  Co.,  12  Iowa,  287; 
Stout  r.  City  Fire  Ins.  Co.,  id.  371 ;  Ripley  v.  JEtna  Ins.  Co.,  29  Barb.  (N.  Y.) 
552;  Fullam  v.  New  York  Union  Ins.  Co.,  7  Gray  (Mass  ),  61.  Tlie  case  in  the 
Supreme  Court  of  Indiana,  Eagle  Ins.  Co.  v.  Lafayette  Ins.  Co.,  9  Ind.  44:3, 
rested  upon  French  v.  Lafayette  Ins.  Co.,  5  McLean,  461,  which  has  been  over- 
ruled by  the  case  cited  above  from  7  Wallace  (U.  S.  Sup.  Ct.),  386.  See  also 
Ripley  v.  iEtna  Ins.  Co.,  30  N.  Y.  136 ;  Brown  v.  Hartford  Ins.  Co.,  5  R.  I. 
394;  Hickey  v.  Anchor  Ass.  Co.,  18  U.  C.  (Q.  B.)  438;  Patrick  v.  Farmers' 
Ins.  Co.,  43  N.  H.  021 ;  Roach  v.  New  York  &  Erie  Ins.  Co.,  30  N.  Y.  546; 
Woodbury  Sav.  Bank  v.  Charter  Oak  Ins.  Co.,  31  Conn.  518.  The  French 
law  and  that  of  Lower  Canada  hold  such  a  limitation  in  derogation  of  the  gen- 
eral statute  of  limitations,  and  such  is  the  language  of  some  of  our  courts. 
Comp.  de  I'Unioh  c.  Foure,  Dallnz,  Jur.  Gen  ,  1850,  2,  40;  Wilson  v.  State  Fire 
Ins.  Co.,  7  L.  C.  Jur.  223;  INIayor  v.  Hamilton  Ins.  Co.,  39  N  Y.  46  ;  Westches- 
ter Fire  Ins.  Co.  v.  Dodge  (Mich.),  9  Ins.  L.  J.  909.  [The  creditor  may  stipulate 
to  shorten  the  time  of  prescription  limited  by  law,  but  an  agreement  to  extend 
that  time  is  not  valid.     Allen  r.  Merch.  Mut.  Ins.  Co.,  33  L  C.  Jur,  314,  316.] 

2  Portage  County  Mut.  Fire  Ins.  Co.  v.  West  et  al.,  6  Ohio,  n.  s.  599. 

1109 


§479]  insurance:    fire,    life,    accident,    etc.       [CH.  XXVI. 

forfeiture.^  And  the  limitation,  being  part  of  the  contract, 
applies  whatever  may  be  the  form  of  the  suit.^  [Where  a  fire 
broke  out  in  the  evening  of  August  23, 1884,  and  extended  in- 
to the  24th,  a  suit  begun  on  Feb.  24, 1885,  was  held  barred,  by 
the  six  months'  limitation.^  When  a  section  of  an  act  incor- 
porating insurance  companies  provides  that  stockholders  may 
bring  suits  if  their  loss  claims  are  not  paid  within  two  months 
thereafter,  and  a  clause  of  a  policy  issued  to  one  not  a  stock- 
holder states  that  "  payment  of  losses  shall  be  made  in  sixty 
days  after  proof,"  the  latter  waives  the  former  even  if  it  might 
otherwise  apply.*  If  a  by4aw  is  relied  on  as  establishing 
a  period  of  limitation  for  suit,  it  must  be  shown  that  it  was 
adopted  before  the  contract  of  insurance  in  issue  was  made.^ 
A  limit  of  a  year  in  which  to  bring  action  "  for  the  recovery 
of  any  claim  by  virtue  of  this  policy  "  does  not  apply  to  a  suit 
to  recover  back  premiums  paid  on  a  policy  void  ah  initio^  such 
action  is  not  based  on  the  policy  but  on  the  absence  of  any 
legal  policy.^  A  condition  that  no  action  should  be  brought 
until  the  defendant  did  something  dependent  on  his  own  will, 
is  void  as  against  public  policy.'  Where  a  corporation  is  char- 
tered to  insure  the  lives  of  members  for  beneficiaries  named, 
the  liability  of  the  company  is  a  statutory  one,  and  the  period 
of  limitation  applicable  to  it  is  twenty  years.^] 

§  479.  Limitation ;  From  Time  when  Loss  becomes  due ; 
From  Proof.  —  In  some  cases  it  is  provided  that  a  suit  is  not 
to  be  brought  until  the  expiration  of  a  certain  time  after  the 
loss  becomes  due ;  and  it  has  been  held  that  where  a  loss, 
subject  to  such  provision,  was  allowed,  payable  in  sixty  days, 
suit  brought  therefor  two  months  after  the  allowance  was 
properly  brought.  The  demand  is  due  from  and  after  the 
determination  of  the  amount  or  allowance.     It  is  payable  at 

1  Keim  v.  Home  Ins.  Co.,  42  Mo.  38. 

2  Fullam  V.  New  York  Union  Ins.  Co.,  7  Gray  (Mass.),  61.    And  see  post,  §  480. 

3  [Allemania  Ins.  Co.  r.  Little,  20  Brad.  431.] 

4  [Howard  v.  Franklin  Mar.  &  Fire  Ins.  Co.,  9  How.  Pr.  45  at  47.1 

5  [Cox  V.  Fire  Assurance  Ass.,  48  N.  J.  53.] 

6  [Waller  v.  Nortliern  Ass.  Co.,  64  Iowa,  101.] 
T  IBowes  I'.  Natl.  Ins.  Co.,  20  N.  B.  R.  438.] 

8  [Ga.  Masonic  Ins.  Co.  v.  Davis,  03  Ga.  471.] 

1110 


CH.  XXVI.]       LIMITATION  OF  SUIT  AS  TO  TIME  AND  PLACE.        [§  479 

the  expiration  of  the  time  limited.  That  it  is  not  due  till  the 
expiration  of  the  time  limited  for  the  payment  is  not  the 
correct  interpretation  ;  after  the  allowance  it  is  dehitum  in 
prcesenti,  solvendum  in  futuro}  If  the  policy  provides  that 
suit  shall  be  brought  within  a  certain  time  after  the  "  loss  or 
damage  shall  occur  and  become  due,"  and  further  provides 
that  the  payment  of  losses  shall  be  made  in  ninety  days  after 
proofs  shall  be  received  at  the  office  of  the  company,  the 
proofs  having  been  furnished  with  due  diligence,  the  time 
limited  for  bringing  suit  will  begin  to  run  at  the  expiration 
of  the  ninety  days,^  and  that  notwithstanding  the  policy  con- 
tains a  general  limitation  of  suits  to  one  year  from  the  time 
of  the  loss.  The  time  when  a  "  claim  shall  occur "  under 
such  policy  is  when  proper  proofs  have  been  made,  and  may 
be  widely  different  from  the  "time  of  loss."  ^  Though  the 
policy  provide  that  suit  shall  be  brought  within  a  certain 
time  after  the  loss  shall  occur,  this  is  held  to  mean  after  the 
cause  of  action  accrues,  if  by  the  same  policy  it  is  provided 
that  no  suit  shall  be  brought  until  after  an  award  has  been 
entertained.  And  generally  the  limitation  will  be  construed 
to  run  from  the  time  when  the  loss  becomes  due  and  payable, 
rather  than  from  the  time  when  the  loss  actually  occurs.^     If 

1  Utica  Ins.  Co.  v.  American  Mut.  Ins.  Co.,  16  Barb.  171 ;  Chandler  v.  St. 
Paul  Fire  &  Mar.  Ins.  Co.,  21  Minn.  85. 

2  Longhurst  v.  Conway  Fire  Ins.  Co.,  U.  S.  D.  Ct.  (Iowa),  1861,  cited  in 
Clarke's  Digest  of  Fire  Insurance  Cases. 

3  Chandler  v.  St.  Paul  Fire  &Mar.  Ins.  Co.,  21  Minn.  85. 

*  Levy  V.  Virginia  Fire  Ins.  Co.,  C.  Ct.  (La.),  9  Ins.  L.  J.  113;  Hay  v.  Star 
Fire  Ins.  Co.,  13  Ilun  (N.  Y.),  49G ;  post,  §  487;  Barber  v.  Fire,  &c.  Ins.  Co.,  16 
W.  Va.  658.  [Although  a  policy  provides  tliat  action  must  be  brought  within 
twelve  months  from  the  time  the  loss"  occurs,"  yet  it  will  be  construed  to  mean 
twelve  months  from  the  time  the  loss  is  due  and  payable,  sixty  days  after  proof  in 
this  case.  Steen  v.  Niagara  Fire  Ins.  Co.,  89  N.  Y.  315 ;  disapproving  Johnson 
r.  H.  Ins.  Co.,  91  111.93;  33  Am.  Rep.  47  ;  FuUam  v.  N.  Y.  U.  Ins.  Co.  7  Gray, 
61.  A  limitation  of  a  year  or  six  months,  &c.,  after  loss  does  not  begin  to  run 
until  the  sixty  days  after  proof  allowed  for  payment.  Ellis  v.  Council  BUiffs 
Ins.  Co.,  64  Iowa,  507  ;  Miller  v.  Hartford  Fire  Ins.  Co.,  70  Iowa,  704;  Mix  v. 
Andes  Ins.  Co.,  9  Hun  (N.  Y.),  397  at  400;  German  Amer.  Ins.  Co.  v.  Hocking, 
115  Pa.  St.  398  ;  Commercial  Union  Ass.  Co.  v.  Hocking,  115  Pa.  St.  407  ;  Mayor 
of  N.  Y.  V.  Hamilton  Ins.  Co.,  39  N.  Y.  45  at  48.  There  are  however  authori- 
ties to  the  contrary.  It  being  held  that  if  the  action  is  to  be  brouglit  within  six 
months  after  the  loss,  it  will  not  be  sufficient  to  bring  it  within  six  months  after 

1111 


§  479]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.        [CII.  XXVI. 

no  time  is  specified  when  loss  shall  become  payable,  it  will 
be  payable  within  a  reasonable  time.^  [Where  the  loss  is  not 
payable  until  sixty  days  after  proof  of  loss,  and  no  action  can 
be  begun  until  an  award  has  fixed  the  amount  of  damages, 
nor  after  six  months  from  the  loss,  the  limitation  of  suit  does 
not  begin  to  run  from  loss,  but  from  the  time  the  right  of 
action  accrues  ;  as  otherwise  it  might  run  out  and  the  right 
of  action  be  barred  before  it  accrued.^  A  suit  witliin  tlie  time 
which  the  contract  gives  the  company  to  settle,  is  premature 
unless  the  company  has  repudiated  its  liability.^  In  Iowa,  by 
statute  an  action  cannot  be  begun  until  ninety  days  after  notice 
of  loss.*  The  thirty  days  allowed  the  company  for  payment 
by  the  Canada  statute  cannot  be  extended  by  the  contract  to 
sixty  days.^  The  policies  of  a  mutual  company,  however,  are  not 
subject  to  the  Uniform  Conditions  Act,  R.  S.  0.,  c.  162,  and  the 
agreement  may  give  the  company  three  months  after  proofs 
in  which  to  pay  the  claim.^]  And  where  sixty  days'  delay 
in  payment  of  loss  is  given,  it  will,  unless  otherwise  specified, 
run  from  the  time  when  proofs  are  furnished.'^  Where  the 
loss  was  not  to  be  payable  till  an  inventory  was  sent  and  an 
appraisal  permitted  by  the  insured,  and  nothing  was  done 
about  an  appraisal  by  either  party,  it  was  lield  that  a  recovery 
might  be  had  without  an  appraisal,  as  that  was  a  matter  in 
wliich  the  insurers  were  to  move,  and  he  only  to  permit.     It 

the  expiration  of  the  sixty  days  allowefl  the  company  for  payment  of  the  claim. 
Blair  v.  Sovereign  Fire  Ins.  Co.,  19  N.  S.  R.  372 ;  McDonald,  C.  J.,  dis.  If  the 
policy  provides  that  suit  must  be  commenced  witliin  twelve  months  after  the  fire, 
the  time  begins  to  run  at  the  fire,  and  not  from  the  expiration  of  the  sixty 
days  given  the  company  in  which  to  make  payment  after  proofs  of  loss.  King 
?•.  Watertown  Fire  Ins.  Co.,  47  Hun,  1  ;  Chambers  v.  Atlas  Ins.  Co.,  61  Conn. 
17;  Bradley  v.  Phoenix  Ins.  Co.,  28  Mo.  App.  7] 

1  Tooley  v.  Railway  Passenger  Ass.  Co.,  C.  Ct.  (Ill),  2  Ins.  L.  J.  275. 

2  [Friezen  v.  Allemania  Fire  Ins.  Co.,  30  Fed.  Rep.  352  (Wis.),  1887  ;  Vette 
V.  Clinton  Fire  Ins.  Co.,  id.  668  (Mo.).] 

3  [Donahue  v.  Windsor  Co.  Mut.  Fire  Ins.  Co.,  56  Vt.  374.] 

*  [Quinn  v.  Capitol  Ins.  Co.,  71  Iowa,  615;  Vore  v.  Hawkeye  Ins.  Co.,  76 
Iowa,  548 ,   Laws  of  1880,  c.  211,  §  3.] 

6  [City  of  Lond.  Fire  Ins.  Co.  v.  Smith,  15  Can.  S.  C.  R.  69] 
«  [Mut.  Fire  Ins.  Co.  v.  Frey,  5  Can.  Supr.  Ct.  82.] 

7  Hatton  V.  Provincial  Ins.  Co.,  7  U.  C.  (C.  P.)  555;  Insurance  Co  of  North 
America  v.  McDowell,  50  111.  120. 

1112 


CH.  XXVI.]       LIMITATION  OF  SUIT  AS  TO  TIME  AND  PLACE.       [§  481 

was  their  neglect,  and  not  his.^  But  where  insurers  against 
damage  by  hail  to  crops  were  not  to  be  liable  for  any  injury 
less  than  one  twenty-fifth  of  the  value  of  the  crops,  and  it  was 
also  provided  that  appraisers  should  be  appointed  to  ascertain 
the  damage  at  the  expense  of  the  insured,  if  the  loss  was  less 
than  one  twenty-fifth,  he  to  deposit,  on  demand  of  the  agent, 
"  the  amount  of  costs  arising  from  the  assessment,"  before  the 
accomplishment  of  the  assessment,  it  was  held  that  the  insurers 
were  entitled  to  demand  the  deposit  before  making  the  ap- 
praisement, without  reference  to  the  actual  damage  done.^  [It 
is  no  defence  to  a  plea  of  the  agreed  limitation  to  reply  that 
the  suit  was  brought  within  twelve  months  after  the  ad- 
justment.^ If  the  last  day  of  the  period  comes  on  Sunday  the 
insured  may  sue  on  the  following  day.*] 

§  480.  Limitation  ;  Execution.  —  And  a  like  provision,  with 
reference  to  the  levy  of  an  execution  for  similar  reasons,  is 
also  valid.  And  the  provision  of  the  charter  of  a  mutual  fire 
insurance  company,  that  no  execution  shall  issue  upon  any 
judgment  obtained  against  them  until  three  months  after  the 
rendition  thereof,  will  be  enforced,  though  the  judgment 
upon  which  the  execution  is  sought  to  be  enforced  be  founded 
upon  a  foreign  judgment  rendered  long  before.  The  pro- 
vision of  the  charter  becomes  a  constituent  part  of  the 
contract  between  the  parties,  and  the  analogy  between  a 
stipulation  not  to  bring  suit  within  or  after  the  expiration  of 
a  certain  period,  and  a  stipulation  not  to  levy  execution,  is 
sufficient  to  warrant  the  court  in  ordering  a  stay  of  execution.^ 

§  481.  Limitation;  Reinsurance.  —  Reinsurance,  under  a 
policy  which  stipulates  that  suit  shall  be  brought  within  a 
limited  time  after  any  loss  or  damage  shall  occur,  expires  at 
the  expiration  of  the  time  limited  after  the  loss  of  the  prop- 
erty by  the  peril  insured  against,  and  not  after  the  payment 
by  the  reinsured  of  the  loss.     The  payment  by  him,  though 

1  Commercial  Ins.  Co.  v.  Robinson,  64  111.  265. 

2  Mutual  Hail  Ins.  Co.  v.  Wilde,  8  Neb.  427  ;  8  Ins.  L.  J.  765. 

3  [Dickie  v.  Western  Ass.  Co.,  21  N.  B.  K.  544.] 
*  [Owen  V.  Howard  Ins.  Co.,  87  Ky.  571.] 

6  Judkins  v.  Union  Mat.  Fire  Ins.  Co.,  39  N.  H.  172. 

1113 


§  483]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXVI. 

in  one  sense  a  loss  to  him,  is  not  the  loss  or  damage  referred 
to  in  the  policy  of  reinsurance.^ 

§  482.  Limitation  ;  Avoidance  ;  New  Promise.  —  And  a  new 
promise  or  acknowledgment  will  not  revive  such  a  cause  of 
action.2  jf  ^\^q  prescribed  time  be  suffered  to  elapse  without 
suit,  there  remains  no  longer  a  legal  liability  in  any  form. 
There  is  no  indebtedness  which,  though  by  the  operation  of 
the  statute  incapable  of  being  enforced  by  suit,  may  never- 
theless be  reanimated  and  invested  with  that  quality  by  an 
acknowledgment  or  new  promise.  The  contract  is  of  a  pe- 
culiar description,  resembling  a  wagering  contract,  in  which 
the  insurers,  for  a  small  premium,  undertake  to  indemnify  the 
party  who  suffers  the  loss.  The  amount  for  which  they  may 
become  responsible  greatly  exceeds  the  premium  paid ;  and 
the  liability  depends  upon  a  contingency  over  which  neither 
party  has  any  control.  For  whatever  the  insurers  may  event- 
ually have  to  pay,  they  become  liable  by  positive  stipulation 
rather  than  upon  any  principle  of  natural  justice  growing  out 
of  an  adequate  consideration  received.  So  far  as  this  liabil- 
ity exceeds  the  premium  paid,  it  more  nearly  resembles  a 
penalty  than  a  simple  debt,  and  thus  would  more  naturally 
fall  into  the  class  of  cases  in  which  statutes,  prescribing  a 
time  within  which  suits  shall  be  brought,  are  construed  as 
limitations  upon  the  liability  rather  than  mere  denials  of  a 
remedy.^  It  was  intimated  in  Brown  et  ux.  v.  Savannah  Mu- 
tual Insurance  Company  ^  that  such  a  limitation  might  not 
be  upheld  if  the  period  within  which  suit  must  be  brought  be 
so  unreasonable  as  to  raise  a  presumption  of  imposition  or  un- 
due advantage  in  some  way. 

§  483.  Failure  of  Suit  Brought  within  Time.  —  Nor  can  such 
suit,  brought  after  the  expiration  of  the  time  limited,  although  a 
prior  suit  commenced  within  the  limited  period  may  have  been 
nonsuited,  or  judgment  thereon  arrested,  be  maintained.  The 
condition  is  without  exception,  and  the  exceptions  of  statutes  of 

1  Prov.  Ins.  Co.  v.  JEtna  Ins.  Co.,  16  U.  C.  (Q.  B.)  135. 

2  [But  see  Fire  &  Mar.  Ins.  Co.  v.  Chestnut,  50  111.  Ill] 
»  Williams  et  al.  v.  Vermont  Mat.  Ins.  Co.,  20  Vt.  222. 

*  24  Ga.  97.     And  see  Angell  on  Limitations  {5th  ed.),  p.  16,  note. 

1114 


CH.  XXVI.]       LIMITATION  OF  SUIT  AS  TO  TIME  AND  PLACE,       [§  484 

limitations  cannot  be  imported  into  it  by  the  court.^  But 
where  a  suit  was  commenced  within  the  time  limited,  but  by 
mistake  the  name  of  the  wrong  company  was  inserted  in  the 
body  of  the  summons,  the  defendant  having  voluntarily  ap- 
peared  to  move  to  dismiss,  the  plaintiff  was  allowed  to  amend 
by  inserting  the  name  of  the  defendant,  and  proceed  with  his 
suit.^  (Yet  if  in  such  a  case  the  plaintiff  discontinues  a  suit 
in  equity  afterwards,  and  after  the  time  when  he  might  have 
brought  a  new  suit,  the  real  object  of  which  is  to  obviate  the 
delay,  will  not  be  sustained.^)  [So  an  amendment  adding 
a  plaintiff  may  be  made  after  the  period  for  action  has 
expired.*  If  suit  is  begun  within  the  period  a  mortgagee 
or  other  person  entitled  to  part  of  the  proceeds  may  inter- 
vene in  the  suit  after  the  period.^  When  suits  on  a  policy 
must  be  prosecuted  within  one  year  after  loss,  the  bringing 
of  an  action  within  that  time,  the  transfer  of  it  to  another 
court  and  finally,  while  it  is  still  pending,  the  change  of  suit 
because  of  wrong  parties,  is  sufficient,  provided  good  faith 
exists,  although  the  last  act  was.  done  after  the  year  was  up 
and  the  other  suit  discontinued.^  But  beginning  a  suit  in  a 
court  without  jurisdiction  within  the  period  will  not  stop  the 
running  of  the  limitation.''] 

§  484.  Limitation  ;  Excuse  ;  Absence  of  Defendant.  —  Per- 
haps, however,  the  doctrine  of  the  last  case  should  be  taken 
with  the  qualification  that  the  failure  of  the  first  suit  is  not 
imputable  to  the  fault  of  the  insurers.  Such  seems  to  have 
been  the  view  taken  in  a  case  in  Michigan,  where  suit  was 
brought  thirteen  days  before  the  expiration  of  the  time  limited. 
The  writ  was  immediately  placed  in  the  hands  of  the  officer, 
who  made  return  that  he  could  not  find  the  defendant. 
Thereupon  the  next  day,  which  was  two  days  after  the  ex- 

1  Riddlesbarger  v.  Hartford  Ins.  Co.,  7  Wall.  (U.  S.)  386;  Brown  v.  Roger 
Williams  Ins.  Co.,  7  R.  I.  301 ;  Wilson  v.  JEtna  Ins.  Co.  of  New  York,  27  Vt.  99. 

2  Burton  v.  Buckeye  Ins.  Co.,  26  Ohio  St.  467. 

3  Arthur  v.  Homestead  Ins.  Co.,  78  N.  Y.  462. 

<  [DoulliJ.  Western  Ass.  Co  ,  6  Russ.  &  Geld.  (Nova  Scotia)  478.] 
*  [Stevens  v.  Citizens'  Ins.  Co.,  69  Iowa,  658.] 
s  [Madison  Ins.  Co.  v.  Fellowes,  1  Disnej'  (Ohio),  217  at  221.] 
'  [Keystone  Mut.  Ben.  Ass.  v.  Norris,  115 Pa.  St.  446] 

1115 


§  484]         insut?ance:  fire,  life,  accident,  etc.     [ch.  xxvi. 

piration  of  the  time  limited,  another  summons  was  issued, 
with  which  the  defendant  was  served.  The  limitation  in  this 
case  was  in  the  contract,  and  not  in  the  charter  of  the  com- 
pany. The  court,  without  stopping  to  consider  wliether  the 
issue  of  the  second  summons  was,  or  was  not,  a  continuation 
of  the  suit,  sustained  the  action.  It  appeared  to  them  to 
have  been  the  fault  of  the  defendant  —  the  absence  of  their 
agent  —  that  the  first  summons  was  not  served,  and  the  ac- 
tion commenced  within  the  limited  period ;  and  this  was  suf- 
ficient to  defeat  the  limitation,  or  extend  it  till  the  service 
was  made  under  the  second  summons,  which  was  issued  im- 
mediately on  the  return  of  the  first.  While  a  limitation  by 
statute  is  arbitrary  and  peremptory,  admitting  of  no  excuse 
beyond  the  period  fixed,  a  limitation  by  contract  must,  upon 
the  principles  governing  contracts,  be  more  flexible  in  its 
nature,  and  liable  to  be  defeated  or  extended  by  any  act  of 
the  defendant  which  prevents  the  plaintiff  from  bringing  his 
action  within  the  prescribed  period.  And  the  fundamental 
idea,  the  tacit  condition  upon  which  such  a  limitation  must 
rest,  and  without  which  it  could  not  be  tolerated  for  a  mo- 
ment, is,  that  the  defendant  shall  be  accessible  to  the  service 
of  process  by  which  suit  may  be  commenced  against  him,  if 
not  for  the  whole  period,  at  least  for  a  sufficient  time  imme- 
diately preceding  its  close  to  enable  the  plaintiff  to  commence 
suit  by  the  service  of  process  in  the  ordinary  legal  mode. 
If  this  be  not  so,  then  it  follows  that  the  defendant  could 
take  advantage  of  his  own  wrong,  and,  by  absenting  himself 
entirely,  defeat  the  plaintiff's  right  of  action. ^  But  this  im- 
portation into  the  contract  of  the  exception  of  absence,  after 
the  analogy  of  statutes  of  limitations,  has  not  elsewhere  met 
with  approbation.^  In  the  last-cited  case,  however,  no  at- 
tempt had  been  made  to  bring  the  action  within  the  limited 
period,  for  the  alleged  reason  that  the  action  could  not  have 
been  maintained  unless  the  defendant  had  voluntarily  ap- 
peared, and  there  was  no  means  of  compelling  an  appearance ; 
and  perhaps  the  observation  of  tiie  court,  that  nevertheless 

1  Peoria  Mar.  &  Fire  Ins.  Co.  v.  Hall,  12  Mich.  202. 

'■'  Ketchum  v.  Prot.  Ins.  Co.,  1  Allen  (New  Brunswick),  136. 

1116 


CH.  XX\a.]       LIMITATION  OF  SUIT  AS  TO  TIME  AND  PLACE.       [§  487 

the  plaintiff  might  have  sued  out  process  within  the  limited 
period,  is  indicative  that,  had  this  been  done,  the  result  would 
have  been  different. 

§  485.  Limitation  ;  Excuse;  Pending  Negotiations.  —  Nor  will 
the  operation  of  such  a  limitation  be  suspended  or  prevented 
by  negotiations  for  a  settlement,  as  by  a  reference  pending 
between  the  parties,  if  there  be  no  agreement  for  delay, 
and  the  defendant  has  done  nothing  to  mislead  the  plaintiff. ^ 
[Negotiations  which  terminate  two  months  before  the  period 
of  limitation  is  up  do  not  excuse  delay  beyond  such  period.^] 

§  486.  Limitation  ;  Excuse  ;  Effect  of  War.  —  Where  by  the 
terms  of  the  policy  suit  is  to  be  brought  within  twelve  months 
after  loss,  and  to  a  suit  brought  after  that  time  the  lapse  of 
tuTie  shall  be  deemed  conclusive  evidence  against  the  validity 
of  the  claim,  and  insured  was  prevented  by  the  intervention 
of  war  from  bringing  his  suit  within  twelve  months  after  the 
loss,  tiie  court  held  that  war  having  rendered  compliance  with 
this  condition  impossible,  the  presumption  from  the  lapse  of 
time  was  destroyed,  and  did  not  revive,  and  that  the  insured 
might  bring  his  suit  at  any  period  within  the  statute  of  limit- 
ations, without  regard  to  the  fact  whether  twelve  months 
of  peace  within  which  he  might  have  brought  his  suit  had 
elapsed.^ 

§  487.  Limitation;  Excuse;  Inconsistent  Conditions.  —  And 
where  the  other  conditions  are  such  that  a  reasonaljle  compli- 
ance with  them  is  inconsistent  with  a  compliance  with  the 
condition  requiring  suit  to  be  brought  within  a  specified  time, 
the  latter  will  not  be  allowed  to  defeat  a  recovery.  Thus, 
where  suit  is  to  be  brought  within  six  months  from  the  time 
of  the  loss,  and  the  loss  is  not  payable  until  sixty  days  after 
the  adjustment,  and  the  parties,  in  good  faith  and  without 
objection,  are  occupied  so  long  in  adjusting  the  loss  that  sixty 

1  Gooden  v.  Amoskeag  Fire  Ins.  Co.,  20  N.  H.  73. 

2  [Blanks  v.  Insurance  Co.,  3G  La.  Ann.  599.] 

3  Semmes  v.  City  Fire  Ins.  Co.  of  Hartford,  13  Wall.  (U.  S.)  158,  159,  re- 
versing s.  c.  6  Blatehf.  (C.  Ct.  U.  S  )  445;  Lynchbiirgh  Hose  Fire  Ins.  Co.  v. 
Knox,  ante,  §  39,  note ;  Hillyard  v.  Mut.  Ben.  Life  Ins.  Co.,  6  Vroom  (N.  J.), 
415;  [Phoenix  Ins.  Co.  v.  Underwood,  12  Heisk.  (Tenn.),  424  at  427.]  And  see 
ante,  §  350. 

1117 


§  488]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXVI. 

days  from  the  date  of  the  adjustment  docs  not  expire  within 
the  six  months,  a  suit  brought  at  the  expiration  of  sixty  days 
will  be  sustained.!  So  where  the  insurable  interest  was  a 
mechanic's  lien,  the  value  of  which  could  only  be  determined 
by  a  judgment  of  court  upon  suit,  which  was  brought  imme- 
diately upon  the  occurrence  of  the  loss,  but  did  not  come  to 
judgment  till  after  the  expiration  of  the  time  limited  for 
bringing  suit  for  the  loss,  it  being  also  stipulated  that  proof  of 
the  value  of  the  loss  must  be  made  before  it  could  be  de- 
manded, it  was  held  that  the  limitation  of  the  suit  was  inop- 
erative,^  The  insurers,  in  issuing  a  policy  upon  a  mechanic's 
lien,  must  be  presumed  to  issue  it  subject  to  the  unavoidable 
delay  in  the  judicial  ascertainment  of  the  value  of  the  inter- 
est if  a  loss  should  occur.  If,  with  reasonable  diligence,  that 
value  cannot  be  legally  ascertained  in  time  to  bring  an  action 
on  the  policy  within  the  limited  period,  it  follows  either  that 
there  is  a  dishonest  purpose  on  the  part  of  the  company  in 
inserting  such  a  condition,  or  else  they  intend  in  such  case  to 
waive  it,  or  treat  it  as  wholly  inapplicable  and  nugatory.^ 
Nor  will  a  collateral  suit  brought  after  the  expiration  of  the 
limited  time  in  aid  of  a  suit  at  law  brought  within  the  limited 
time,  be  barred  ;  as  where  a  bill  in  equity  is  brought  to  reform 
a  policy.  Had  there  been  no  suit  at  law  pending,  a  bill  in 
equity  for  relief  would  have  been  barred.*  And  if  the  insur- 
ers refuse  to  issue  a  policy,  and  a  bill  in  equity  to  enforce 
the  agreement  to  issue  it  be  filed,  they  cannot  a\ail  themselves 
of  such  a  limitation  as  applicable  to  the  bill  in  equity.^ 

§  488.  Limitation  ;  Waiver  ;  Refusal  to  Pay  ;  Adjustment.  — 
But  this  condition,  like  all  others  intended  for  the  benefit  of 
the  insurers,  may  be  waived  by  them  ;  and  as  the  condition  is 
a  harsh  one  in  its  bearing  on  the  insured,  and  works  a  for- 

1  Mayor,  &c.  of  New  York  v.  Hamilton  Fire  Ins.  Co.,  10  Bosvv.  (N.  Y.)  537; 
ante,  §  470;  Badger  v.  Phoenix  Ins.  Co.  (Oliio),  9  Ins.  L.  J.  627;  Chandler  v. 
St.  Paul,  &c.  Ins.  Co.,  21  Minn.  85.  But  see  Pennell  v.  Lamar  Fire  Ins.  Co.,  73 
111.  303. 

2  Stout  V.  City  Fire  Ins.  Co.  of  New  Haven,  12  Iowa,  871. 

3  Longhurst  v.  Star  Ins.  Co.,  19  Iowa,  364.     And  see  post,  §  50.3. 

*  Woodbury  Savings  Bank  v.  Charter  Oak  Ins.  Co.,  31  Conn.  518. 
s  Penlev  v.  Beacon  Ass.  Co.,  7  Grant  (Canada),  130. 

1118 


CH.  XXVI.]       LIMITATION  OP  SUIT  AS  TO  TIME  AND  PLACE.       [§  488 

feiture  when  upheld,  the  courts  will  not  require  very  strin- 
gent evidence  in  order  to  defeat  its  application.  A  positive 
act  of  the  company  intended  to  induce  postponement  is  not 
necessary.  And  where  the  evidence  upon  this  point  is  con- 
flicting, waiver  is  a  question  of  fact  for  the  jury.^  Merc 
silence,  however,  is  no  waiver,^  though  it  may  be  evidence 
thereof  to  go  to  a  jury  ;3  especially  if  it  has  a  tendency  to 
mislead  ;  ^  nor  are  loose  conversations  about  a  settlement ;  ^ 
nor  is  a  peremptory  refusal  to  pay,  though  on  the  ground  that 
actions  have  been  brought  by  other  parties,  and  nothing  will 
be  done  towards  payment  while  such  actions  are  pending,  a 
waiver  of  the  right  to  insist  upon  the  limitation.  The  insured 
is  not  misled  thereby,  nor  is  he  expressly  or  impliedly  re- 
quested to  delay  by  the  insurer.*^  [A  communication  from 
the  company  five  months  before  the  limitation  is  over,  that  it 
will  not  pay,  is  not  waiver  of  the  right  to  insist  on  the  limita- 
tion.'^] Nor,  as  we  have  just  seen,^  is  the  mere  pendency  of 
negotiations  in  good  faith.  If,  however,  they  are  not  pros- 
ecuted in  good  faith,  or  are  made  the  occasion  of  delay, — 
a  result  to  which  the  insurers  mainly  contribute  by  holding  out 
hopes  of  an  amicable  adjustment  whereby  the  insured  is  led  to 
feel  a  false  security,  this  is  a  waiver.^  So,  if  the  delay  for  any 
cause  be  attributable  to  the  insurers  and  the  insured  be  not  in 


1  Ripley  v.  ^tna  Ins.  Co.,  29  Barb.  (N.  Y.)  552 ;  Coursin  v.  Penn  Ins.  Co., 
46  Pa.  St.  323;  Ketchum  v.  Prot.  Ins.  Co.,  1  Allen  (N.  B.),  136;  Columbian 
Ins.  Co.  V.  Lawrence,  2  Pet.  (U.  S.)  25;  Graves  u.  Washington  Mar.  Ins.  Co., 
12  Allen  (Mass.),  891. 

2  Ante,  §  464  ;  Schroeder  v.  Keystone  Ins.  Co.,  2  Phila.  286 ;  s.  c.  14  Leg. 
Int.  164. 

3  Ripley  V.  iEtna  Ins.  Co.,  29  Barb.  (N.  Y.)  552 ;  post,  §  508. 

*  Westchester  Fire  Ins.  Co.  v.  Dodge  (Mich.),  9  Ins.  L.  J.  909. 
5  Ripley  V.  JEtna.  Ins,  Co.,  30  N.  Y.  136 ,  Lampkin  v.  Western  Ass.  Co.,  13 
U.  C.  (Q.  B.)  237. 

fi  Ripley  v.  JEtnn  Ins.  Co.,  30  N.  Y,  136.     See  end  of  this  section. 
^  [Garretson  v.  Hawkeye  Ins.  Co.,  65  Iowa,  468.] 

8  Ante,  §  485.  [Phoenix  Ins.  Co.  v.  Lebcher,  20  Brad.  450 ;  Allemania  Ins. 
Co.  V.  Little,  id.  431.] 

9  Mickey  v.  Burlington  Ins.  Co.,  Sup.  Ct.  (Iowa),  2  Ins.  L.  J.  15;  Grant  v. 
Lexington  Fire,  Life  &  Mar.  Ins.  Co.,  5  Ind.  23,26 ;  Fullam  y  New  York  Union 
Ins.  Co.,  7  Gray  (Mass.),  61  ;  Black  v.  Winnesheik  Ins.  Co.,  31  Wis.  74;  Der- 
rick V.  Lamar  Ins.  Co.,  74  111.  404. 

VOL.  ir.  —  27  1119 


§  488]  INSURANCE  :    FIRE,  LIFE,   ACCIDENT,   ETC.       [CH.  XXVI. 

fault.i  Thus,  in  Ames  v.  New  York  Union  Insurance  Company ,2 
where  the  policy  provided  tliat  suit  must  be  brought  within  six 
months  from  the  day  of  the  loss,  and  that  the  insurers  should 
have  ninety  days  after  proofs  were  furnished  within  which  to 
pay,  the  proofs  of  loss  were  delivered  to  the  defendants  some 
nine  days  after  the  fire.  They  were  then  retained,  without 
objection,  for  eighty-five  days,  when  suggestion  was  made  by 
the  insurers  that  further  proof  was  necessary,  which  further 
proof  was  furnished  in  seven  days  more.  No  further  objections 
were  made.  By  the  delay,  however,  the  time  within  which 
the  plaintiff  had  a  right  to  demand  payment  did  not  arrive  till 
after  the  time  limited  for  bringing  suit.  The  defendants  had 
thereby  secured  an  extension  of  time  within  which  to  pay  the 
loss,  and  put  it  out  of  the  power  of  the  plaintiff  to  success- 
fully maintain  a  suit  commenced  within  six  months  after  the 
loss  occurred.  To  the  same  effect  is  Curtis  v.  Home  Insur- 
ance Company,^  where  it  is  said  that  if  the  conduct  of  the 
insurers  during  the  negotiations  is  such  that  the  insured  may 

1  [If  by  holding  out  hopes  of  amicable  adjustment  the  company  induce  the 
insured  to  delay  suit,  the  company  is  estopped  to  take  advantage  of  the  limita- 
tion in  the  policy.  Martin  v.  Slate  Ins.  Co.,  44  N.  J.  485.  So  if  the  company 
induces  the  insured  to  believe  that  the  sum  admitted  to  be  due  on  an  adjustment 
will  be  paid  without  suit,  wherefore  he  delays  beyond  the  period  of  limitation 
named  in  the  policy,  the  company  is  estopped  to  set  up  this  limitation.  Paul 
Fire  &  Mar.  Ins.  Co.  v.  McGregor,  63  Tex.  399.  Any  conduct  of  the  company 
that  induces  the  assured  acting  as  a  prudent  man  to  suppose  that  there  is  no 
necessity  of  bringing  suit,  or  causes  him  to  delay  beyond  the  period  of  limita- 
tion, waives  it.  Bish  v.  Hawkeye  Ins.  Co.,  69  Iowa,  184.  Letters  from  the 
company  may  be  introduced  to  show  that  the  promises  of  the  company  in- 
duced the  plaintiff  to  delay  action  beyond  the  time  limited.  Eggleston  v. 
Council  Bluffs  Ins.  Co.,  65  Iowa,  308.  Delay  in  bringing  a  suit  on  a  policy  be- 
yond the  prescribed  time,  if  induced  by  the  company  in  bad  faith,  is  no  defence 
by  them  in  an  action.  Little  v.  Phoenix  Ins.  Co.,  123  Mass.  380  at  389.  Prom 
ises  to  pay  made  during  the  pendency  of  a  suit  waive  such  a  limit,  and  excuse" 
the  non-prosecution  of  tlie  said  suit.  Home  Ins.  Co.  v.  Myer,  93  111.  272  at 
276.] 

2  14  N.  Y.  254  ;  Killips  v.  Putnam  Fire  Ins.  Co.,  28  Wis.  472 ;  Akin  v.  Liver- 
pool, &c.  Ins.  Co.,  C.  Ct.  (Ark.),  6  Ins.  L.  J.  341  ;  Coffee  v.  Universal  Life  Ins. 
Co.,  C.  Ct.  (Wis.),  10  Ins.  L.  J.  525 ;  Brady  v.  Western  Ins.  Co.,  17  U.  C.  (C.  P.) 
597 

3  1  Bissell  (C.  Ct.  U.  S.),  485.  See  also  ante,  §  .360;  Davis  v.  Canada,  &c. 
Ins.  Co.,  39  U.  C.  (Q.  B.)  452;  Westchester  Fire  Ins.  Co.  r.  Dodge  (Mich.),  9 
Am.  Law  Record,  297. 

1120 


CH.  XXVI.]       LIMITATION  OF  SUIT  AS  TO  TIME  AND  PLACE.       [§  489 

reasonably  believe  that  they  Intend  to  pay  them,  delay'  is  ex- 
cusable ;  otherwise  not.  Upon  a  peremptory  refusal  to  pay 
suit  may  be  brought  at  once.^  [Demanding  and  receiving 
proofs  after  the  time  has  expired  waives  the  limitation  of 
suit.'-^  So  does  a  recognition  of  liability  by  the  agent  after 
expiration  of  the  period.^  Where  a  policy  provided  against 
waiver  of  any  condition  unless  by  writing,  the  limitation  of 
suit  to  six  months  cannot  be  waived  by  verbal  representations 
of  the  agent  that  it  is  needless  to  sue,  as  the  company  will  pay 
without  it.*  But  the  president  is  not  within  the  contemplation 
of  the  parties  in  using  the  word  "  agent  "  in  the  condition  "  no 
agent  is  empowered  to  waive  any  condition  of  the  policy  with- 
out special  authority,"  and  the  president  may  waive  the  lim- 
itation of  suit  to  six  months.^  Payment  to  the  mortgagee  of 
his  interest  in  the  policy  is  not  a  waiver  of  the  limitation  as 
to  the  mortgagor.^  That  the  insured  was  arrested  for  arson, 
not  at  the  instance  of  the  defendant,  is  no  excuse  for  not 
bringing  suit  within  a  year  from  the  loss  as  provided  in  the 
policy."] 

§489.  Limitation;  Suit. — "Suit"   to  recover  a   claim   by 

1  .yEtna  Ins.  Co.  v.  Maguire,  51  111.  342  ;  Penley  v.  Beacon  Ass.  Co.,  7  Gr. 
Ch.  (U.  C.)  130;  Frey  v.  Wellington  Ins.  Co.,  U.  C.  (Ct.  of  App.)  15  Can.  L.  J. 
190.  Contra,  Hatton  v.  Provincial  Ins.  Co.,  7  U.  C.  (C.  P.)  555.  So  upon  an 
adjustment  of  the  loss.  Illinois  Ins.  Co.  v.  Archdeacon,  82  111.  236  ;  Williams- 
burg Fire  Ins.  Co.  v.  Cary,  83  111.  453.  [Although  a  company  may  have  sixty 
days  in  which  to  pay  the  loss,  yet  if  before  that  time  an  authorized  agent  de- 
clares that  it  will  not  pay,  suit  may  be  commenced  at  once.  Georgia  Home  Ins. 
Co.  V.  Jacobs,  56  Tex.  366;  State  Ins.  Co.  v.  Maackens,  38  N.  J.  L.  564;  Hof- 
fecker  v.  N.  C.  C.  M.  Ins.  Co.,  5  Hous.  (Del.)  101.  When  a  company  offers  a 
specific  sum,  denying  liability  for  some  articles  as  not  being  covered  by  the  pol- 
icy, this  is  a  waiver  of  the  preliminary  proofs  of  loss  and  of  the  time  allowed 
for  decision  and  payment,  and  suit  may  be  brought  without  waiting  for  the 
lapse  of  the  sixty  days  provided  for  by  the  policy.  Commercial  Fire  Ins.  Co. 
V.  Allen,  80  Ala.  571.  Proof  of  waiver  of  the  "  sixty  days "  or  otlier  time 
clause  in  a  policy  must  be  positive,  as  it  is  otherwise  binding.  Schroeder  v. 
Keystone  Ins.  Co.,  2  Pliila.  206  at  286.] 

2  [Cousineau  v.  City  of  Lond.  Fire  Ins.  Co.,  15  Ont.  R.  329.] 
8  [Horst  V.  Insurance  Co.,  73  Tex.  67] 

*  [Waynesboro  Mut.  Fire  Ins.  Co.  v.  Conover,  98  Pa.  St.  384.] 

5  [Universal  Fire  Ins.  Co.  v.  Stewart,  3  Pennypacker  (Pa.),  536.] 

8  [King  V.  Watertown  Fire  Ins.  Co.,  47  Hun,  1  ] 

^  [Edson  V.  Merchants'  Mut.  Ins.  Co.,  35  La.  Ann.  353.] 

1121 


§  490]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC,       [CH.  XXVI. 

virtue  of  the  policy,  means  any  proceeding  in  a  court  for  the 
purpose  of  reaching  and  getting  possession  of  the  loss  which 
may  be  found  to  be  payable,  under  whatever  mode  the  law 
permits.  A  creditor,  for  instance,  of  the  person  who  suffers 
the  loss  may  proceed  by  trustee  process  or  foreign  attachment, 
and  under  this  try  the  question  of  the  liability  of  the  insurers 
to  the  insured.  And  such  suit,  if  brought  within  the  time 
limited,  is  a  compliance  with  the  condition.^  Of  course  the 
creditor  would,  in  such  case,  have  no  greater  rights  than  his 
debtor  ;  and  if  the  debtor  has  failed  to  comply  with  a  condition 
precedent  to  his  right,  as,  for  instance,  to  submit  to  ex- 
amination on  oath,  when  so  required,  his  creditor  cannot  re- 
cover. That  the  debtor  received  no  actual  notice  of  the 
requirement  will  not  help  the  creditor,  if  the  insurers  make 
reasonable  efforts  to  notify  him.  If  the  want  of  notice  were 
attributable  to  the  negligence  of  the  insurers,  it  might  be 
otherwise.  A  failure,  on  their  part,  to  notify  within  reason- 
able time  might  be  deemed  a  waiver  of  the  condition .^  [When  a 
clause  in  a  policy  declares  that  all  actions  against  it  for  claims 
must  be  "  prosecuted  within  a  certain  time,"  a  mere  presenta- 
tion of  proofs  is  not  sufficient.     There  must  be  a  lis  mota?'\ 

§  490,  Limitation  as  to  Place.  —  A  provision  in  the  charter 
defining  the  court  in  which  suit  may  be  brought,  on  certain 
conditions,  is  valid,  if  the  conditions  are  strictly  complied 
with.  If  not,  suit  may  be  brought  in  any  court  having  juris- 
diction.* A  condition  in  the  contract  limiting  the  venue  or 
place  where  the  action  shall  be  brought,  is  invalid.  There  is 
an  obvious  distinction  between  a  stipulation  by  contract  as  to 
the  time  when  a  right  of  action  shall  accrue  or  be  lost,  on  the 
one  hand,  and  a  stipulation  as  to  the  forum  before  which,  and 
the  proceedings  by  which,  an  action  shall  be  commenced  and 
prosecuted,  on  the  other.  The  one  is  a  condition  annexed  to 
the  acquisition  and  continuance  of  a  legal  right,  and  depends 
on  contract  and  the  acts  of  the  parties  ;  the  other  is  a  stipula- 
tion concerning  the  remedy,  which  is  created  and  regulated 

1  Harris  i-.  Plioenix  Ins.  Co.,  35  Conn.  310.  2  ibid. 

3  [Merchants'  Mut.  &c.  Co.  v.  La  Croix,  35  Texas,  249  at  262.] 
*  Arnet  v.  Milwaukee,  &c.  Ins.  Co.,  22  Wis.  516. 

1122 


CH.  XXVI.]       LIMITATION  OP  SUIT  AS  TO  TIME  AND  PLACE.       [§  491 

by  law.  The  time  within  which  money  shall  be  paid  is  matter 
of  contract,  depending  on  the  will  and  acts  of  the  parties  ;  but 
in  case  of  breach,  the  tribunal  before  which  a  remedy  is  to  be 
sought,  the  means  and  processes  by  which  it  is  to  be  con- 
ducted, affect  the  remedy,  and  are  created  and  regulated  by 
law.  The  remedy  does  not  depend  on  contract,  but  upon  law, 
generally  the  lex  fori,  regardless  of  the  lex  loci  contractus, 
which  regulates  the  construction  and  legal  effect  of  the  con- 
tract. It  is,  moreover,  a  well-settled  maxim  that  parties  can- 
not, by  their  consent,  give  jurisdiction  to  courts,  and  it  would 
seem  to  follow  that  parties  cannot  take  away  jurisdiction 
where  the  law  has  given  it.  And  mutual  and  stock  companies 
are  equally  under  the  disability .1  Upon  the  same  general 
grounds  an  agreement  not  to  sue,  except  in  a  particular  State, 
will  not  defeat  an  action  on  the  policy  in  a  different  State. 
Such  an  agreement  is  against  public  policy .2  It  is  also  against 
the  statute  of  Missouri.^  If  the  venue  be  fixed  by  the  terms 
of  the  charter,  a  subsequent  act  of  the  legislature  changing 
the  venue  and  extending  the  right  to  sue  in  counties  where 
there  is  an  agency  of  the  insurers  is  valid,  as  affecting  only 
the  remedy.* 

§  491.  Limitation  ;  Strictly  Construed.  —  But  the  limitation 
as  to  venue  and  as  to  time  will  be  strictly  construed  and  con- 
fined to  the  exact  case  stated  in  the  charter  or  contract.  Thus 
where  the  charter  provides  that  after  a  loss  the  directors  shall 
proceed  and  determine  the  amount,  and  if  the  party  suffering 
is  not  satisfied  with  the  determination,  he  may  bring  his  ac- 
tion at  a  particular  court ;  if  the  directors  repudiate  the  claim 
altogether,  the  party  suffering  may  sue  in  any  court  open  to 
him  by  the  general  provisions  of  law.  The  limitation  can  only 
be  supported  in  the  special  case  provided  for.°     The  reasons 


1  Nute  V.  Hamilton  Mut.  Ins.  Co.,  6  Gray  (Mass.),  174;  Hall  v.  People's  Mut. 
Fire  Ins.  Co.,  id.  185;  Ainesbury  et.  al.  v.  Bowditch  Mut.  Fire  Ins.  Co.,  id.  596. 

2  Reichard  v.  Manhattan  Life  Ins.  Co.,  31  Mo.  518. 

3  Rev.  Code,  884. 

4  Howard  w.  Kentucky  &  Louisville  Mut.   Ins.  Co.,  13  B.  Mon.  (Ky.)  282; 
Sanders  v.  Hillsborough  Ins.  Co.,  44  N.  H.  238. 

*  Williams  v.  Columbian  Mut.  Ins.  Co.,  29  Me.  465 ;  Boynton  et  al.  v.  Mid- 
1123 


§  491]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XXVI. 

for  the  distinction  are  obvious.  So  far  as  the  claim  for  insur- 
ance is  disputed,  and  ma}^  be  a  subject  of  litigation  between 
the  parties,  the  insurers  may  well  provide  in  their  by-laws 
that  an  action  shall  be  speedily  brought,  so  that  the  extent  of 
their  liability  may  be  settled  while  the  facts  are  recent,  and 
the  witnesses  by  whom  they  are  to  be  proved  are  readily  ac- 
cessible. But  there  is  no  such  reason  for  the  limitation  of 
the  time  within  which  a  suit  shall  be  brought,  when  it  is  sought 
to  recover  only  the  amount  under  the  policy,  which  has  been 
ascertained  and  admitted  to  be  justly  due  by  the  insurers.^ 
And  a  limitation  subject  to  a  condition  which  may  be  defeated 
by  either  party,  as  that  no  suit  shall  be  brought  until  the  case 
has  been  submitted  to  arbitration,  since  either  party  may  re- 
fuse to  arbitrate,  is  invalid.^ 

dlesex  Mut.  Fire  Ins.  Co.,  4  Met.  (Mass.)  212;  Martin  v.  Penobscot  Mut.  Fire 
Ins.  Co.,  53  Me.  419 ;  Arnet  v.  Milwaukee  Mech.  Mut.  Ins.  Co.,  22  Wis.  516. 

1  Amesbury  et  al.  v.  Bowditch  Mut.  Fire  Ins.  Co.,  6  Gray  (Mass.),  608 ;  Bart- 
lett  V.  Union  Mut.  Fire  Ins.  Co.,  46  Me.  500 ;  Nevins  v.  Rockingham  Fire  Ins. 
Co.,  5  Fost.  (N.  H.)  22  ;  Indiana  Mut.  Fire  Ins.  Co.  v.  Routledge,  7  Ind.  25;  Phil- 
lips V.  Prot.  Ins.  Co.,  14  Mo.  220.  In  Phillips's  case  just  cited,  the  distinction 
adverted  to  in  St.  Louis  Insurance  Company  v.  Kyle,  11  Mo.  278,  that  there  could 
be  no  waiver  of  notice,  while  there  might  be  of  preliminary  proof,  is  declared 
not  to  be  well  founded.  It  has  been  held,  however,  in  Ohio,  that,  although  the 
insurers  neglect  to  ascertain  and  determine  the  loss,  under  a  policy  that  provides 
that  an  action  shall  be  brought  in  a  certain  county  if  the  insured  shall  not  be 
satisfied,  the  action  must  be  brought  in  the  county  named ;  the  statute  of  that 
State,  providing  that  suits  on  policies  of  insurance  may  be  brought  in  any 
county  where  the  contract  is  made,  except  in  cases  whore  the  policies  are  is- 
sued by  companies  whose  charters  specify  the  county  in  which  suit  shall  be 
brought.  Portage  County  Mut.  Ins.  Co.  v.  Stukey,  18  Ohio,  455.  This  deci- 
sion seems  to  rest  upon  the  peculiarity  of  the  general  statute.  And  in  Dutton 
V.  Vermont  Mut.  Fire  Insurance  Company,  17  Vt.  360,  it  is  held,  contrary  to 
the  almost  uniform  current  of  authorities,  that  a  refusal  to  pay  a  claim  is  a  de- 
termination and  ascertainment,  within  the  meaning  of  such  a  condition,  and 
consequently  no  action  can  be  maintained  except  as  provided  in  the  policy. 
No  reference  by  court  or  counsel  is  made  to  any  of  the  decisions  to  the 
contrary. 

2  Leach  v.  Eepublic  Fire  Ins.  Co.,  58  N.  H.  245;  post,  §  495. 

1124 


CH.  XXVII.]  ARBITRATION.  [§  492 


CHAPTER   XXYII. 

ARBITRATION. 

Analysis. 

§  492.         A  general  agreement  to  refer  will  not  be  specifically  enforced,  though 
encouraged  by  the  courts,  which  will  enforce  an  award  fairly  made. 
A  provision  for  adjustment  by  directors  in  case  the  policy  is  forfeited 
puts  the  matter  in  their  hands,  and  the  courts  have  uo  voice  in 
the  matter. 
§  493.         A  special  agreement  for  reference  which  does  not  go  to  the  root  of  the 
action,  but   merely  provides  for  the  adjustment  of  some 
special  matter,  as  the  amount  of  loss,  or  that  some  particu- 
lar person  or  court  shall  settle  all  disputes,  is  valid  (see  also 
§  495). 
But  unless  it  is  distinctly  agreed  that  arbitration  shall  be  a  con- 
dition precedent,  it  will  be  treated  as  a  collateral  matter, 
and  suit  may  go  on  upon  the  question  of  liability  (unless  the 
company  admits  it),  while  arbitration  is  being  had  on  the 
amount  of  loss,  or  before  it  is  had,  §  493,  and  n.     The  action 
is  to  be  brought  on  the  policy,  not  the  award,  §  493. 
§  493  A.    If  arbitration  is  to  be  had  upon  the  ivrittcn  request  of  either  party,  the 
company  must  j'jroye  a  request  in  writing  on  its  behalf,  in  order  to 
set  up  the  condition  (see  §  295,  end). 
§  494.         If  by  a  charter  provision  it  seems  the  intent  of  the  legislature  to  com- 
pel resort  to  arbitration  before  going  to  the  courts,  the  latter  will 
require  the  parties  to  arbitrate  first. 
§  496.         Equitable  adjustment  after  forfeiture.     Discretion  of  directors. 
§  496  a.      Fraud.     Company  may  sometimes  deny  liability  after  award. 
§  496  B.     Waiver  or  estoppel  by  refusal  to  pay  any  sum,  or  proceeding  to  repair, 
or  bad  faith. 
Award  void  if  arbitrators  exceed  their  powers,  or  do  not  confoim  to 

conditions. 
Arbitration  upheld  as  an  appraisement. 
If  arbitrators  tir.st  selected  fail,  a  new  selection  should  be  made. 

§  492.  Agreement  to  refer  generally  invalid;  Waiver.  —  Not 
unfrequently  policies  contain  a  stipulation,  that  in  case  of  loss, 
and  the  parties  cannot  agree  upon  the  terms  of  adjustment, 
all  matters  in  dispute  shall  be  submitted  to  arbitration,  —  a 
practice  which  may  be  traced  almost  to  the  infancy  of  insur- 
ance, and  originated  no  doubt  in  a  laudable  desire  to  avoid  the 

1125 


§  492]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXVII. 

vexation,  delay,  and  expense  of  litigation.  It  has  not,  how- 
ever, proved  so  effectual  for  that  purpose  as  was  anticipated, 
since  the  courts  have  very  uniformly  deemed  the  stipulation  to 
have  no  binding  force.  It  plainly  tends  to  oust  them  of  their 
jurisdiction,  and  they  will  not  specifically  enforce  the  agree- 
ment.i  An  agreement  not  to  bring  an  action  after  one  year, 
and  not  to  bring  any  action  till  arbitration  has  been  had,  is 
void. 2  If,  however,  the  parties  consent  or  prefer  to  adjust 
their  disputes  in  this  way,  the  courts  will  not  only  not  inter- 
fere to  prevent,  but  will  rather  encourage,  such  a  course  ;  and 
if  arbitration  be  resorted  to,  and  proceed  to  an  award,  the 
award  will  be  recognized  as  a  good  plea  in  bar  to  an  action  on 
the  policy.^  So  where  there  has  been  an  actual  submission, 
and  the  reference  is  still  pending.^  And  the  courts  will  en- 
force the  award.^  [Where  the  question  of  insurable  interest 
is  submitted  to  arbitration  (resulting  in  favor  of  the  plaintiff) 
the  court  cannot  go  behind  the  award.^]  But  neither  a  pro- 
vision enabling  the  parties  to  submit  matters  in  controversy 
to  arbitration,  nor  a  covenant  so  to  do,  will  prevent  the 
courts  from  taking  their  rightful  jurisdiction  in  the  premises. 
All  such  agreements  have  for  their  purpose  the  substitution  of 
a  tribunal,  erected  by  the  parties,  for  the  tribunal  which  public 
policy  and  the  general  laws  have  established  and  clothed  with 
the  requisite  powers  to  make  them  the  efficient  and,  upon  the 
whole,  the  best  means  of  hearing  and  determining  controver- 

1  Thompson  v.  Charnock,  8  T.  R.  139  ;  Goldstone  v.  Osborne,  2  C.  &  P.  550 : 
[German-Amer.  Ins.  Co.  v.  Etherton,  25  Neb.  505,  508 ;  Hurst  v.  Litchfield,  39 
N.  Y.  377  at  379;  Mark  v.  Nat.  Fire  Ins.  Co.,  24  Hun,  565.  A  condition  in  the 
policy  to  refer  to  arbitration  does  not  prevent  bringing  a  suit  at  law  or  in  equity. 
Reed  v.  Washington  Ins.  Co.,  138  Mass.  575.  A  general  agreement  not  to 
bring  suit  until  after  an  award  shall  be  made,  is  revocable  by  either  party, 
and  the  bringing  of  suit  is  in  itself  a  revocation.  Commercial  Union  Ass.  Co. 
V.  Hocking,  115  Pa.  St.  407.] 

2  Leach  v.  Republic  Ins.  Co.  (N.  H.),  9  Reptr.  181  ;  s.  c.  58  N.  H.  245. 

3  Roper  t'.  Lendon,  1  El.  &  El.  (Q.  B.)  825;  102  E.  C.  L.  825;  Burchell  v. 
Marsh,  17  How.  (U.  S.)  344  ;  Johnson  v.  Humboldt  Ins.  Co.,  91  111.  92.  But  see 
Barber  v.  Fire,  &c.  Ins.  Co.,  16  W.  Va.  658. 

*  Kill  V.  Hollister,  1  Wilson,  129. 

5  Richardson  v.  Suffolk  Ins.  Co.,  3  Met.  (Mass.)  573 ;  Hughes  v.  Mut.  Fire 
Ins.  Co.  of  New  Castle,  9  U.  C.  (Q.  B.)  387. 

6  [Troop  V.  Anchor  M.  Ins.  Co.,  8  Russ.  &  Geld.  (Nova  Scotia)  234.] 

1126 


CH.  XXVII.]  ARBITRATION.  [§  493 

sies  between  individuals.  If  the  stipulation  were  to  be  held 
valid,  the  courts  might  be  called  upon  to  enforce  it.  The  dis- 
pute would  thus  come  to  them  at  last,  and  they  have  preferred 
to  ignore  the  validity  of  the  stipulation  and  to  refuse  to  enforce 
it,  rather  than  permit  themselves  to  be  occupied  with  the 
somewhat  ludicrous  question  whether  parties  may  come  into 
court  for  the  purpose  of  compelling  each  other  to  keep  out.^ 
In  Louisiana,  it  has  been  intimated  that  the  agreement  to  re- 
fer would  be  upheld  if  insisted  upon ;  but  the  point  was  not 
directly  in  issue,  the  court  holding  that  the  insurers,  having 
refused  to  pay,  without  invoking  this  article,  had  waived  the 
right  to  set  it  up  in  bar  of  the  action.^ 

§  493.  Arbitration  ;  Agreement  to  refer  Special  Matter  valid. 
—  While,  however,  it  is  perfectly  well  settled  that  any  agree- 
ment that  contemplates  the  exclusion  of  an  aggrieved  party 
from  a  suit  of  law  is  invalid,  there  seems  to  be  no  doubt  that 
any  agreement  as  to  the  mode  of  adjustment  or  of  settling  the 
amount  of  loss,  or  the  time  for  paying  it,  or  any  particulars  of 
that  nature  which  do  not  go  to  the  root  of  the  action,  but  are 
preliminary  thereto  or  in  aid  thereof,  —  as,  for  instance,  an 
agreement  that  at  the  trial  of  an  action  it  shall  not  be  lawful 
for  either  party  to  enter  into  the  question  of  the  amount  of 
the  loss,  but  that  it  shall  always  be  settled  by  reference,  and 
that  the  only  question  to  be  tried  at  law  shall  be  the  right  to 
recover,  —  is  valid.^     A  distinction  is  made  between  an  agree- 

1  Kill  V.  Hollister,  1  "Wilson,  129  ;  Scott  v.  Avery,  20  Eng.  L.  &  Eq.  327  ;  s.  c. 
5  H.  L.  C.  811 ;  Scott  v.  The  Phoenix  Ass.  Co.,  1  Stuart  (L.  C),  152  ;  Stephen- 
son V.  P.  F.  &  M.  Ins.  Co.,  54  Me.  55,  70. 

2  Millaudon  v.  Atlantic  Ins.  Co.,  8  La.  557.  See  also  Robinson  i'.  Georges 
Ins.  Co.,  17  Me.  131.  And  if  the  policy  provides  one  mode  of  appraisal,  and 
tlie  insurers  provide  a  diflf'erent  mode,  it  may  amount  to  a  waiver.  Davis  v. 
Western  Mass.  Ins.  Co.,  8  R.  I.  277. 

^  [Wlien  it  is  agreed  that  no  suit  shall  be  maintained  until  an  award  has  been 
had,  fixing  the  amount  of  the  claim,  the  agreement  will  be  respected  by  the 
courts.  Adams  v.  Insurance  Cos.,  70  Cal.  198 ;  Carroll  v.  Girard  Fire  Ins.  Co.,  72 
Cal.  297  ;  Gauche  v.  Lond.,  &c.  Ins.  Co.,  10  Fed.  Rep.  347  ;  4  Woods,  102.  Where 
an  award  upon  "  matters  in  dispute  "  is  a  condition  precedent  to  action,  delay 
of  the  arbitrators  in  coming  to  a  decision  will  not  justify  suit,  even  though  the 
company  denies  all  liability.  Lantalum  v.  Anchor  Mar.  Ins.  Co.,  22  N.  B.  R. 
14.  But  an  agreement  to  fix  the  amount  of  loss  by  arbitration  does  not  make 
it  a  condition  precedent  to  suit  unless  clearly  so  stipulated.     Canfield  v.  Water- 

1127 


§  493]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.       [CH.  XXVII. 

ment  to  refer  every  matter  in  dispute  to  arbitration,  ajid  one 
to  pay  such  a  sum  as  the  damage  shall  be  found  by  a  third 
party  to  amount  to,  which  latter  operates  to  reduce  the  policy 
from  a  contract  to  pay  the  amount  of  damage  absolutely,  and 
to  substitute  the  arbitrator  for  the  jury  to  ascertain  its 
amount.^  The  following  condition  is  common  in  English  pol- 
icies, and  is  believed  to  be  valid  :  — 

"  If  any  difference  shall  arise  in  the  adjustment  of  a  loss, 
the  amount  (if  any)  to  be  paid  by  the  company  shall,  whether 
the  right  to  recover  on  the  policy  be  disputed  or  not,  and 
independently  of  all  other  questions,  be  submitted  to  the 
arbitration  of  some  person,  to  be  chosen  by  both  parties,  or  of 
two  indifferent  persons,  one  to  be  chosen  by  the  party  in- 
sured, and  the  other  by  the  directors.  And  in  case  either 
party  shall  refuse  or  neglect  to  appoint  an  arbitrator  within 

town  Fire  Ins.  Co.,  55  Wis.  419;  Birmingham  Fire  Ins.  Co.  i'.  Pulver,  126  111. 
329;  Liverpool,  &c.  Ins.  Co.  v.  Creighton,  51  Ga.  95  at  110.  A  mere  stipulation 
that  in  case  of  a  difference  of  opinion  as  to  the  amount  of  loss,  it  shall  be  sub- 
mitted to  arbitration  is  not  a  condition  precedent  to  action  on  the  policy,  but  a 
collateral  agreement.  Crossley  v.  Conn.  Fire  Ins.  Co.,  27  Fed.  Rep.  30  (Mass.) 
1886  (reviewing  Eng.  &  Amer.  cases).  Suit  may  be  brought  before  the  arbitra- 
tion. And  a  stay  of  proceedings  at  law  will  not  be  granted  in  such  a  case  un- 
less the  company  will  admit  its  liability.  If  it  will  not,  then  the  suit  may  go  on 
to  establish  liability  for  the  loss,  and  the  arbitration  will  go  on  to  fix  the  amount. 
Hughes  V.  Lond.  Ass.  Co.,  4  Ont.  R.  293.  If  there  is  a  stipulation  that  if  a 
dispute  shall  arise  as  to  the  amount  of  loss,  it  shall  on  request  of  either  party 
be  referred  to  arbitrators.  It  is  not  a  condition  precedent  to  action,  but  whether 
at  the  trial  the  amount  of  loss  can  be  proved  against  the  defendant's  objection 
by  any  other  evidence  than  an  award,  where  one  has  been  requested,  is  a  ques- 
tion suggested  by  the  judge,  but  not  decided,  because  it  did  not  arise  on  the 
record.  Gere  v.  Council  Bluffs  Ins.  Co.,  67  Iowa,  272.  The  answer  would  seem 
clearly  no,  if  the  request  was  made  within  proper  time.  Otherwise  the  agree- 
ment for  arbitration  of  loss  could  be  annulled  by  one  party  to  it,  which  is  di- 
rectly contrary  to  both  reason  and  authority,  wherever  the  provision  for  arbitra- 
tion refers  to  amount  of  loss  and  does  not  prevent  suit.  A  clause  providing  for 
arbitration  in  respect  to  the  "  amount  of  sound  value  and  of  damage  to  the 
property,"  has  no  reference  to  property  absolutely  destroyed.  Rosenwald  v. 
Phoenix  Ins.  Co.,  50  Hun,  172.  A  stipulation  for  an  appraisal  as  a  pre-requisite 
to  suit  is  legal.     "Wolff  v.  Insurance  Co.,  50  N.  J.  4.53.] 

1  Scott  V.  Avery,  20  Eng.  L.  &  Eq.  327;  s.  c.  5  H.  L.  C  811  ;  Braunstein  v. 
Accidental  Death  Ass.  Co.,  1  B.  &  S.  782;  Tredwen  v.  Holman,  1  H.  &  C.  72  ; 
Lowndes  r.  Stamford,  18  Q.  B.  425 ;  Trott  v.  City  Ins.  Co.,  1  Cliff.  (C.  Ct.  U.  S.) 
439;  London,  &c.  Ins.  Co.  v.  Honey,  2  Vict.  L.  Rep.  L.  9;  Wright  i-.  Ward,  24 
L.  T.  N.  s.  439. 

1128 


CH.  XXYII.]  ARBITRATION.  [§  493 

twenty-eight  da^^s  after  notice,  the  other  party  shall  appoint 
both  arbitrators ;  and  in  case  of  the  arbitrators  differing 
therein,  the  amount  shall  be  submitted  to  the  arbitration  of 
an  umpire,  to  be  chosen  by  the  arbitrators  before  they  proceed 
to  act,  and  the  award  of  the  arbitrators  or  umpire  (as  the 
case  may  be)  shall  be  conclusive  evidence  of  the  amount  of 
the  loss,  and  the  party  insured  shall  not  be  entitled  to  com- 
mence or  maintain  any  action  at  law  or  suit  in  equity  upon 
his  policy,  until  the  amount  of  the  loss  shall  have  been  referred 
and  determined  as  hereinbefore  provided,  and  then  only  for 
the  amount  so  awarded.  Each  party  to  pay  his  or  their  own 
costs  of  the  reference,  and  a  moiety  of  the  costs  of  the  award, 
and  of  the  arbitrators  and  umpire ;  and  the  reference,  in  all 
other  respects,  to  be  subject  to  such  rules  and  conditions  as 
are  usually  inserted  in  orders  of  reference  at  Msi  Frius,  if 
the  parties  differ  about  the  same."  ^  In  Goldstone  v.  Os- 
borne,2  ^j^g  agreement  was,  that  if  any  difference  should  arise 
on  any  claim,  it  should  be  submitted  to  arbitration,  and  that 
no  compensation  shall  be  payable  until  after  an  award  deter- 
mining its  amount.  But,  it  appearing  that  the  insurers  dis- 
puted the  right  of  the  plaintiff  to  recover  any  thing,  Best, 
C.  J.,  allowed  the  action  to  go  on,  although  there  had  been 
no  reference  as  to  the  amount  of  loss.^  [Where  it  is  agreed 
that  an  award  shall  have  no  reference  to  any  other  question 
than  the  estimate  of  damage  done,  the  assured  properly  brings 
an  action  on  the  policy  and  not  on  the  award.*  When  parties 
stipulate  that  disputes,  whether  actual  or  prospective,  shall  be 
submitted  to  the  arbitrament  of  a  particular  person  or  tri- 
bunal, they  cannot  seek  redress  elsewhere.^  When  the  con- 
tract provided  that  "  the  chief  engineer  of  the  railroad " 
should  settle  all  disputes,  it  was  held  that  it  must  refer  to  the 


1  Law  of  Fire  Insurance,  Bunyon,  108. 

2  2  C.  &  P.  550. 

8  See  also  Millaudon  v.  Atlantic  Ins.  Co.,  8  La.  557. 

4  [Soars  V.  Home  Ins.  Co.,  140  Mass.  343.] 

6  [Snodgrass  v.  Gavit,  28  Pa.  St.  221  at  224,  dictum.  The  decision  there  is 
final.  O'Reilly  v.  Kerns,  52  Pa.  St.  214  at  217 ;  Condon  v.  South  Side  R.  R.,  14 
Grat.  302  at  309.] 

1129 


§  494]  INSURANCE :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXVII. 

person  holding  that  office  when  the  dispute  arose,  not  when, 
the  contract  was  made.^] 

[§  493  A.  Arbitration  to  be  had  upon  Written  Request.  — ■ 
When  the  policy  provides  for  arbitration  upon  the  written  re- 
quest of  either  party,  a  request  in  writing  is  a  condition  pre- 
cedent to  appraisal  and  award,  and  if  there  is  no  such  request 
arbitration  is  not  necessary  before  suit.^  When  it  was  in  the 
power  of  the  company  to  have  an  arbitration  by  written  re- 
quest, and  they  did  not  avail  themselves  of  the  right,  they 
are  estopped  from  setting  up  "  no  award  "  as  a  defence  to  an 
action  by  the  assured.^  The  company  must  prove  a  written 
request  in  order  to  set  up  the  condition.  A  verbal  request 
is  not  sufficient.^  If  written  request  is  not  made,  the  condi- 
tion for  arbitration  is  waived.^  And  although  the  parties  do 
actually  attempt  to  arbitrate  without  written  request,  it  is  a 
common-law  arbitration  subject  to  revocation,  and  the  bring- 
ing of  suit  is  such  a  revocation.  Where  in  case  of  any  dif- 
ference touching  any  loss  the  matter  is,  at  the  written  request 
of  either  party,  to  be  submitted  to  arbitrators,  and  no  action 
is  to  be  brought  until  the  amount  of  loss  is  fixed  by  an 
award,  and  it  appears  that  the  plaintiff  made  a  written  re- 
quest for  arbitration,  but  the  company  refused,  the  plaintiff 
may  proceed  with  his  suit.^] 

§494.  Arbitration;  Provision  for  in  Charter.  —  If,  by  the 
terms  of  the  charter,  arbitration  be  provided  for  in  such  a 
manner  as  to  indicate  that  it  is  the  intention  of  the  legislature 
to  erect  such  a  tribunal  for  the  benefit  of  the  parties,  and  to 
compel  a  resort  to  arbitration  in  the  first  instance,  before  ap- 
pealing to  the  courts,  then  the  courts  will  not  entertain  a  suit 
until  such  arbitration  has  been  had.^     The  question  underwent 

1  [North  Lebanon  R.  R.  v.  McGrann,  .33  Pa.  St.  5.30  at  534.] 

2  [Wright  V.  Susquehanna  Mut.  Fire  Ins.  Co.,  40  Pa.  St.  29.] 

3  [Plioenix  Ins.  Co.  v.  Badger,  53  Wis.  283  at  288.] 

4  [Wallace  v.  Ger.-Am.  Ins.  Co.,  2  Fed.  Rep.  658  (Iowa),  1880 ;  1  McCrary,  335.] 

5  [Nurney  v.  Fireman's  Fund  Ins.  Co.,  G3  Mich.  6.33.] 

6  [Adams  v.  National  Ins.  Co.,  20  N.  B.  R.  569 ;  Bowes  v.  National  Ins.  Co., 
id.  438.  (In  the  first  case  one  judge  held  that  the  refusal  of  the  company  to 
appoint  an  arbitrator  would  not  relieve  the  insured  from  the  condition).] 

7  Reeves  i^.  White,  10  Eng.  L.  &  Eq.  332;  Crisp  v.  Bunbury,  8  Bing.  394; 
Ex  parte  Payne,  5  Dowl.  &  L.  P.  C.  079. 

1130 


CH.  XXVII.]  ARBITRATION.  [§  494 

further  elaborate  consideration  in  the  case  of  Elliott  v.  Royal 
Exchange  Insurance  Company ,i  where  the  discussion  turned 
upon  the  point  whether  the  form  of  the  provision  in  question 
was  such  as  to  amount  to  a  condition  precedent,  or  only  to  a 
collateral  stipulation.  If  the  former,  then  it  was  valid  ;  if  the 
latter,  then  it  was  of  no  avail.  The  facts  were,  so  far  as  they  do 
not  appear  in  the  opinion  of  the  court,  that  the  })olicy,  which 
was  under  seal,  in  one  of  its  articles  provided  that  "  the  loss  or 
damages,  after  the  same  shall  be  adjusted,  shall  immediately 
be  paid,"  and  that  "  in  case  any  difference  shall  arise  touch- 
ing any  loss  or  damage,  such  difference  shall  be  submitted  " 
to  arbitrators,  whose  award  in  writing  shall  be  conclusive  and 
binding  on  the  parties.  The  covenant  was  to  pay  according 
to  the  exact  tenor  of  the  articles  subjoined  to  the  policy. 
Upon  this  policy  an  action  was  brought,  and  the  defendants 
replied  that  a  difference  arose  between  them  and  the  plaintiff, 
which  the  plaintiff  refused  to  submit  to  arbitration.  The  ma- 
jority of  the  court  concurred  with  Kelly,  C.  B.,  who  said  :  — 
"  The  question  in  this  case  is,  whether  the  plaintiff  is  enti- 
tled to  recover  the  amount  of  a  loss  by  fire,  which  he  has  suf- 
fered, and  for  which  he  claims  to  be  compensated  under  a 
policy  effected  by  the  defendants,  such  loss  not  having  been 
adjusted  as  pointed  out  in  the  articles,  subject  to  which  the 
policy  was  made.  The  form  of  the  policy  is  a  covenant  by 
the  defendants  that  their  capital,  stock,  <fec.,  shall  be  subject 
to  make  good  the  plaintiff's  loss,  £2200,  '  according  to  the 
exact  tenor  of  the  articles  thereunto  subjoined.'  If  the  sen- 
tence had  stopped  at  the  figures  X2200,  and  in  a  subse- 
quent part  of  the  instrument  there  had  been  independent 
provisions,  which  might  be  supposed  to  have  qualified  these 
words,  it  might  have  been  a  question  of  greater  doubt  whether 
these  provisions  were  to  be  held  a  condition  precedent  or  a 
collateral  stipulation,  which  could  not  avail  to  oust  the  juris- 
diction of  the  court.  But  the  covenant  is  itself,  in  its  very 
terms,  qualified  and  made  conditional  by  the  subsequent 
words  referring  to  the  articles,  which,  following  without  any 
interval,  form  an  integral  and  substantial  part  of  the  cove- 
I  2  L.  Rep.  (Exch.  Cas.)  237. 

1131 


§  494]       insurance:  fire,  life,  accident,  etc.     [ch.  xxvii. 

nant.  Therefore,  in  order  to  ascertain  whether,  when  a  loss 
has  been  sustained  by  the  insured,  a  right  of  action  has  ac 
crued  to  him,  we  must  look  at  the  articles,  '  according  to  the 
exact  tenor '  of  which  the  insurance  is  to  be  paid.  Now  the 
10th  article  provides  that  upon  the  occurrence  of  any  loss  or 
damage  by  fire,  the  party  is  forthwith  to  give  notice  to  the 
officers,  and  within  fifteen  days  to  deliver  in  a  particular 
account  of  his  damage,  evidenced  and  verified  as  may  be 
required,  '  which  loss  or  damage,  after  the  same  shall  be  ad- 
justed, shall  immediately  be  paid  in  money,'  with  an  option  to 
the  company  to  reinstate.  Collecting  the  meaning  of  the  par- 
ties from  the  language  used  by  them  in  this  sentence,  and 
putting  on  it  the  ordinary  and  usual  construction,  the  effect 
is,  not  that  the  plaintiff  is,  in  the  event  of  loss,  entitled  imme- 
diately to  recover  the  amount  of  his  loss,  but  what  he  is  en- 
titled to  recover  is  the  amount  of  the  loss  after  it  has  been 
adjusted,  which  means  adjusted  in  the  manner  pointed  out  by 
the  subsequent  articles.  It  appears  to  me  that  to  decide  to 
the  contrary  would  be  to  disregard  entirely  the  obvious  inten- 
tions of  the  parties,  expressed  in  words  which  state  em- 
phatically that  before  the  loss  is  paid  its  amount  shall  be 
adjusted. 

"  We  were  pressed  with  the  weight  of  authority,  and  it  was 
ably  argued  that  it  is  impossible  to  decide  i-n  favor  of  the 
defendants,  consistently  with  prior  decisions,  and  with  the 
well-recognized  principle,  that  no  contract  shall  oust  the  juris- 
diction of  the  courts  of  law ;  and  it  was  urged  that  the  con- 
tract was  neither  more  nor  less  than  a  contract  on  the  part 
of  the  company  to  make  good  the  loss,  with  a  separate  and 
collateral  stipulation  that  the  amount  shall  be  referred  to 
arbitration.  It  is  no  doubt  difficult  to  reconcile  and  give 
effect  to  two  propositions  so  nearly  in  direct  opposition,  as 
that  no  contract  of  the  parties  shall  oust  the  jurisdiction  of 
the  courts,  and  that  on  any  difference  arising  between  two 
parties,  it  shall  be  referred  to  arbitration.  But  the  fair  result 
of  the  authorities  is  that,  if  the  contract  is  in  such  terms  that 
a  reference  to  a  third  person,  or  to  a  board  of  directors,  is  a 
condition  precedent  to  the  right  of  the  party  to  maintain  an 
1132 


CH.  XXVII.]  ARBITRATION.  [§  494 

action,  then  he  is  not  entitled  to  maintain  it  until  that  condi- 
tion is  complied  with ;  but  if,  on  the  other  hand,  the  contract 
is  to  pay  for  the  loss  (or  other  matter  in  question),  with  a 
subsequent  contract  to  refer  the  matter  to  arbitration,  con- 
tained in  a  distinct  clause,  collateral  to  the  other,  then  that 
contract  for  reference  shall  not  oust  the  jurisdiction  of  the 
courts,  or  deprive  the  party  of  his  action.  Now  it  seems  to 
me  impossible,  without  directly  overruling  or  disregarding 
the  decision  of  the  House  of  Lords,  in  iScott  v.  Avery ,i  to  say 
that  the  stipulation  here  is  not  a  condition  precedent.  There 
the  words  were  that  '  the  sum  to  be  paid  by  this  association 
to  any  suffering  member  for  any  loss  or  damage  shall,  in  the 
first  instance,  be  ascertained  by  the  committee.'  Here  they 
are  '  that  the  loss,  after  the  same  shall  he  adjusted,  shall  imme- 
diately be  paid.'  In  both  cases  a  stipulation  follows  that  any 
difference  arising  between  the  parties  shall  be  referred  to  arbi- 
tration. The  House  of  Lords,  in  that  case,  having  held  that 
the  ascertainment  of  the  loss  by  the  committee  or  by  arbitra- 
tion was  a  condition  precedent,  and  that  without  such  ascer- 
tainment the  plaintiff  had  no  cause  of  action,  I  cannot  see  any 
distinction  which  would  justify  us  in  holding  here  that  the 
adjustment  of  the  loss,  as  provided  in  the  articles,  was  not  a 
condition  precedent.  All  the  cases  cited  were  in  favor  of  the 
defendants'  contention,  with  the  exception  of  Horton  v. 
Sayer^  and  Roper  v.  Lendon,^  which  were  both  decided  on 
the  ground  that  the  agreement  to  refer  was  only  a  collateral 
stipulation.  In  the  latter  case,  the  court  came  to  that  deci- 
sion on  a  contract  very  much  resembling  the  present  one.  I 
do  not  enter  into  the  question  whether  the  true  construction 
was  put  on  the  instrument  in  that  case  ;  the  point  seems  to  have 
been  given  up  early  in  the  argument,  and  the  matter  was 
hardly  discussed.  But  on  another  part  of  the  same  contract, 
words  contained  in  one  of  several  conditions,  subject  to  which 
the  policy  was  made,  were  held  to  constitute  a  condition  pre- 
cedent; and  that  part  of  the  decision  rather  supports  our 
present  judgment.     This  contract,  I  think,  speaks  plainly  to 

15H.L.  C.  511.  2  4H.  &N.  643.  3  1  E.  &  E.  825. 

1183 


§  494]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.        [CH.  XXVII. 

the  effect  I  have  stated,  and  my  judgment  therefore  is  for  the 
defendants."  ^ 

Bramwell,  J.,  dissented,  not  because  he  differed  with  his 
brethren  as  to  the  law,  but  because  he  thought  the  provision 
in  question  a  collateral  stipulation  and  not  a  condition  pre- 
cedent.2 

1  Elliott  V.  Royal  Exchange  Ass.  Co.,  Law  Rep.  (2  Exch.  Cas.)  237. 

2  The  opinion,  though  a  dissenting  one,  is  worth  the  space  we  shall  be  obliged 
to  give  it  in  this  note.  Bramwell,  J. :  "I  think  the  plaintiff  is  entitled  to  judg- 
ment. I  agree  that  there  is  no  doubt  as  to  the  law,  nor  did  I  ever  think  there 
was,  even  before  the  decision  in  Scott  v.  Avery.  In  the  argument  of  that  case 
(the  arbitration  clause  in  which  was  framed  by  Mr.  Justice  Cresswell)  Mr.  Man- 
isty  and  myself  were  counsel  for  the  defendants.  We  scarcely  cited  a  case,  but 
laid  down  a  proposition  wliich  was  almost  immediately  adopted  by  the  judges 
below  and  by  the  House  of  Lords.  That  proposition  was,  that  if  two  persons, 
whether  in  the  same  or  in  a  different  deed  from  that  which  creates  the  liability, 
agree  to  refer  the  matter  upon  which  the  liability  arises  to  arbitration,  that 
agreement  does  not  take  away  the  right  of  action.  But  if  the  original  agreement 
is  not  simply  to  pay  a  sum  of  money,  but  that  a  sum  of  money  shall  be  paid  if 
something  else  happens,  and  that  something  else  is  thatatliird  person  shall  settle 
the  amount,  then  no  cause  of  action  arises  until  the  third  person  has  so  assessed 
the  sum.  For  to  say  to  the  contrary  would  be  to  give  the  party  a  different  measure 
or  rate  of  compensation  from  that  for  which  he  has  bargained.  Tiiis  is  plain 
common  sense,  and  Is  what  I  understand  the  House  of  Lords  to  have  decided  in 
Scott  V.  Avery.  Now  the  construction  of  this  policy  appears  to  me  far  from 
clear,  upon  the  point  whether  tlie  defendants  agree  to  pay  tlie  adjusted  amount, 
or  whether  they  agree  to  pay  the  actual  loss,  with  a  provision  for  adjusting  the 
loss.  If  the  latter  is  the  true  construction,  then  the  principle  of  Scott  v.  Avery 
does  not  apply,  or  rather  it  applies  to  exclude  them  from  their  defence.  The 
words  of  the  policy  are  that  the  defendants  will  pay  to  the  plaintiff  'any  loss  or 
damage  by  fire,'  according  to  the  tenor  of  the  articles.  The  articles,  whicii  are 
thus  part  of  the  covenant,  then  say,  '  which  loss  or  damage,  after  the  same  shall 
be  adjusted,  shall  immediately  be  paid.'  To  my  mind,  these  words  refer  not  to 
an  essential  term  of  the  covenant  (which  I  prefer  to  the  phrase  '  condition  pre- 
cedent'), but  to  the  time  when  the  payment  is  to  be  made,  that  is,  immediately 
after  the  adjustment.  This  verbal  examination  may  seem  critical,  but  it  is  called 
for;  for  if  the  adjusted  loss  only  is  stipulated  to  be  paid,  the  consequence  will  be 
that  if  the  assured,  after  the  adjustment,  discovers  that  something  has  been  burned 
which  has  been  boim  Jide  omitted  from  his  claim,  he  will  be  precluded  by  this 
clause  from  recovering  it.  But  I  do  not  think  that  it  was  in  the  contemplation  of 
the  parties  to  be  so  irrevocably  bound.  If  not,  then  the  agreement  is  to  pay  not 
the  adjusted,  but  the  actual  amount,  with  a  proviso  for  settling  the  matter  in  case 
of  dispute.  The  clause  goes  on  to  say  that  the  defendants  may,  at  their  option, 
restore;  so  that  it  is  not  merely  their  intention  to  pay  the  adjusted  loss.  It  is 
then  provided  that  in  case  'any  difference  shall  arise,  touching  any  loss  or  dam- 
age,' it  shall  be  settled  by  arbitration.     Now  it  is  impossible  to  say  that  this  is 

1134 


CH.  XXVII.]  ARBITRATION.  [§  495 

§  495.  Arbitration  ;  Condition.  —  111  Campbell  v.  American 
Popular  Life  Insurance  Company,^  where  it  was  provided 
that  payment  of  the  loss  was  to  be  on  condition  that,  in  the 
opinion  of  the  surgeon-general  of  the  company,  the  insured 
did  not  die  from  "  intemperance,"  while  if  such  was  his  opin- 
ion then  the  company  were  to  repay  all  the  premiums,  with 
compound  interest,  the  subject  came  again  under  considera- 
tion, with  a  result  favorable  to  the  validity  of  the  provision 
as  a  condition  precedent.  The  court  thus  stated  its  views  as 
to  the  present  state  of  the  law :  "  It  is  not  denied,"  say  the 
court,  "  that  any  mere  agreement  between  the  parties  that 
any  future  differences  growing  out  of  their  contract  shall  be 
decided  by  arbitrators  or  referees,  thereafter  to  be  cliosen, 
will  not  be  allowed  by  the  court  to  oust  their  jurisdiction. 
But  in  this  branch  of  the  law  there  exist  distinctions  which, 
if  carefully  observed  and  followed,  will,  in  our  judgment, 
reconcile  the  authorities,  and  produce  a  beautiful  correspond- 
ence, where  at  first  view  there  may  appear  nothing  but  a 
conflict  of  authorities.  The  leading  case  on  this  question  was 
that  of  Kill  V.  Hollister,^  decided  in  the  Court  of  King's 
Bench.  The  following  is  the  condensed  and  careful  opinion 
in  this  case  :  '  This  is  an  action  upon  a  policy  of  insurance, 
wherein  a  clause  was  inserted  that,  in  case  of  any  loss  or  dis- 
pute about  the  policy,  it  should  be  referred  to  arbitration  ; 
and  the  plaintiff  avers,  in  his  declaration,  that  there  has  been 
no  reference.  Upon  the  trial  at  Guildhall  the  point  was  re- 
served for  the  consideration  of  the  court,  whether  this  action 
was  well  laid  before  reference  was  had.  And  by  tlie  whole 
court :  If  there  had  been  a  reference  depending,  or  made  and 
determined,  it  might  have  been  a  bar ;  but  the  agreement  of 

merely  a  substitute  for  adjustment  between  the  parties,  for,  under  these  words, 
the  arbitrator  would  have  power,  not  merely  to  adjust  the  amount  that  shall  be 
paid,  but  to  determine  whether  the  plaintiff  shall  have  any  payment  at  all,  or 
whether,  by  reason  of  non-payment  of  premiums  or  of  fraud,  he  has  forfeited  his 
right  to  recover.  I  think,  therefore,  that  this  is  a  collateral  agreement  to  refer 
to  arbitration,  and  not  an  agreement  tliat  only  tlie  adjusted  loss  shall  be  paid." 

1  Supreme  Court,  Dist.  of  Columbia,  5  L.  Times  (U.  S.  Reports),  6;  s.  c.  2 
Big.  Life  &  Ace.  Ins.  Cas.  16;  1  Mc Arthur  (D.  C),  246,  471. 

■^  1  Wilson,  129. 

VOL.  II.  —  28  1135 


§  495]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXVII. 

the  parties  cannot  oust  the  court.     And  as  no  reference  has 
been  nor  any  is  depending,  the  action  is  well  brought,  and 
the  plaintiff  must  have  judgment.'     To  the  same  effect  arc 
Thompson  v.  Charnock,i  Goldstone  v.  Osborne,^  and  Street 
V.  Rigby,^  following  a  prior  decision  made  by  Lord  Thurlow, 
to  w^hich  may  be   added  Scott  v.  Avery.*     These  decisions, 
however,  do  not  apply  to  an  agreement  where  the  parties  have 
actually  chosen  and  named  the  referee  ;  for  in  such  a  case  the 
court  say,  in  Kill  v.  Hollister,  the  reference  might  have  been 
pleaded  in  bar.     It  is  only  the  imperfect  and  executory  agree- 
ment to  have  a  reference    entered  into  hereafter  which  the 
court  say  will  not  oust  its  jurisdiction.     It  is  because  no  ref- 
erence has  been  agreed  upon  and  settled  between  the  parties, 
that  the  agreement  is  not  a  bar.^     An  imperfect  and  execu- 
tory agreement,  such  as  that  referred  to,  cannot  be  enforced 
in  equity,  for  the  reason  that  a  court  of  equity  will  not  and 
cannot  compel  the  parties  to  come  to  an  agreement  in  the 
choice  of  referees.  ...  If  the  controversy,  therefore,  be  not 
in  effect  actually  referred  by  such  an  agreement,  as  it  cer- 
tainly is  not,  it  must  remain  under  the  jurisdiction  of  the 
court.  .  .  .  The  effect  of  these  decisions,  therefore,  is  this, 
and  nothing  more,  that  an  agreement  to  refer,  which  is  so 
imperfect  as  not  to  be  specifically  enforced  in  equity,  and  for 
breach  of  which  nothing  but  nominal  damages  can  be  recov- 
ered at  law,  will  not  be  allowed  to  oust  the  courts  of  jurisdic- 
tion, else  there  will  be  a  failure  of  justice.  .  .  .  But  if  the 
contract  be  drawn  in  the  '  prudential  way,'  recommended  by 
Lord  Eldon,6  by  inserting  a  stipulation  for  liquidated  dam- 
ages, or  there  be   a  separate  bond  to   bind   the   parties   by 

1  8  T.  R.  136.  2  2  C.  &  P.  550. 

8  6  Ves.  815.  *  8  Exch.  487. 

5  With  due  deference  to  the  learned  court,  it  is  suggested  tliat  the  effect  of 
the  decision  in  Kill  v.  Hollister  is  not  accurately  stated.  They  do  not  say  that 
an  agreement  to  refer  to  a  particular  person  would  be  good.  They  say  only  that 
an  agreement  to  refer  will  not  oust  them  of  their  jurisdiction,  but  mtimate  that  if 
the  agreement  had  been  acted  on,  then  it  might  have  been  a  good  plea  in  bar. 

6  "  There  miglit  have  been  an  agreement  for  liquidated  damages  to  enforce  a 
specific  performance,  if  an  action  could  not  produce  sufficient  damages,  or  equity 
would  not  entertain  a  bill  for  specific  performance."  Per  Lord  Eldon,  Street  v. 
Rigby,  uhi  supra. 

1136 


CH.  XXVII.1  ARBITRATION.  [§  496 

penalty  to  its  performance,  the  contract  must  be  fulfilled,  or 
the  penalty  will  be  enforced."     And  nowhere,  adds  the  court, 
"  have  we  been  able  to  find  a  decision  or  even  a  dictum  to 
sustain  the  doctrine  of  the  court  below,  .  .  .  that  a  contract, 
binding  the  parties  to  a  reference,   was  contrary   to    public 
policy."      This  case   doubtless  w^ell  stands   on  the   doctrine 
upon  which  the  cases  of  an  agreement  to  procure  the  certifi- 
cates of  certain  persons  to  certain  facts,  before  action  can  be 
brought,  are  uplield,  to  wit,  on  the  ground  that  they  are  by 
contract  made  conditions   precedent  to   the  bringing  of    an 
action,  and  are  subject  to  no  such  objection  as  is  an  agree- 
ment to  refer,  which,  if  held  to  be  valid,  cuts  off  all  right  of 
action.      Any  stipulation,  therefore,  which   merely  looks  to 
the  requirement  of  certain  acts  to  be  done  or  omitted  before 
bringing  an  action,  seems  to  be  valid,  since  such  a  stipulation 
not  only  does  not  oust  the  courts,  but  obviously  contemplates 
and  makes  preparation  for  an  appeal  to  the  courts.     The  dis- 
tinction between  an  agreement  to   do  certain  things  before 
bringing  an  action,  and  an  agreement  to  refer  to  arbitration, 
which  is  tantamount  to  an  agreement  not  to  bring  an  action, 
is  too  obvious  to  need  remark.     Any  agreement  which  does  not 
prevent  the  parties  from  coming  into  court  will  doubtless  be 
sustained  ;  as,  for  instance,  an  agreement  to  submit  to  arbitra- 
tion what  amount  will  be  due,  if  any,  reserving  the  question 
of  liability.^     If,  however,  the  agreement  to  arbitrate  as  to  the 
amount  be  subject  to   the  qualification  tliat   it  be  "  at  the 
written  request  of  either  party,"  an  action  will  be  sustained  if 
neither  has  so  requested  before  action  brought.^ 

§  496.  Arbitration  ;  Equitable  Adjustment  after  Forfeiture.  — 
In  Nightingale  v.  State  Life  Insurance  Company  of  Wor- 
cester,^  there  was  a  provision   in  the  policy  that  in  case  of 

1  Yeomans  v.  Girard  Fire  Ins.  Co.,  C.  Ct.  (N.  J.),  5  Ins.  L.  J.  853;  Trott  v. 
City  Ins.  Co.,  1  Cliff  (C.  Ct.  U.  S.)  439 ;  ante,  §§  484,  485,  491.  But  see  Mentz 
V.  Armenia  Fire  Ins.  Co.,  79  Pa.  St.  478.  See  also,  upon  the  general  subject,  tiie 
learned  note  by  Judge  Bennett,  appended  to  the  case  of  Scott  v.  Phoenix  Assur- 
ance Company,  in  the  first  volume  of  his  Fire  Insurance  Cases,  page  122.     ^ 

'^  Wallace  v.  German-American,  &c.  Ins.  Co.,  2  Fed.  Rep.  658;  Mentz's 
Case,  supra. 

3  5  R.  I.  38. 

1137 


§  496]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXVII. 

foi'feiture  from  any  cause  the  party  interested  should  have 
the  benefit  of  such  equitable  adjustment  as  may,  from  time  to 
time,  be  provided  by  the  board  of  directors  ;  and  it  was  held 
that,  whether  any  such  adjustment  could  be  made  was  en- 
tirely in  the  discretion  of  the  directors,  not  in  any  way  subject 
to  the  control  of  the  court.  "  It  is  true,"  said  Ames,  C,  J., 
in  giving  the  opinion  of  tlie  court,  "  that  by  the  qualifying 
clause  of  the  condition  of  forfeiture  the  executors  of  the 
assured  would  have  been  entitled  to  the  benefit  of  any  equi- 
table adjustment  provided  for  by  existing  rules  established  by 
the  directors,  or  accorded  by  their  special  act.  Whether  such 
rules  should  be  established,  or  such  special  dispensation  from 
the  forfeiture  should  be  granted,  was,  as  it  seems  to  us,  left 
by  this  qualifying  clause  wholly  to  the  discretion  of  the  direc- 
tors, who  '  from  time  to  time  '  might  act  in  the  matter  ;  except, 
indeed,  that  they  should  not  be  permitted  to  change,  to  the 
injury  of  the  assured,  an  established  rule  of  adjustment,  exist- 
ing at  the  time  of  the  act  or  omission,  of  the  forfeiture.  The 
construction  which  supposes  that  such  discretion  was  designed 
by  both  parties  to  the  contract  to  be  reposed  in  the  directors, 
as  fair  arbiters  for  all  interested,  borrows  support  from  the 
fact  that,  under  the  charter  of  this  company,  the  directors  are 
elected  by  the  joint  votes  of  the  assured  and  holders  of  the 
guaranty  stock,  and  are  to  be  chosen,  in  moieties,  out  of  these 
two  classes  of  the  members  of  the  corporation.  No  rule  of 
equitable  adjustment  applicable  to  the  case  at  bar  appears  to 
have  been  established  by  the  directors  of  this  company,  and 
the  request  made  to  them  by  the  claimants  for  special  action 
in  their  favor  was,  upon  full  consideration,  rejected.  We 
cannot  interfere  with  their  discretion  in  this  matter  without 
doing  violence  to  the  contract  upon  which  we  are  called  to 
adjudicate."  In  Manby  v.  Gresham  Life  Assurance  Company  ^ 
there  was  an  agreement,  if  the  insured's  health  should  improve, 
to  remit  an  extra  premium  charged  on  account  of  the  infirm 
state  of  his  health,  upon  the  "  society  being  satisfied  "  of  the 
fact.  Having  entirely  recovered,  and  become  sound  and  well, 
the  insured  brought  his  bill  in  equity  to  compel  them  to  remit 

1  29  Beav.  439. 

1138 


CH.  XXVII.]  ARBITRATION.  [§  496  B 

the  premium.  But  the  court  said  they  could  not  interfere 
with  the  judgment  of  the  directors,  if  ho7ia  fide  exercised. 
It  could  not  undertake  to  say  in  whicli  way  their  judgment 
should  be  given. 

§  496  a.  Arbitration  ;  Fraud.  —  But  fraud  in  the  negotiation 
of  the  contract  taints  the  agreement  for  arbitration,  as  also 
every  other  provision.  If,  therefore,  the  arbitration  be  entered 
upon  and  concluded  by  a  decree,  and  subsequent  thereto  it 
comes  to  the  knowledge  of  the  insurers  that  the  policy  was 
procured  by  fraud,  or  for  a  fraudulent  purpose,  the  court 
will  set  aside  the  decree,  although  by  the  terms  of  submis- 
sion it  is  to  be  final,  and  although  one  of  the  grounds  upon 
which  it  is  sought  to  be  set  aside  was  in  issue  before  the 
arbitrator.! 

[§  496  B.  Waiver;  Void  Awards,  &c.  —  Refusal  of  the  com- 
pany to  pay  any  sum  is  a  waiver  of  the  arbitration  clause,  and 
suit  may  be  maintained  at  once.^  And  when  the  company 
took  possession  of  the  injured  vessel  and  proceeded  to  repair 
her  with  a  view  to  making  good  their  loss,  this  was  deemed  a 
waiver  of  arbitration.^  If  either  party  acts  in  bad  faith  to  de- 
feat the  real  object  of  the  arbitration  clause  the  other  is  ab- 
solved from  duty  in  regard  to  it.*  When  arbitrators  exceed 
their  powers  the  whole  award  is  void.^  When  the  policy  pro- 
vided that  arbitrators,  if  needed,  should  be  chosen  by  the  par- 
ties and  be  disinterested  proof  that  neither  of  these  conditions 
were  carried  out,  avoids  the  award. ^  An  appraisement  is  valid 
though  the  appraisers  be  not  sworn,  and  the  mere  fact  that 
the  submission  was  in  writing  and  in  the  nature  of  a  sub- 
mission to  arbitrators  will  not  operate  to  make  the  matter 
an  arbitration  and  so  void  under  the  statutes  for  want  of 

1  Hercules  Ins.  Co.  v.  Hunter,  14  Ct.  of  Sess.  Cas.  (Scotch),  147,  1137  ; 
15  id.  800.  [Arbitration  and  award  as  to  the  amount  of  loss  does  not  prevent 
the  company  from  afterward  denying  liability  on  a  ground  known  at  the  time  of 
submitting  to  the  arbitration.  Johnson  v.  Amer.  Fire  Ins.  Co.,  18  Ins.  L.  J.  724 
(Minn.),  Aug.  12,  1889.] 

2  [Western  Ins.  Co.  v.  Putnam,  20  Neb.  331.] 

3  [Cobb  V.  N.  E.  Mut.  Ins.  Co  ,  6  Gray,  192  at  204.] 

4  [Uhrig  V.  Williamsburgh  City  Fire  Ins.  Co.,  101  N.  Y.  362.] 
6  [Skipper  v.  Grant,  10  C.  B.  n.  s.  237  at  250.] 

6  [.^tna  Ins.  Co.  v.  Stevens,  48  111.  31  at  33.] 

1139 


§  496  B]     INSURANCE  :  fire,  life,  accident,  etc.     [ch.  xxyii. 

formalities.!  If  the  contract  provides  for  arbitration,  and  the 
appraisers  severally  appointed  by  the  company  and  the  insured 
fail  to  agree  on  a  third,  this  does  not  justify  suit.  The  insured 
should  propose  a  new  selection  of  appraisers.^  When  several 
underwriters  have  referred  to  an  arbitrator,  before  trial,  a  case 
against  them  for  consolidated  damages  and  he  has  rendered  a 
sum  due  from  all  to  which  they  consent  the  cause  cannot  be 
remanded  to  him  to  apportion  the  sum  among  them,  unless  all 
consent.^] 

1  [Zallee  v.  Laclede  Mut.  Fire  &  Mar.  Ins.  Co.,  44  Mo.  530  at  533.] 

2  [Davenport  i'.  Long  Island  Ins.  Co.,  10  Daly,  535.] 
8  [Kynaston  v.  Liddell,  8  Moore,  223  at  224.] 

1140 


CH.  XXVIII.]  OF   WAIVER   AND    ESTOPPEL. 


CHAPTER   XXVIII. 

OF   WAIVER   AND   ESTOPPEL. 

Analysis. 

A  §  497.  General  Kules.     Any  conduct  recognizing  the  policy  as  valid  after 

breach  of  condition,  or  any  act  that  puts  the  insured  to 
expense  and  trouble  on  the  justifiable  belief  that  the 
company  still  regard  the  policy  as  good,  will  be  sufficient. 
"Waiver  must  be  pleaded.  It  is  a  question  for  the  court  if 
facts  are  admitted,  otherwise  for  jury. 

B  §  498.  Waiver  or  estoppel   may   be   by  the  act  of  an   agent  within  his 

authority. 
Where  the  agent  makes  the  survey  which  is  signed  by  the  ap- 
plicant relying  on  the  agent's  assurance  that  it  is  all  right, 
misstatements  in  it  of  the  distances  of  surrounding  build- 
ings, &c.,  cannot  avail  the  company,  §  498. 
So  where  an  applicant  signed  a  blank  application  stating  to 
the  agent  that  there  was  a  mortgage,  and  the  agent  after- 
ward filling  in  the  answers  stated  that  there  was  no  in- 
cumbrance, §  498. 

§  499.  A  company  cannot  through  its  agent  write  representations  of 

which  the  assured  knows  nothing,  and  then  hold  him  to 
them. 

§  500.  It  is  always  a  question  of  fact  whether  the  agent  in  any  given 

matter  acted  for  the  insurer  or  for  the  insured.  An  agent 
filling  in  wrong  number  and  amount  of  prior  policy  after 
the  insured  has  signed  the  application  is  acting  as  the 
company's  agent.  If  the  insured  answers  fully,  and  the 
agent  deems  part  of  the  answer  immaterial,  and  omits  to 
write  it  down,  the  company  cannot  avail  themselves  of 
the  condition  that  the  answer  must  be  full. 

C  §  501.  Estoppel  by  facts  arising  during  negotiations. 

Issue  of  policy  upon  appliiation  containing  an  ambiguous 
answer,  or  no  answer  to  certain  questions,  waives  them, 
unless  the  omission  signifies  the  affirmance  of  a  certain 
state  of  facts. 
Prepayment,  change  of  location,  &c.,  waived. 
Issue  or  renewal  with  knowledge  of  facts  is  a  waiver  generally, 
but  not  as  to  want  of  insurable  interest. 

§  503.  Where  insurer  knows  the  undertaking  of  the  assured  is  impos- 

sible, he  cannot  insist  upon  it. 

D  §  502.  Estoppel  by  facts  arising  during  currency  of  the  policy. 

After  knowledge  of  the  facts,  any  recognition  of  the  validity 
of  the  policy  or  conduct  that  misleads  the  assured  to  his 
prejudice  amounts  to  a  waiver. 

1141 


§  497]        INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XXVIII. 

Agent's  knowledge  of  a  cause  of  forfeiture  and  receipt  of 
after-maturing  premium  or  assessment  is  a  waiver  unless 
there  is  an  understanding  to  the  contrary. 
Courts  will  find  a  waiver  on  slight  evidence. 
§  502a.  Notice.     Option  (see  also  §  512).     Notice  from  stranger. 

E  §§  504-505.  Estoppel  by  facts  arising  after  loss. 
Same  principles  as  above. 
Any  overlooking  of  known  forfeiture  properly  relied  on  by 

thQ  assured  to  his  prejudice  is  a  waiver  or  estop]iel. 
Entering  negotiations  for  settlement,  adjusting  loss,  prom- 
ising to  pay,  payment,  &c. 
§  504  A.  Eefusal  to  pay  on  one  ground  waives  others.  Demanding  proofs 

(or  even  allowing  assured  to  go  to  the  expense  of  making 
them  (?)  )  waives  a  known  cause  of  forfeiture,  contra. 
There  is  no  estoppel 
§  506.  Where  the  facts  are  not  known. 

§  507.  Nor  where  the  insured  has  not  been  prejudiced. 

§  508,  Silence  usually  no  estoppel. 

The  act  constituting  a  waiver  must  be  intentional,  and  not  a 
mere  mistake. 
§  509.  Agent  acting  under  undisclosed  instructions. 

§  511.  Stipulation  against  waiver.    Limitation  of  agent's  authority. 

Opinions  vary  as  to  the  effect  of  conditions  against  waiver 
by  agent,  or  requiring  all  waivers  to  be  iu  writing, 
or  indorsed  on  the  policy.    It  is  held  — 
that  such  provisions  are  valid  ; 
that  they  are  null  and  void  ; 
that  they  do  not  apply  to  matters  connected  with  the 

creation  of  the  contract  ; 
and  that  they  apply  only  to  such  matters. 
The  courts  in  many  instances  show  a  tendency  to  repudiate 
the  condition  as  unreasonable.      On  the  facts  most  of 
the  cases  are  fair,  and  the  consideration  that  these  condi- 
tions may  themselves  he  luaivcd  as  well  as  any  others  goes 
far  to  harmonize  the  decisions. 
§  513.  Collusion  between  agent  and  insured. 

§  497.  General  Rules-  —  Insurers  may,  and  often  do,  find 
themselves  in  such  a  position  that  they  cannot  avail  themselves 
either  of  a  breach  of  warranty,  or  of  a  misrepresentation  or 
concealment.  And  when  in  this  position  they  are  said  to  be 
estopped  from  availing  themselves,  or  to  have  waived  the 
right  to  avail  themselves,  of  such  a  defence.  And  the  rule 
here  is,  with  reference  to  the  negotiations  had  at  the  time  of 
taking  out  the  policy,  that  where  the  application  is  reduced  to 
writing  by  the  insurer  or  his  agent  upon  the  oral  statement 
of  the  applicant,  whether  the  application  is,  or  is  not,  made 
tantamount  to  a  warranty,  by  being  made  part  of  the  contract, 
1142 


CH.  XXVIII.]  OF    WAIVER   AND    ESTOPPEL.  [§  497 

the  insurer  being  under  a  strong  moral  obligation  to  secure  to 
the  applicant  the  protection  for  which  he  pays,  if  a  controversy- 
arises  upon  the  truthfulness  of  the  application,  and  statements 
alleged  by  the  insurer  to  be  essential  were  omitted,  and  others 
falsely  made,  and  he  seeks  to  avoid  the  contract  on  that 
ground,  parol  evidence  is  admissible  to  show  that,  at  the  time 
the  negotiations  were  pending,  the  facts  alleged  to  have  been 
omitted  or  falsely  stated  were  in  fact  truly  stated,  or  were 
accepted,  as  they  were  stated,  as  and  for  the  truth,  by  the 
insurer,  or  that  the  conduct  of  the  insurer  led  the  applicant 
to  believe  that  such  as  were  omitted  were  immaterial,  and 
such  as  were  alleged  to  be  false  were  truly  made. 

To  deliver  a  policy  with  full  knowledge  of  facts  upon  which 
its  validity  may  be  disputed,  and  then  to  insist  upon  these 
facts  as  ground  of  avoidance,  is  to  attempt  a  fraud.  This 
the  courts  will  neither  aid  nor  presume  ;  and  when  the  alter- 
native is  to  find  this,  or  to  find  that,  in  accordance  with  hon- 
esty and  fair  dealing,  there  was  an  intent  to  waive  the  known 
ground  of  avoidance,  they  will  choose  the  latter.^ 

Such  an  issue  is  tantamount  to  an  assertion  that  the  policy 
is  valid  at  the  time  of  the  delivery,  and  is  a  waiver  of  the 
known  ground  of  invalidity .^  So  is  the  issue  of  a  policy  upon 
an  application  to  a  question  in  which  no  answer  is  given.^ 

And  any  acts,  declarations,  or  course  of  dealing  after  de- 
livery by  the  insurers,  with  a  knowledge  of  the  facts  con- 
stituting a  breach  of  a  condition  of  the  policy,  recognizing  the 
policy  as  still  valid,  and  from  which  the  insured  might  fairly 
infer  that  he  was  protected,  will  amount  to  a  waiver  of  such 
breach,  and  estop  the  insurers  from  setting  it  up  in  defence ;  * 

1  Mahony  v.  National,  &c.  Life  Ass.  L.  R.  6  C.  P.  252. 

'^  Commercial  Ins.  Co.  v.  Ives,  56  111.  402 ;  Morrison  v.  Universal,  &c.  Ins.  Co., 
8  L.  R.  (Ex.)  40;  Geib  v.  Enterprise  Ins.  Co.,  1  Dill.  C.  Ct.  443,  440;  Lorillard 
Fire  Ins.  Co.  v.  McCuUoch,  21  Oliio  St.  176 ;  Richnionrl  v.  Niagara  Fire  Ins.  Co., 
79  N.  Y.  230;  Peoria  Mar.  &  Fire  Ins.  Co.  (;.  Perkins,  16  Mich.  380  ;  Van  Schoick 
V.  Niagara  Ins.  Co..  68  N.  Y.  434;  Bennett  v.  North  British,  &c.  Ins.  Co.,  81  id. 
273;  Shaw  v.  Scottish  Provincial  Ins.  Co.,  1  Fed.  Rep.  761  ;  Micliigan,  &c.  Ins. 
Co.  V.  Lewis,  30  Mich.  41  ;  Germania  Fire  Ins.  Co.  v.  McKee,  94  111.494;  Smith 
V.  Commonwealth  Ins.  Co.,  49  Wis.  322. 

3  Dayton  Ins.  Co.  v.  Kelly,  24  Ohio  St.  345. 

*  Georgia  Home  Ins.  Co.  v.  Kinnier,  28  Grat.  (Va.)  88.     See  also  post,  §  502. 

1143 


§  497]         INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXVIII. 

and  generally  any  act  which  puts  the  insured  to  expense  or 
trouble,  and  justifies  him  in  the  belief  that  the  insurers  regard 
the  policy  as  still  a  valid  contract.^  So,  if  the  insurers  lead 
the  insured  into  an  infraction  of  some  condition.^ 

And  vice  versa,  if  the  insured  accepts  a  policy,  and  pays 
the  premium,  with  knowledge  that  false  representations  have 
been  made  to  him  to  induce  him  to  accept,  he  cannot  after- 
wards set  up  those  false  representations  in  defence  to  an 
action  on  the  premium  note.^ 

1  Titus  V.  Glens  Falls  Ins.  Co.,  81  N.  Y.  410 ;  Penn  Fire  Ins.  Co.  v.  Kittle,  39 
Mich.  51.  In  Plicenix  Ins.  Co.  v.  Stevenson  (Ky.),  8  Ins.  L.  J.  922,  it  is  said  that 
unreasonable  delay  in  notifying  a  purpose  to  claim  a  forfeiture,  as  it  may  lull  the 
insured  into  a  false  security,  and  prevent  his  obtaining  new  insurance,  will 
amount  to  a  waiver. 

2  Leslie  v.  Knickerbocker  Ins.  Co.,  5  T.  &  C.  (N.  Y.)  193.  A  warranty  does 
not  cover  patent  and  obvious  defects,  which  are  plainly  visible  to  the  warrantee, 
—  such,  for  instance,  as  the  loss  of  an  eye  in  a  horse.  This  doctrine  is  based 
upon  the  reasonable  presumption  that  the  parties  could  not  have  intended  to 
affirm  that  to  be  true  which  they  both  knew  to  be  false.  Brown  v.  Bigelow, 
10  Allen  (Mass.),  242  ;  American  Ins.  Co.  v.  Mahone,  21  Wall.  (U.  S.)  152. 

3  Lycoming  Ins.  Co.  v.  Woodworth,  83  Pa.  St.  223.  In  Carr  v.  London  & 
North  Western  Railway  Company,  L.  R.  10  C.  P.  307,  the  following  were  laid 
down  as  recognized  propositions,  with  respect  to  an  estoppel  in  pais,  by  Lord 
Justice  Brett :  — 

1.  If  a  man  by  his  words  or  conduct  wilfully  endeavors  to  cause  another  to 
believe  in  a  certain  state  of  things  which  the  first  knows  to  be  false,  and  if  the 
second  believes  in  such  a  state  of  things,  and  acts  upon  his  belief,  he  who  know- 
ingly made  the  false  statement  is  estopped  from  averring  afterwards  that  such  a 
state  of  things  did  not  in  fact  exist. 

2.  If  a  man,  either  in  express  terms  or  by  conduct,  makes  a  representation  to 
another  of  the  existence  of  a  certain  state  of  facts  which  he  intends  to  be  acted 
upon  in  a  certain  way,  and  it  is  acted  upon  in  that  way,  in  the  belief  of  the 
existence  of  such  a  state  of  facts,  to  the  damage  of  him  who  so  believes  and 
acts,  the  first  is  estopped  from  denying  the  existence  of  such  a  state  of  facts. 

3.  If  a  man,  whatever  his  real  meaning  may  be,  so  conducts  himself  that  a 
reasonable  man  would  take  his  conduct  to  mean  a  certain  representation  of  facts, 
and  that  it  was  a  true  representation,  and  that  the  latter  was  intended  to  act 
upon  it  in  a  particular  way,  and  he  with  such  belief  does  act  that  way  to  his 
damage,  the  first  is  estopped  from  denying  that  the  facts  were  as  represented. 

4.  If  in  the  transaction  itself  which  is  in  dispute  one  has  led  another  in  the 
belief  of  a  certain  state  of  facts  by  conduct  or  culpable  negligence  calculated  to 
have  that  result,  and  such  culpable  negligence  has  been  the  cause  of  leading, 
and  has  led,  the  other  to  act  by  mistake  on  such  belief  to  his  prejudice,  the 
second  cannot  be  heard  afterwards,  as  against  the  first,  to  show  that  the  state 
of  facts  referred  to  did  not  exist. 

1144 


CH.  XXVIII.]  OF   WAIVER    AND    ESTOPPEL.  [§  498 

[Waiver  may  be  a  question  for  the  court,  if  the  facts  are 
not  in  dispute.^  Otherwise  it  is  for  the  jury .2  Facts  relied 
on  as  constituting  a  waiver  must  be  pleaded.  If  waiver  is  not 
pleaded  it  is  error  to  instruct  the  jury  as  though  such  an  issue 
were  in  the  case.^J 

§  498.  Estoppel  by  Act  of  Agent.  —  Prior  to  the  case  of 
Plumb  V.  Cattaraugus  County  Mutual  Insurance  Company,* 
the  rule  in  that  State  had  been  that  statements  in  the  applica- 
tion which  were  referred  to  and  made  part  of  the  policy  were 
warranties,  a  breach  of  which  worked  a  forfeiture,  whether 
the  application  was  made  and  signed  by  the  applicant,  or,  at 
his  request,  filled  up  by  an  agent  of  the  company  authorized 
to  receive  and  forward  applications,  and  then  signed  by  the 
applicant.  But  in  that  case  the  rule  was  changed  upon  the 
following  facts  :  The  agent  and  surveyor  of  the  company  pre- 
sented to  the  plaintiff  a  blank  application,  and  solicited  him 
to  effect  an  insurance  in  the  company  for  which  he  acted. 
After  some  hesitation  the  plaintiff  told  the  agent  that  if  he 
insisted  upon  taking  the  application  that  day,  he  must  get 
along  alone,  and  act  on  his  own  responsibility.  Whereupon 
the  agent  proceeded  to  make  the  survey  alone  ;  and  having 
filled  up  the  application,  presented  it  to  the  plaintiff  with  the 
assurance  that  it  was  all  right,  and  just  as  it  should  be,  who 
thereupon,  stating  that  he  relied  upon  this  assurance,  signed 
it.  It  appeared,  however,  that  there  were  material  misstate- 
ments in  the  survey  as  to  the  relative  distances  and  positions 
of  surrounding  buildings.  Under  these  circumstances  the 
court  held  that  it  was  a  case  for  the  application  of  the  doc- 
trine of  estoppel,  and  that,  since  the  agent  acted  within  the 

A  fifth  rule  was  added  to  these,  in  Ex  parte  Adamson,  by  Lord  Justice  James, 
8  Ch.  D.  807,  817. 

5.  Nobody  ought  to  be  estopped  from  averring  the  truth  or  asserting  a  just 
demand,  unless  by  his  acts  or  words  or  neglect  his  now  averring  the  truth  or 
asserting  the  demand  would  work  some  wrong  to  some  other  person  who  has 
been  induced  to  do  something,  or  to  abstain  from  doing  something,  by  reason  of 
what  he  had  said  or  done,  or  omitted  to  say  or  do. 

1  [New  Orleans  Ins.  Ass.  v.  Matthews,  65  Miss.  301.] 

•2  [Drake  v.  Farmers'  Union  Ins.  Co.,  3  Grant's  Cas.  325  at  326.] 

2  [Eiseman  v.  Hawkeye  Ins.  Co.,  74  Iowa,  11.] 
4  18  N.  Y.  392. 

1146 


§498]      insurance:  fire,  life,  accident,  etc.      [ch.  xxviii. 

scope  of  his  authority,  what  he  had,  with  a  full  knowledge  of 
the  facts,  asserted  to  be  true,  the  company  could  not  be  al- 
lowed to  prove  to  be  false,  for  the  purpose  of  showing  a  breach 
of  the  warranty.  And  the  doctrine  of  this  case  was  subse- 
quently affirmed  in  the  case  of  Rowley  v.  Empire  Insurance 
Company,^  where  the  agent  was  empowered,  among  other 
things,  "  to  take  applications."  The  plaintiff  stated  verbally 
to  the  agent  the  facts  necessary  to  meet  the  requirements  of 
the  company,  and  among  other  things  that  the  property  was 
incumbered  by  mortgage,  and  then  signed  the  application, 
which  the  agent  proceeded  to  fill  up  on  his  return  to  his  resi- 
dence. In  it,  however,  he  stated  that  there  was  no  incum- 
brance on  the  property  ;  and  the  falsity  of  this  statement  the 
insurers  sought  to  show  in  order  to  defeat  a  recovery.  But 
the  court  held  that  they  were  estopped  from  so  doing.  A 
party  who  deals  with  an  agent,  through  whom  he  applies  for 
and  obtains  a  policy,  has  a  right  to  presume  that  such  material 
facts  as  are  made  known  to  him  are  known  to  his  principal, 
and  when  policies  are  issued  with  a  full  knowledge  of  such 
facts,  the  insured  is  to  suffer  no  prejudice,  nor  are  the  insurers 
to  gain  any  advantage  by  insisting  upon  conditions  which  it 
would  be  dishonest  to  enforce.^  The  doctrine  of  these  cases 
has  been  made  the  subject  of  statutory  enactment  in  Maine, 
whereby  such  statements  are  made  conclusive  upon  the  com- 
pany when  the  application  is  drawn  up  by  the  agent  who 
knows  the  facts.^ 


1  36  N.  Y.  (9  TifE.)  550.  See  also  Owens  v.  Holland,  &c.  Ins.  Co.,  56  N.  Y. 
565. 

2  Security  Ins.  Co.  v.  Fay,  22  Mich.  (4  Clarke)  467,  473 ;  ./Etna  Live  Stock  & 
Fire  Ins.  Co.  v.  Olmstead,  21  Midi.  (3  Clarke)  246  ;  North  Am.  Fire  Ins.  Co.  f. 
Throop,  id.  146 ;  Aurora  Fire  Ins.  Co.  y.  Eddy,  55  111.  213;  Knox  v.  Lycoming 
Ins.  Co.  (Wis.),  10  Ins.  L.  J.  89. 

3  Stat.  1861,  c.  .34,  §  2.  By  that  statute  it  is  enacted  that  "  no  insurance  com- 
pany shall  avoid  payment  of  a  loss  by  reason  of  incorrect  statements  of  value, 
or  title,  or  erroneous  description  by  the  insured  in  the  contract  of  insurance,  if 
the  jury  shall  find  that  the  difference  between  the  property  as  described  and  as 
really  existing  did  not  contribute  to  the  loss,  or  materially  increase  the  risk  ;  any 
change  in  the  property  insured,  its  use  or  occupation,  or  breach  of  any  of  the 
terms  or  conditions  of  the  contract  by  the  insured,  shall  not  affect  the  contract, 
unless  the  risk  was  thereby  materially  increased." 

1146 


CH.  XXVIII.]  OF   WAIVER   AND    ESTOPPEL.  [§  499 

§  499.  And  the  Supreme  Court  of  the  United  States  has  at 
last  thrown  the  great  weight  of  its  authority  into  the  scale  in 
favor  of  this  doctrine  of  equitable  estoppel/  the  elasticity  of 
which  it  must  be  admitted  has  been  put  to  the  test  of  the 
severest  tension.  But  to  this  the  courts  seem  to  have  been 
driven  by  the  constantly  increasing  tendency  of  insurance 
companies  to  seek  profit  at  the  expense  of  the  unwary,  and 
protection  against  sharp,  not  to  say  dishonest,  practices,  by 
invoking  another  rule  of  law,  —  that  parol  evidence  is  inad- 
missible to  contradict  or  vary  the  terms  of  a  written  contract,^ 
—  which  was  intended  to  prevent  fraud  and  not  to  work  in- 
justice.    In  that  case  the  court  say  :  — 

"  In  the  case  before  us,  a  paper  is  offered  in  evidence 
against  the  plaintiff,  containing  a  representation  concerning  a 
matter  material  to  the  contract  on  which  the  suit  is  brought, 
and  it  is  not  denied  that  he  signed  the  instrument,  and  that 
the  representation  is  untrue.  But  the  parol  testimony  makes 
it  clear,  beyond  a  doubt,  that  this  party  did  not  intend  to 
make  that  representation  when  he  signed  the  paper,  and  did 
not  know  he  was  doing  so ;  and,  in  fact,  had  refused  to  make 
any  statement  on  that  subject.  If  the  writing  containing  this 
representation  had  been  prepared  and  signed  by  the  plaintiff 
in  his  application  for  a  policy  of  insurance  on  the  life  of 
his  wife,  and  if  the  representation  complained  of  had  been 
inserted  by  himself,  or  by  some  one  who  was  his  agent  alone 
in  the  matter,  and  forwarded  to  the  principal  office  of  the 
defendant  corporation,  and  acted  upon  as  true  by  the  officers 
of  the  company,  it  is  easy  to  see  that  justice  would  authorize 
them  to  hold  him  to  the  truth  of  the  statement ;  and  that  as 
they  had  no  part  in  the  mistake  which  he  made,  or  in  the 
making  of  the  instrument  which  did  not  truly  represent  what 
he  intended,  he  should  not,  after  the  event,  be  permitted  to 


1  Union  Mut.  Ins.  Co.  v.  Wilkinson,  13  Wall.  (U.  S.)  222. 

2  Tliis  rule  is  not  applicable  at  all  unless  tlie  application  is  made  part  of  the 
contract.     Cheever  v.  Union  Central  Ins.  Co.  (Superior  Ct.   Cincinnati),  5  Big. 
Life  &  Ace.  Ins.  Cas.  458.     That  the  rule  is  not  infringed,  see  ante,  §  144  ;   Insur- 
ance Co.  V.  Mahone,  21    Wall.   (U.  S.)   152;  McLean  v.  Piedmont,  &c.  Ins.  Co 
.29Grat.  (Va.)  361. 

1147 


§  499]         INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.       [CH.  XXVIII. 

show  his  own  mistake  or  carelessness  to  the  prejudice  of  the 
corporation. 

"  If,  however,  we  suppose  the  party  making  the  insurance 
an  individual,  and  to  have  been  present  when  the  application 
was  signed,  and  soliciting  the  assured  to  make  the  contract 
of  insurance,  and  that  the  insurer  liimself  wrote  out  all  these 
representations,  and  was  told  by  the  plaintiif  and  his  wife  that 
they  knew  nothing  at  all  of  this  particular  subject  of  inquiry, 
and  that  they  refused  to  make  any  statement  about  it ;  and 
yet,  knowing  all  this,  wrote  the  representation  to  suit  himself, 
it  is  equally  clear  that  for  the  insurer  to  insist  that  the  policy 
is  void  because  it  contains  this  statement,  would  be  an  act 
of  bad  faith  and  of  the  grossest  injustice  and  dishonesty. 
And  the  reason  for  this  is,  that  the  representation  was  not 
the  statement  of  the  plaintiff,  and  that  the  defendant  knew 
it  was  not  when  he  made  the  contract ;  and  that  it  was  made 
by  the  defendant,  who  procured  the  plaintiff's  signature 
thereto. 

"  It  is  in  precisely  such  cases  as  this  that  courts  of  law 
in  modern  times  have  introduced  the  doctrine  of  equitable  es- 
toppels ;  or,  as  it  is  sometimes  called,  estoppels  in  j^ais.  The 
principle  is,  that  where  one  party  has,  by  his  representations 
or  his  conduct,  induced  the  other  party  to  a  transaction  to 
give  him  an  advantage  which  it  would  be  against  equity  and 
conscience  for  him  to  assert,  he  would  not  in  a  court  of  justice 
be  permitted  to  avail  himself  of  that  advantage.  And  although 
the  cases  to  which  this  principle  is  to  be  applied  are  not  as 
well  defined  as  could  be  wished,  the  general  doctrine  is  well 
understood,  and  is  applied  by  courts  of  law  as  well  as  equity 
where  the  technical  advantage  thus  obtained  is  set  up  and 
relied  on  to  defeat  the  ends  of  justice  or  establish  a  disiionest 
claim.  It  has  been  applied  to  the  precise  class  of  cases  of  the 
one  before  us  in  numerous  well-considered  judgments  by  the 
courts  of  this  country."  ^ 

1  Plumb  V.  Cattaraugus  Ins.  Co.,  18  N.  Y.  392  ;  Rowley  v.  Empire  Ins.  Co., 
36  id.  550 ;  Woodburj'  Savings  Bank  v.  Charter  Oak  Ins.  Co.,  31  Conn.  526  ; 
Combs  V.  Hannibal  Savings  &  Ins.  Co.,  43  Mo.  148  ;  Nortli  American  Fire  Ins. 
Co.  V.  Tliroop,  22  Mich.  146;  Michigan  St.  Ins.  Co.   v.  Lewis,  30  id.  40;  ante, 

1148 


CH.  XXVIII.]  OF   WAIVER   AND    ESTOPPEL.  [§  500 

§  500.  Estoppel  ;  Misrepresentation  ;  Agency.  —  In  Spar- 
row V.  Mutual  Benefit  Life  Insurance  Company ,i  the  validity 
of  the  policy  was  made  dc})endcnt  ujjon  the  truth  of  the  an- 
swers to  the  inquiries  contained  in  the  aj)plication  ;  and  the 
insured  was  inquired  of  in  the  same  interrogatory  as  to  prior 
insurance,  other  insurance,  and  also  if  he  had  insurance  upon 
his  life  in  other  companies,  in  what  companies,  and  to  what 
amount.  The  answer  was,  "  Yes  ;  5000,  under  policy  17,990." 
It  appeared  in  evidence  that  the  insurers,  a  New  Jersey 
corporation,  had  a  general  agent  in  Boston  for  Massachu- 
setts, who  had  supervision  over  the  other  agencies  within  the 
State,  and  appointed  sub-agents,  whose  duty  it  was  to  submit 
to  applicants  for  insurance  certain  questions,  and  to  see  that 
they  were  answered.  This  sub-agent  solicited  the  insured, 
at  the  place  of  business  of  the  latter,  to  make  application 
for  insurance,  and  took  down  from  the  dictation  of  the 
insured  all  of  the  answer  except  the  number  of  the  policy, 
which  was  inserted  by  the  clerk  of  the  sub-agent  at  the  lat- 
ter's  direction,  the  information  having  been  obtained  from 
the  records  in  the  office,  and  all  having  been  done  after  the 
signature  of  the  insured  was  made  to  the  application.  The 
answer  was  untrue  as  to  the  amount  of  other  insurance,  and 
incomplete  as  to  the  offices  in  which  it  was  placed.  It  was 
held  to  be  a  question  of  fact  for  the  jury  as  to  each  particular 
act  in  the  negotiation,  whether  the  agent,  who  might  be  act- 
ing now  for  the  company  and  now  for  the  insured,  was  in  fact 
acting  for  the  one  or  the  other  ;  and  the  responsibility  of  each 
particular  act  or  declaration  would  rest  with  that  party  for 
whom  the  agent  acted  in  the  matter  and  under  whose  direc- 
tion and  control,  as  to  that  particular  matter,  he  might  be, 
adopting  and  applying  the  doctrine  as  laid  down  in  Union 
Mutual   Insurance    Company  v.  Wilkinson.^     Such  an  agent 

§§  143,  144;  ^.tna  Live  Stock  &  Tornado  Ins.  Co.  v.  Olmstead,  21  Mich.  246; 
Miller  v.  Mut.  Ben.  Life  Ins.  Co.,  31  Iowa,  216;  McBrlile  v.  Republic  Fire  Ins. 
Co.,  30  Wis.  562;  Miner  v.  Phoenix  Ins.  Co.,  27  id.  6'J3;  Continental  Ins.  Co.  v. 
Kasey,  25  Grat.  (Va.)  268. 

1  Tried  before  Shepley,  J.,  in  the  Circuit  Court  of  the  United  States,  First 
Judicial  District  (Massachusetts),  April,  1873,  and  not  yet  reported. 

2  13  Wall.  (U.  S.)  222;  ante,  §  144. 

1149 


§  500]         INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.        [CH.  XXVIII. 

is  not  necessarily  the  agent  of  the  insurers  in  every  act,  be- 
cause he  may  be  controlled  and  directed  in  the  particular 
matter  by  the  insured,  when  of  course  he  is  the  agent,  pro 
hac  vice,  for  the  insured.  But  where  such  an  agent  by  his 
advice,  opinion,  or  otherwise,  acting  within  the  general  sphere 
of  his  duties,  leads,  directs,  or  controls  the  assured,  he  is  the 
company's  agent,  and  they  are  bound  by  his  acts  and  their 
results.  And  in  the  same  case  where  the  answer,  in  the 
making  of  which  the  agent  of  the  company  intervened,  was 
untrue  and  incomplete,  the  defendant  requested  the  court  to 
instruct  the  jury  that  if  the  insured  accepted  the  policy,  with 
the  knowledge  that  the  answers  to  the  several  questions  were 
as  they  appeared  at  the  trial,  he  was  bound  by  them,  what- 
ever knowledge  the  agent  of  the  company  might  have  had 
from  him,  or  from  any  other  person,  relating  to  the  subject- 
matter  inquired  about.  But  the  court  declined  to  so  instruct, 
without  qualification,  but  did  instruct  that  if  the  insured  ac- 
cepted the  policy  with  the  knowledge  that  the  answers  were 
in  the  words  as  they  appeared  at  the  trial,  that  those  words 
could  not  be  altered  or  changed,  or  their  meaning  altered  or 
changed  by  the  introduction  of  parol  evidence,  and  that  al- 
though the  agent  of  the  company  was  aware  from  other 
sources  that  the  answers  were  untrue,  yet  if  they  were  know- 
ingly made  by  the  insured  and  adopted  by  him,  and  their 
truth  made  the  test  of  the  validity  of  the  policy,  he  was 
bound  by  them.  But  there  was  a  clear  distinction  between 
words  used  in  the  request  as  to  matters  which  would  conclude 
the  insured,  and  as  to  matters  which  would  estop  the  office. 
If  the  insured  adopts  the  particular  answer,  he  is  concluded 
from  saying  that  the  words  used  mean  anything  different 
from  what  they  purport  to.  But  the  question  as  to  what  con- 
cludes the  insured  is  not  to  be  confused  with  the  question  as 
to  what  estops  the  office.  These  are  entirely  distinct  and 
separate.  The  office,  for  instance,  presents  a  question  hav- 
ing two  clauses.  Both  are  answered  with  equal  truth  and 
fulness.  With  regard  to  one  clause,  the  answer  is  put  down 
and  adopted  and  signed  by  the  assured.  With  regard  to  the 
other,  the  office  puts  down  but  a  part  of  the  answer.  While 
1150 


CH.  XXVIII.]  OF   WAIVER   AND    ESTOPPEL.  [§  501 

the  insured  is  concluded  as  to  the  first,  yet  when  the  com- 
pany defends  upon  the  ground  that  the  answer  to  the  second 
is  not  true  and  full,  the  insured  may  be  allowed  to  reply  that 
he  did  say  something  in  reply  to  the  interrogatory  which  the 
insurers  did  not  put  down,  because  they  regarded  it  then  as 
immaterial.  And  although  in  the  light  of  subsequent  events 
it  proves  to  have  been  material,  yet  as  the  insurers  determined 
to  omit  it,  it  was  their  act  and  not  his,  and  so  they  shall  not 
be  allowed  to  set  it  up  against  him.  The  questions,  whether 
a  party  insured  is  concluded  by  an  answer  which  he  has 
adopted,  and  whether  the  insurers  are  estopped  from  setting 
up  some  imperfection  in  an  answer,  for  which  they  are  di- 
rectly responsible,  are  entirely  distinct.  And  this  distinction 
is  the  foundation  of  the  doctrine  laid  down  in  the  Union 
Mutual  Life  Insurance  Company  v.  Wilkinson,^  under  which 
parol  evidence  is  allowed,  not  to  vary  or  change  the  language 
as  it  is,  but  to  show  that  the  party  claiming  to  set  up  an 
omission  or  modification  is  in  such  a  condition  that  he 
cannot  set  it  up  by  reason  of  his  own  knowledge  of  his 
own  acts. 

§  501.  Estoppel  where  Facts  arise  pending  Negotiations,  — 
This  estoppel  is  oftenest  based  on  matter  arising  pending  the 
negotiation,  as  where  the  amount  of  the  risk  taken  is  beyond 
the  limit  prescribed  by  the  charter ;  2  or  a  special  risk  pro- 
hibited by  the  by-laws  is  taken ;  ^  or  prepayment  of  premium, 
though  by  the  terms  of  the  policy  made  essential  to  its  valid- 
ity, is  not  insisted  on;*  or  an  incomplete  answer,  or  no  an- 

1  13  Wall.  (U.  S.)  222. 

2  Hoxsie  V.  Prov.  Mut.  Fire  Ins.  Co.,  6  R.  I.  517  ;  Fuller  v.  Boston  Fire  Ins. 
Co.,  4  Met.  (Mass.)  206;  Cumberland  Valley  Mut.  Prot.  Ins.  Co.  v.  Schell,  29 
Pa.  St.  31  ;  ante,  §§  1-30,  131.     But  see  post,  §  510. 

3  Merch.  &  Manuf.  Ins.  Co.  v.  Curran,  45  Mo.  142. 

*  Sheldon  v.  Atlantic  Fire  &  Mar.  Ins.  Co.,  26  N.  Y.  460;  Heaton  v.  Man- 
hattan Fire  Ins.  Co.,  7  R.  I.  502  ;  Kibbe  et  al.  v.  Travellers'  Ins.  Co.,  N.  Y. 
Supreme  Ct.,  1872,  not  yet  reported  ;  (tnte,  §§  134,  135.  [When  the  policy  con- 
tained a  clause  stating  that  the  company  would  not  be  liable  until  premiums 
should  be  actually  paid,  but  the  agent  had  delivered  the  policy  to  the  assured 
waiving  prepayment  and  fixing  no  time  for  payment  and  further  had  demanded 
payment  several  times  at  the  last  of  which,  the  assured  promised  to  pay  in  a  few 
days  and  when  the  policy  was  not  cancelled  nor  was  the  assured  notified  that  it 

VOL  II.  —  29  1151 


§  501]        INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXVIII. 

swer  at  all,  to  a  question  in  the  application  ;  ^  or  the  insurers 
issue  or  renew  a  policy  after  notice  that  the  statements  in 
the  application  are  untrue ;  ^  or  that  the  original  policy  was 
forfeited  by  other  insurance  without  notice  ;  ^  or  that  the  loca- 
tion of  the  property  has  been  changed ;  *  or  that  the  insured 
resided  in  a  prohibited  district.^  Notice  which  is  sufficient 
to  excite  attention,  and  put  a  party  on  his  guard,  and  call  for 
inquiry,  is  notice  of  everything  to  which  such  inquiry  might 


would  be,  it  was  held  that  a  waiver  of  payment  had  been  made  and  that  the 
company  was  liable.  Washoe  Tool  Manuf.  Co.  v.  Hibernia  Fire  Ins.  Co.,  66 
N.  Y.  613  at  614.] 

1  Hall  V.  People's  Mut.  Ins.  Co.,  6  Gray  (Mass.),  185;  Blake  v.  Exchange 
Mut.  Ins.  Co.,  12  id.  265;  Liberty  Hall  Ass.  o.  Housatonio  Mut.  Fire  Ins.  Co., 
7  id.  261;  Nichols  v.  Fayette  Mut.  Fire  Ins.  Co.,  1  Allen  (Mass.),  63;  Geib  v. 
Enterprise  Ins.  Co  ,  1  Dillon  (U.  S.  C.  Ct.),  443,  449;  Lorillard  Fire  Ins.  Co.  v. 
McCuUoch,  21  Ohio  St.  176.  [If  the  company  issues  a  policy  on  an  application 
containing  an  ambiguous  answer,  it  waives  a  breach  arising  from  a  possible  con- 
struction of  the  answer.  Lebanon  Mut.  Ins.  Co.  v.  Kepler,  100  Pa.  St.  28.  If 
a  question  in  the  application  is  not  answered  at  all,  or  on  its  face  is  imperfectly 
answered,  the  issue  of  a  policy  without  further  inquiry  is  a  waiver  of  the  want 
or  imperfection  of  the  answer.  Phoenix  Life  Ins.  Co.  v.  Raddin,  120  U.  S.  183. 
In  this  case  one  of  the  questions  was,  "  Has  any  application  been  made  to  this  or 
any  other  company  for  assurance  on  the  life  of  the  party  ?  If  so,  with  what  re- 
sult 1  What  amounts  are  now  insured  on  the  life  of  the  party  and  in  what  com- 
panies ?  "  Answer,  "  §10,000,  Equitable  Life  Assurance  Society."  A  policy  in 
tliat  company  was  in  fact  the  only  other  existing  insurance,  but  no  mention  was 
made  of  unsuccessful  applications  which  the  question  called  for  and  which  the 
answer  manifestly  did  not  touch.  An  omission  to  answer  a  question  will  not  be 
imputed  to  fraud,  a  subsequent  issue  of  a  policy  amounts  to  omitting  the  question 
from  the  application  altogether.  Conn.  Mut.  Life  Ins.  Co.  v.  Luchs,  108  U.  S. 
498 ;  Armenia  Ins.  Co.  v.  Paul,  91  Pa.  St.  520  at  522 ;  Dunbar  v.  Phenix  Ins. 
Co.,  72  Wis.  492 ;  Carson  v.  Jersey  City  Ins.  Co.,  43  N.  J.  300 ;  Jersey  City  Ins. 
Co.  V.  Carson,  44  N.  J.  210.  But  where  a  policy  requires  a  statement  of  the  true 
interest  of  the  insured,  if  the  same  is  not  absolute,  the  acceptance  of  the  policy 
without  any  declaration  of  title  amounts  to  a  representation  that  it  is  abso- 
lute. Lasher  v.  St.  Joseph  Fire  &  Mar.  Ins.  Co  ,  86  N.  Y.  423.  Where  the  as- 
sured forgets  to  fully  state  the  status  of  surrounding  buildings  in  his  application, 
but  afterwards  informs  the  agent  of  the  company  of  tlie  same  and  is  told  that  it 
is  all  right,  the  breach  is  waived  and  cannot  be  set  up  as  a  defence.  Farmers'  & 
Mer.  Ins.  Co.  v.  Chesnut,  50  111.  111.] 

2  Witherell  v.  Maine  Ins.  Co.,  49  Me.  200;  Home  Mut.  Fire  Ins.  Co.  v.  Gar- 
field, 60  111.  124. 

3  Carroll  v.  Charter  Oak  Ins.  Co.,  38  Barb.  (N.  Y.)  402. 
*  Ludwig  V.  Jersey  City  Ins.  Co.,  48  N.  Y.  379. 

s  Garber  v.  Globe  Ins.  Co.,  C.  Ct.  (Mo.)  4  Ins.  L.  J.  307. 

1152 


CH.  XXVIII.]  OP   WAIVER   AND    ESTOPPEL.  [§  502 

have  led,  as  of  a  change  of  business  on  an  application  for  a 
renewal  of  a  policy  where  the  agent  of  the  applicant  states  his 
belief  of  the  fact  of  a  change,  and  refers  to  a  certain  person 
for  information,!  or  misleads  the  insured  in  the  very  matter 
of  supplying  the  information  upon  which  the  application  is 
filled  up.2  [If  the  company  knows  certain  facts  at  the  time' 
of  insurance  it  cannot  forfeit  the  policy  on  the  ground  of  the 
existence  of  such  facts  although  the  insured  stated  that  they 
did  not  exist.3  If  the  general  agent  knows  at  the  time  of  in- 
surance that  petroleum  is  kept  or  used  on  the  premises,  the 
condition  against  it  is  waived.*  But  the  issue  of  a  policy  with 
knowledge  of  the  facts  as  to  the  interest  of  the  assured  does 
not  estop  the  company  from  setting  up  the  defence  of  no  in- 
surable interest.^  If  the  company  is  estopped  to  take  ad- 
vantage of  a  mistake  in  the  cuje  of  the  insured,  the  verdict 
should  be  for  the  amount  which  the  premium  would  insure  at 
the  actual  age.^] 

§  502.  Estoppel  where  Facts  arise  during  the  Currency  of  the 
Policy.  —  It  nevertheless  not  unf requently  takes  place  where 
the  facts  upon  which  it  is  based  arise  after  the  negotiations 
have  been  completed,  and  during  the  currency  of  the  contract ; 
as  where  an  assignment  is  assented  to,  or  premiums  received,^ 

1  Reynolds  v.  Commercial  Fire  Ins.  Co.,  47  N.  Y.  (Com.  of  App.)  559. 

2  Sweeney  v.  Promoter  Life  Ass.  Co.,  11  Irish  Com.  L.  476. 

3  [Sehwarzbach  v.  Protective  Union,  25  W.  Va.  024,  665.] 
*  [Kruger  v.  Western  Fire  &  Mar.  Ins.  Co.,  72  Cal.  91.] 

5  [Spare  v.  Home  Mut.  Ins.  Co.,  12  Ins.  L.  J.  365 ,  22  Am.  L.  Reg.  N.  S.  409, 
(Or.)  1883.] 

6  [Epes  V.  Arlington  Ins.  Co.  (Va.),  8  Ins.  L.  J.  342] 

^  [After  full  knowledge  of  facts  receipt  of  an  after-maturing  premium  or 
assessment  or  other  act  recognizing  the  policy  is  a  waiver.  Schimp  i\  Cedar 
Rapids  Ins  Co.,  124  111.  354;  Masonic  Mut.  Ben.  Ass.  v.  Beck,  77  Ind.  203;  Jor- 
dan V.  State  Ins.  Co.,  64  Iowa,  216;  Gerniania  Ins.  Co.  v.  Rudwig,  80  Ky.  223 
(removal)  ;  Story  v.  Hope  Insurance  Co.,  37  La.  Ann.  254;  Carpenter  ?•.  Conti- 
nental Ins.  Co.,  61  Mich.  635;  King  v.  Council  Bluffs  Ins.  Co.,  72  Iowa,  310 
(policy  renewed  after  general  agent  knew  that  buildings  had  been  erected  near 
the  one  insured);  Harl  v.  Pottawattamie  County  Mut.  Fire  Ins.  Co.,  74  Iowa,  39 
(a  company  demanding  and  receiving  an  assessment  from  the  administrator 
cannot  afterwards  claim  that  the  fire  policy  ceased  with  the  life  of  the  insured); 
Phoenix  Ins.  Co.  v.  Lansing,  15  Neb.  494  (acceptance  of  over-due  premium); 
Schoneman  v.  Insurance  Co.,  16  Neb.  404  (same).  See  also  Western  Ins.  Co.  v. 
Scheidle,  18  Neb.  495;  McCluer  v.  Home  Ins.  Co.,  31  Mo.  App.  62  (error  not  to 

1153 


§  502]         INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXVIII. 

or  assessments  ^  are  made  and  collected  on  a  premium  note,  or 
dividends  paid,  or  a  renewal  premium  is  received,  or  a  change 

submit  to  the  jury  the  question  of  waiver  by  adjustment  after  loss  during  de- 
fault of  premium);  Penn  Fire  Ins.  Co.  v.  Dougherty,  102  Pa.  St.  568;  Liver- 
pool, &c.  Ins.  Co.  V.  Ende,  65  Tex.  118  (agent  received  premiums  after  knowing 
that  insured  was  not  sole  owner);  Morrison  v.  Wis.  O.  F.  Mut.  Life  Ins.  Co.,  59 
Wis.  162 ;  Osterloh  i'.  New  Denmark  M.  H.  Fire  Ins.  Co.,  60  Wis.  126  ;  Schwarz- 
bach  y.  Protective  Union,  25  W.  Va.  624,  666;  Millard  v.  Supreme  Council  of 
Am.  L.  of  Honor,  81  Cal.  340.  Where  the  company  has  by  its  conduct  induced 
a  belief  that  an  existing  cause  of  forfeiture  will  not  be  acted  on,  and  acting  on 
this  belief  has  paid  subsequent  premiums,  the  company  is  estopped.  Mobile 
Life  Ins.  Co.  v.  Pruett,  74  Ala.  487.  If  after  knowledge  of  the  facts  constituting 
a  breach  of  condition  the  company's  agent  says  there  will  be  no  more  trouble  and 
that  the  money  will  be  paid  in  case  of  loss,  and  relying  on  this  the  plaintiff  pays 
the  premiums  as  they  come  due,  the  company  is  estopped.  Ferguson  v.  Mass. 
Mut.  Life  Ins.  Co.,  32  Hun,  306.  An  agent  to  procure  applications,  deliver  pol- 
icies, and  collect  premiums  in  a  certain  territory,  may  waive  a  cause  of  forfeit- 
ure by  the  receipt  ofjremiums  after  he  knows  of  it.  Smith  v.  St.  P.  Fire  &  Mar. 
Ins.  Co.,  3  Dak.  80,  although  the  policy  declares  that  agents  are  not  authorized 
to  waive  forfeitures.  His  knowledge  is  that  of  the  company.  So  where  the 
agent  saw  liquors  sold  in  a  grocery  insured,  drank  some  himself  and  afterward 
delivered  the  policy,  and  received  premiums,  the  policy  could  not  be  avoided  for 
breach  of  the  condition  against  sale  of  liquor,  McGurk  v.  Metropolitan  Life  Ins. 
Co.,  56  Conn.  528.  But  although  the  receipt  with  knowledge  of  a  premium  ma- 
turing after  the  breach  of  condition  is  a  waiver,  it  is  otherwise,  in  regard  to  a 
premium  due  before  breach  and  for  which  credit  was  given.  For  example,  wliere 
a  premium  note  was  given  pa3'able  one  year  from  date  or  at  the  date  of  any  loss 
under  the  policy,  that  might  sooner  occur,  and  a  loss  occurred  against  which 
the  company  had  a  complete  defence  for  conditions  broken,  it  was  held  that  re- 
ceiving payment  of  the  note  was  no  waiver.  Schimp  v.  Cedar  Rapids  Ins.  Co., 
124  III.  354.  So  if  the  assured  pays  it  with  full  knowledge  that  the  company 
does  not  intend  to  waive  the  breach  and  only  in  order  to  keep  the  policy  alive, 
so  that  it  will  revive  when  the  breach  ceases,  there  is  no  waiver.  Northwestern 
Mut.  Life  Ins.  Co.  v.  Amerman,  119  III.  329.  Receiving  premiums  through  an 
agent,  with  knowledge  of  the  facts,  estops  the  company  from  denying  the  agent's 
authority.  Northwestern  Iron  Co.  v  ^Etna  Ins.  Co.,  26  Wis.  78,  or  that  the  pol- 
icy did  not  cover  the  special  property  in  question,  Block  v.  Columbian  Ins.  Co., 
42  N.  Y.  393.] 

^  [Collection  of  an  assessment  after  knowledge  of  a  breach  of  condition  is  a 
waiver.  Lycoming  Mut.  Ins.  Co.  v.  Stocklomn,  3  Grant's  Cas.  207  at  208  (in- 
surance beyond  two-thirds  value);  Insurance  Co.  ;•.  Slockbower,  26  Pa.  St.  199, 
202.  A  certificate  cannot  be  treated  as  valid  for  the  purpose  of  assessment  and 
invalid  for  the  purpose  of  avoiding  payment  to  the  beneficiaries.  Malt  v.  Rom. 
Cath.  Mut.  Prot.  Soc,  70  Iowa,  455.  Receipt  of  an  assessment  overdue  has  been 
considered  a  waiver  though  it  was  by  mistake,  and  the  company  did  not  intend 
to  waive.  Bailey  v.  Mut.  Ben.  Ass.,  71  Iowa,  689,  690;  Tobin  v.  Western  Mut. 
Aid  Soc,  72  Iowa,  261.     Where  G.  a  married  woman  separated  from  her  bus- 

1154 


CH.  XXVIII.]  WAIVER    AND    ESTOPPEL.  [§  502 

in  the  risk  is  permitted,  or  the  last  of  several  conveyances  has 
been  assented  to,  or  the  insured  is  misled  by  the  agent  into 
neglect  to  give  notice  of  a  change  of  risk,  or  consent  to  a  ri;- 
newal,!  ^nd  continuance  is  given,  after  knowledge,  actual  or 
constructive,  of  a  breach  of  a  condition  of  the  policy .^  "  The  de- 
fendants," said  the  court,  in  Frost  v.  Saratoga  County  Mutual 
Insurance  Company ,3  "  with  full  knowledge  of  the  facts  inval- 
idating the  policy,  have  chosen  to  act  upon  the  premium  note 
of  the  plaintiff,  as  an  available  security  in  their  favor,  and 
which  he  was  bound  to  pay.  Several  sums  have  accordingly 
been  assessed  by  the  directors  of  the  company,  and  payment 
thereof  required  on  said  note.  These  payments  have  been 
made  by  the  plaintiff,  and  the  question  is  presented.  Can  the 

band,  representing  that  she  was  a  widow  and  obtained  a  policy  which  she 
assigned  to  F.,  and  F.  not  knowing  of  G.'s  misrepresentation  went  to  the  secre- 
tary to  ask  if  G.'s  husband  could  prevent  the  operation  of  the  assignment,  and 
the  secretary  referred  F.  to  a  clerk,  who  told  her  that  the  husband  could  not  in- 
terfere, it  was  held  that  this  was  notice  to  the  company  that  G.  had  a  husband, 
and  that  by  receiving  assessments  afterward,  the  right  to  avoid  the  policy  was 
waived.     Fitzpatrick  v.  Hartford  Life  &  Ann.  Ins.  Co.,  56  Conn.  116.] 

i  [A  renewal  of  a  policy  by  the  agent,  with  knowledge  of  a  change  in  the 
title  which  would  be  a  breach  of  a  condition  in  the  policy,  is  a  waiver  of  the 
same.  Mechler  v.  Phoenix  Ins.  Co.,  38  Wis.  665  at  671 ;  Shafer  v.  Phoenix  Ins. 
Co  ,  53  Wis.  361  at  367  (incumbrance).] 

2  Insurance  Co.  i-.  Slockbower,  26  Pa.  St.  199  ;  Buckley  v.  Garrett,  47  id.  204  ; 
Keenan  v.  Dubuque  Mut.  Fire  Ins.  Co.,  13  Iowa,  375;  North  Berwick  Co.  c.  New 
England  Fire  &  Mar.  Ins.  Co.,  52  Me.  336  ;  Tuttle  v.  Robinson,  33  N.  H.  104; 
Frost  ?•.  Saratoga  Mut.  Ins.  Co.,  5  Denio,  154;  Cumberland  Valley  Mut.  Prot. 
Ins.  Co.  V.  Mitchell,  48  Pa.  St.  384 ;  Hodsdon  v.  Guardian  Life  Ins.  Co.,  97  Mass. 
144 ;  Bevin  v.  Conn.  Mut.  Life  Ins.  Co.,  23  Conn.  244  ;  Supple  v.  Cann,  9  Irish 
Law,  N.  s.  1265;  Wing  v.  Harvey,  2  DeG.,  M.  &  G.  265;  s.  c.  27  Eng.  L.  &  Eq. 
140;  Hale  v.  Union  Mut.  Fire  Ins.  Co.,  32  N.  H.  295;  Keeler  v.  Niagara  Fire 
Ins.  Co.,  16  Wis.  523;  Williams  i-.  Canada,  &c.  Ins.  Co.,  27  U.  C.  (C.  P.)  119; 
Smith  y.  Mutual  Ins.  Co.,  id.  441 ;  Dickson  v.  Provincial  Ins.  Co.,  24  id.  157; 
Witherell  y.  Maine  Ins.  Co.,  49  Me.  200;  Carroll  v.  Charter  Oak  Ins.  Co.,  38 
Barb.  (N.  Y.)  402;  s.  c.  10  Abb.  Ct.  of  App.  Dec.  316;  New  England,  '&c. 
Ins.  Co.  V.  Wetmore,  32  111.  221 ;  Rathbone  v.  City  Fire  Ins.  Co.,  31  Conn.  193  ; 
Southern  Life  Ins.  Co.  v.  McCain,  P6  U.  S.  84  ;  Anson  v.  Winnesheik  Ins.  Co., 
23  Iowa,  84.  See  also  ante,  §  339  ;  post,  §  502  ;  Maryland  Fire  Ins.  Co.  i'. 
Gusdorf,  43  Md.  506;  Law  v.  Hand-in-Hand  Ins.  Co.,  29  U.  C.  (C.  P.)  1; 
Gilliat  V.  Pawtucket,  &c.  Ins.  Co.,  8  R.  I.  282 ;  Kreutz  v.  Niagara  Ins.  Co.,  16 
U.  C.  (C.  P.)  131  ;  Armstrong  v.  Turquand,  9  Irish  L.  (C.  P.)  32;  Coombs  v. 
Shrewsbury  Mut.  Fire  Ins.  Co.,  N.  J.  (Ch.),  23  Alb.  L.  J.  98. 

3  5  Denio  (NY.),  154. 

1155 


§  502]  INSURANCE  ;    FIllE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXVIII. 

defendants,  who  have  thus  affirmed  the  original  and  continu- 
ing validity  of  the  premium  note,  in  which  the  plaintiff  has 
fully  acquiesced,  be  allowed  to  set  up  that  this  policy,  which 
formed  the  only  consideration  Ox  the  note,  was  never  valid, 
and  that  on  the  sole  ground  of  a  breach  of  warranty  on  the 
part  of  the  plaintiff,  the  facts  constituting  such  breach  of 
warranty  being  as  well  known  to  the  defendants  when  they 
exacted  and  received  payments  on  the  note  as  they  are  at 
the  present  time  ?  This  is  the  point  to  be  determined,  and  I 
should  certainly  with  great  reluctance  come  to  the  conclusion 
that  the  defendants  can  be  allowed  to  occupy  the  position 
they  now  assume.  It  is  wholly  inconsistent  with  the  ground 
taken  by  them  when  they  called  for  payments  on  the  pre- 
mium note,  and  I  think  common  justice  forbids  any  change 
of  position  in  this  respect.  '  It  is  a  question  of  ethics,'  as  was 
said  in  Dezell  v.  Odell,^  and  morality  requires  that  these 
defendants  shall  be  held  strictly  to  the  ground  that  they  have 
chosen  to  assume  for  themselves.  An  estoppel,  according  to 
Lord  Coke,  is  where  '  a  man's  own  act  or  acceptance  stop- 
peth  or  closeth  up  his  mouth  to  allege  or  plead  the  truth.'  ^ 
Estoppels  are  of  three  kinds :  by  matter  of  record,  by  deed, 
and  in  pais ;  but  our  present  concern  is  with  the  latter  class 
only.  Such  an  estoppel  arises  when  one  person  is  induced 
by  the  assertion  of  another  to  do  that  which  would  be  preju- 
dicial to  his  own  interest,  if  the  person  by  whom  he  had  been 
induced  to  act  in  this  manner  was  allowed  to  contradict  and 
disprove  what  he  had  before  affirmed.  In  the  case  of  Pick- 
ard  V.  Sears,^  the  principle  is  thus  stated  by  Lord  Denman : 
'  The  rule  of  law  is  clear,  that  when  one  by  his  words  or 
conduct  wilfully  causes  another  to  believe  the  existence  of  a 
certain  state  of  things,  and  induces  him  to  act  on  that  be- 
lief, so  as  to  alter  his  own  previous  position,  the  former  is 
concluded  from  averring  against  the  latter  a  different  state  of 
things  as  existing  at  the  same  time.'  In  the  case  of  Dezell  v. 
Odell,^  Cowen,  J.,  said:  'We  then  have  a  clear  case  of  an 
admission  by  the   defendant  intended  to  influence  the  con- 

1  3  Hill,  215,  225.  2  Co.  Lit.  352  a. 

8  6  A.  &  E.  409.  *  Supra. 

1156 


CH.  XXVIII.]  WAIVER   AND   ESTOPPEL.  [§  502 

duct  of  the  man  with  whom  he  was  dealing,  and  actually 
leading  him  into  a  line  of  conduct  which  must  be  prejudicial 
to  his  interest,  unless  the  defendant  be  cut  off  from  the 
power  of  retraction.  This  I  understand  to  be  the  very  defi- 
nition of  an  estoppel  in  pais.''  The  estoppel  is  allowed  to 
prevent  fraud  and  injustice,  and  exists  whenever  a  party  can- 
not in  good  conscience  gainsay  his  own  acts  or  assertions. 
The  authorities  upon  this  point  are  numerous,  and  all  speak 
the  same  language.^  '  It  makes  no  difference,  in  the  opera- 
tion of  this  rule,  whether  the  thing  admitted  was  true  or 
false,  it  being  the  fact  that  it  has  been  acted  upon  that  ren- 
ders it  conclusive.'  ^  Here  the  defendants,  in  affirming  the 
validity  of  the  premium  note,  necessarily  affirmed  that  the 
policy  was  also  originally  valid.  This  affirmation  was  acted 
upon  by  the  plaintiff,  for  he  advanced  money  in  consequence 
of  its  being  made,  and  the  defendants  shall  not  now  be  al- 
lowed to  set  up  any  fact  dehors  the  policy  in  order  to  im- 
peach the  original  validity  of  the  contract  of  insurance.  Qui 
sentlt  commodum,  sentire  debet  et  onus.''^  So  if  after  know- 
ledge of  other  insurance  the  insurers  say  it  will  make  no  dif- 
ference, and  so  lead  the  insured  to  still  rely  upon  his  policy 
as  a  valid  policy.-^  But  a  demand  for  an  assessment  not  com- 
plied with,  and  not  pressed,  as  having  been  made  by  mistake, 
is  no  waiver^  [Any  agreement,  declaration,  or  action  by  the 
company  which  induces  the  assured  honestly  to  believe  that  a 
deviation  from  the  strict  letter  of  the  policy  will  not  incur  a 
forfeiture  estops  the  company ;  for  example,  a  course  of  deal- 
ing authorizing  the  assured  to  believe  that  premiums  will  be 
received  within  a  reasonable  time  after  they  come  due.^     If 

1  Gregg  V.  Wells,  10  A.  &  E.  90;  Coles  v.  Bank  of  England,  id.  437  ;  Sandys  v. 
Hodgson,  id.  472;  Stephens  v.  Baird,  9  Cowen  (N.  Y.),  274;  Wclland  Canal  v. 
Hathaway,  8  Wend.  (N.  Y.)  480;  2  Smith,  Lead.  Cases,  458,  467,  notes;  1 
Greenl.  Ev.  §§  22,  27,  204,  207. 

•^  lb.  §§  208,  209. 

3  Westchester  Fire  Ins.  Co.  v.  Earle,  33  Mich.  143.  See  also  St.  Paul,  &c. 
Ins.  Co.  V.  Wells,  89  111.  82. 

*  Elliott  V.  Lycoming  County  Mut.  Ins.  Co.,  66  Pa.  St.  22. 

5  [Piedmont,  &c.  Life  Ins.  Co.  v.  Fitzgerald,  1  Tex.  Civ.  Cas.  §1347  ;  Insur- 
ance Co.  V.  Eggleston,  6  Otto,  572  :  Insurance  Co.  v.  Wolff,  5  Otto,  330  ;  Berg- 
mann  v.  St.  Louis  Life  Ins.  Co.,  2  Mo.  App.  262  at  204.] 

1157 


§  502  a]      INSURANCE  :    FIRE,  LIFE,   ACCIDENT,   ETC.       [CH.  XXVIII. 

the  company  knowing  the  facts  that  constitute  a  forfeiture 
continue  to  treat  the  contract  as  binding,  thereby  inducing 
the  insured  to  act  and  incur  expense,  the  forfeiture  is  waived.^ 
Where  a  policy  was  written  on  a  "  frame  dwelling-house,"  and 
the  insured  afterward  applied  for  and  obtained  from  the  sec- 
retary permission  to  remove  the  floor,  raise  the  ceiling,  etc., 
of  the  "  saloon,"  it  was  held  that  the  company  had  waived  the 
provisions  in  regard  to  saloon  risks.  Any  negotiation  or  rec- 
ognition of  the  policy,  after  knowledge  of  forfeiture,  waives  it.^ 
A  subsequent  promise  of  an  insurance  company  to  pay  a 
loss  removes  their  defence  that  a  building  near  plaintiff's 
liouse  was  not  mentioned  in  the  policy,  which  would  otherwise 
have  vitiated  it,  when  the  said  plaintiff  stated  such  omission  to 
the  company's  duly  authorized  agent  immediately  after  the 
issuance  of  the  policy,  and  was  told  in  reply  that  it  was  all 
right  and  also  removes  their  defence  that  plaintiff's  suit  was 
not  brought  within  a  year  from  loss  as  required.^  The  courts 
will  find  a  waiver  on  slight  evidence  for  they  lean  to  defeat 
forfeitures.'*] 

§  502  a.  Waiver ;  Notice ;  Option.  —  Where  notice  is  re- 
quired and  given,  or  though  not  required  is  actually  given,  of 
an  act  or  omission,  which  may  work  a  forfeiture,  in  order  that 
the  insurer  may  take  some  action  or  exercise  some  option  in 
his  own  interest  relative  thereto,  the  forfeiture  will  be  waived 
if  that  action  be  not  taken  or  that  option  be  not  exercised,  and 
made  known  to  the  holder  of  the  policy,  or  done  in  such  man- 
ner that  it  may  be  known  to  him  on  proper  inquiry,  within 
reasonable  time  and  before  any  other  act  recognizing  the  con- 
tinued validity  of  the  policy.^  This  was  held  to  be  the  rule 
where  the  policy  provided  for  a  forfeiture,  and  immediately 
following  provided  that  the  policy  might  be  terminated  at  any 

1  [Hollis  V.  State  Ins.  Co.,  65  Iowa,  454.] 

2  [Haas  V.  Montauk  Fire  Ins.  Co.,  49  Hun,  272 ;  Ring  v.  Windsor  Co.  Mut. 
Fire  Ins.  Co.,  54  Vt.  434.] 

3  [Fire  &  Mar.  Ins.  Co.  v.  Chesnut,  50  III.  111.] 
*  [Bonenfaut  v.  Insurance  Co.,  76  Mich.  053.] 

5  Potter  V.  Ontario,  &c.  Ins.  Co.,  5  Hill  (N.  Y.),  147;  Allen  v.  Massasoit  Mut. 
Ins.  Co.,  99  Mass.  160,  161  ;  Anson  v.  Winneskeik  Ins.  Co  ,  23  Iowa,  84;  Guern- 
sey V.  Am.  Ins.  Co.,  17  Minn.  104. 

1158 


CH.  XXVIII.]  WAIVER   AND    ESTOPPEL.  [§  503 

time,  at  the  option  of  the  company,  on  notice.^  The  fact  that 
the  insurers  do  not  avail  themselves  of  the  right  to  cancel  a 
policy,  which  for  any  cause  known  to  them  they  have  a  right 
to  treat  as  forfeited,  is  evidence  of  a  waiver  of  forfeitui-e  by 
reason  of  that  cause.^  So  where  a  practice,  as  of  the  time, 
place,  or  manner  of  receiving  premiums,  has  been  changed, 
notice  should  be  given  of  the  change  before  the  option  can  be 
exercised.^ 

§  503.  Estoppel  if  what  is  undertaken  by  the  Insured  is  known 
by  the  Insurer  to  be  impossible.  —  So  if  a  policy  be  issued,  or 
a  contract  of  insurance  made,  under  such  circumstances  that 
it  is  known  to  the  insurers  that  the  conditions  of  the  policy, 
as  to  the  payment  of  the  premiums,  will  not,  because  they  can- 
not, be  complied  with,  this  will  be  deemed  a  waiver  of  such 
conditions,  and  an  estoppel  against  setting  up  a  non-compli- 
ance therewith  as  a  defence,  as  appears  by  a  very  recent  case 
in  the  Circuit  Court  of  the  United  States  for  the  District  of 
California.*  The  San  Francisco  agent  of  a  New  York  com- 
pany forwarded  an  application,  dated  June  5,  1867,  reciting 
that  if  the  application  was  accepted  the  policy  was  to  be  in 
force  from  that  date.  The  application  was  accepted,  and  a 
policy,  dated  April  5,  1867,  was  issued,  reciting  that  the  quar- 
terly premiums  were  due  on  or  before  the  sixth  days  of  April, 
July,  October,  and  January,  and  providing  that  if  not  paid  on 
or  before  said  days,  "  at  the  office  in  New  York  (unless  other- 
wise expressly  agreed  in  writing),  or  to  agents,  when  they 
produce  receipts  signed  by  the  president  or  secretary,"  it  was 
to  be  void.  The  time  of  passage  between  San  Francisco  and 
New  York  was  then  from  twenty-three  to  thirty  days,  and  the 


1  Wakefield  v.  Orient  Ins.  Co.  (Wis.),  11  Reptr.  655. 

2  Teutonia  Life  Ins.  Co.  v.  Anderson,  77  111.  384;  Mutual  Benefit  Life  Ins.  Co. 
V.  French,  30  Oliio  St.  240;  Georgia  Mut.  Life  Ins.  Co.  v.  Gibson,  52  Ga.  640; 
Joiiffe  V.  Madison  Ins.  Co.,  39  Wis.  Ill ;  Comp.  du  Phoenix  c.  Dohis,  Dallos, 
Jur,  Gen.,  1844,  4,  3G. 

3  Mutual  Benefit  Life  Ins.  Co.  v.  Frencli,  80  Ohio  St.  240 ;  Seamans  v.  Nortli 
Western  Ins.  Co.,  C.  Ct.  (Minn.),  10  id.  15.3. 

*  Young  V.  Mut.  Life  Ins.  Co.  of  New  York,  C.  Ct.  (Cal),  2  Ins.  L.  J.  289. 
See  also  Andes  Ins.  Co.  v.  Shipman,  77  111.  189. 

1159 


§  503]        INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXVIII. 

policy  arrived  at  San  Francisco  August  2,  1867.     And  here- 
upon the  court  observes  :  — 

"  The  policy  bears  date  April  5th,  and  the  receipts  prepared 
by   the  company  correspond  with  this  date.     The  company, 
therefore,  regarded  the  second  quarter's  premium  as  due  July 
6th,  and  acted  upon  that  idea,  although  the  application  was 
made,  and  the  first  memorandum  receipt  and  contract  given, 
on  June  5th.     The  promissory  note  given  for  the  first  quar- 
ter's premium  being  payable  without  grace,  fell  due  August 
4th.     It  will  be  seen  that  the  condition  of  the  policy  imposing 
a  forfeiture  required  payment  to  be  made  '  at  the  office  of  the 
company  in  the  city  of  New  Fork,  or  to  agents,  when  they  pro- 
duce receipts  signed  hy  the  president  or  secretary,  unless  other- 
wise expressly  agreed  in  writing.'     There  is  no  evidence  in 
this  case  of  its  having  been  otherwise  agreed  in  writing.     It 
does  not  appear  that  the  policy  was  received  at  the  San  Fran- 
cisco office  before  the  2d  of  August.     At  or  about  the  6th  of 
July  the  policy  must  have  been  in  the  defendant's  office  in 
New  York,  which  would  have  given   twenty-seven   days   to 
August  2d,  to  make  the  passage  to  San  Francisco.     The  de- 
fendant knew  at  the  time  of  despatching  the  policy  that  the 
second  instalment  of  premium  had  not  been  paid  at  the  office 
in  Netv  York.     It  also  knew  that  it  coidcl  not  be  paid  to  its 
agents  here,  in  accordance  with  the  terms  of  the  contract,  so 
as  to  be  obligatory  upon  defendant,  for  the  reason  that  the 
only  receipt  duly  signed  as  specified  in  the  policy  authorizing 
payment  to  its  agents  was  attached  to  the  policy,  and  would 
not  reach  San  Francisco  till  the  month  of  August,  a  month 
after  it  was  due.     The  defendant  did  not  expect  payment  at 
its  office  in  New  York  City,  or  it  would  not  have  sent  its  re- 
ceipt to  its  agent  to  enable  him   to  receive  payment.     The 
defendant,  then,  by  its  officers  in  New  York,  transmitted  the 
policy  and  receipts,  with  knowledge  that  payments  had  not  and 
would  not  be  made  at  the  office  in  New  York,  and  that  it  could 
not  be  made  elsewhere  in  the   mode   required  by  the  terms  of 
the  contract  for  a  month  after  due.     Yet  the  policy  was  sent 
with  an  intent  that  it  should  be  delivered,  and  payment  re- 
ceived by  its  agent  in  San  Francisco,  although  it  knew  that 
1160 


CH.  XXVIII.]  WAIVER    AND    ESTOPPEL.  [§  503 

there  must  necessarily  be  a  forfeiture  upon  the  strict  letter  of 
the  conti-act.  Also,  after  the  receipt  of  the  policy  at  San 
Francisco,  on  the  2d  of  August,  nearly  a  month  after  the  inl 
stalment  fell  due,  according  to  the  terms  of  the  policy,  the 
defendant's  agent,  necessarily  knowing  that  payment  had  not 
been  made,  stamped  and  countersigned  the  receipt,  ready  for 
delivery  upon  payment,  thereby  treating  the  agreement  as  still 
in  force.  Again  on  the  8th  of  August,  four  days  after  the 
note  given  for  the  first  quarter's  premium  fell  due,  and  after 
default  in  payment,  and  necessarily  with  the  knowledge  of 
non-payment  of  both  the  note  and  second  instalment,  the 
agent  of  the  defendant  addressed  to  Young  the  note  before  set 
out  in  this  opinion. ^ 

"  This  act,  after  the  forfeiture,  if  any  there  was,  had  at- 
tached, recognizes  the  agreement  as  being  still  in  force.  The 
letter  does  not  even  demand  payment,  or  refer  to  the  fact  of 
non-payment,  or  fix  any  time  when  the  insured  should  call  for 
the  policy  or  make  payment.  It  simply  notifies  him  that  his 
policy  has  arrived,  and  asks  whether  it  should  be  sent  to  him 
at  Vallejo,  or  whether  he  would  call  and  get  it  when  in  the 
city,  implying  that  it  would  be  at  his  option  to  have  it  sent  to 
him  at  once,  or  wait  his  convenience  till  he  should  come  to 
the  city  and  be  able  to  call  for  it.  The  defendant  manifested 
no  haste  or  anxiety  upon  the  subject,  for  the  policy  was  on 
hand  from  the  second  to  the  eighth  of  August  at  least,  before 
the  notice  to  Young  was  even  written,  and  it  does  not  appear 
when  it  was  sent.  It  does  not  appear  that  this  or  any  other 
notice  reached  him.  No  other  act  of  the  company  is  shown 
inconsistent  with  this  action,  or  tending  in  the  slightest  degree 
to  show  an  intention  to  insist  upon  a  forfeiture  till  after  the 
death  of  Young,  when  the  policy  was  cancelled,  October  31st, 
payment  of   the  loss  having  before  been  refused.     It  could 

1  San  Francisco,  Aug.  8, 1867. 
M.  P.  YocNG,  Esq.,  Vallejo,  Cal. 

Dear  Sir, —  Your  policy  of   insurance  with  the  Mutual  Life  Insurance  Com- 
pany has  arrived.     Please  inform  me  whether  I  shall  send  it  to  you  at  Vallejo, 
or  if  you  will  call  and  get  it  wlien  you  are  in  the  city. 
Respectfully  yours, 

H.  D.  HoMANS,  GenernJ  Agent. 

Per  K.  W.  Heath,  Jr. 

11(51 


§  503]        INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XXVIIl. 

hardly  have  been  expected  that  Young  would  call  to  make  the 
second  payment  until  notified  whether  the  risk  had  been  ac- 
fcepted,  especially  as  there  was  ample  time  between  June  5th, 
when  the  apj)lication  was  made,  and  the  5th  of  September,  the 
time  when  the  next  payment  would  have  fallen  due,  had  the 
date  of  the  policy  agreed  with  the  date  of  the  application,  and 
the  preliminary  memorandum  of  agreement  given  to  him  by 
defendant's  agent  in  San  Francisco.  It  was  doubtless  sup- 
posed that  notice  of  acceptance  or  rejection  would  be  given 
before  the  note  for  the  first  quarter's  premium  would  fall  due. 
But  however  this  may  be,  the  several  acts  of  the  defendant, 
and  all  its  acts  and  the  acts  of  its  officers  in  relation  to  the 
matter  shown  to  the  court,  which  were  performed  subsequent 
to  the  accruing  of  the  forfeiture,  if  any  accrued,  treat  the 
agreement  for  insurance  as  still  in  force.  They  affirmatively 
indicate  an  intention  not  to  insist  upon  a  forfeiture,  and  had 
the  accident  and  death  not  occurred,  there  can  be  no  doubt, 
from  the  facts  shown,  that  even  as  late  as  the  death  of  Young 
the  premium  would  have  been  received  and  the  policy  delivered. 
In  the  case  cited  by  counsel  of  Chipman  against  the  same  de- 
fendant, tried  in  this  court  a  year  ago,  there  was  no  act  of  any 
kind  shown  on  the  part  of  the  company  indicating  an  inten- 
tion to  waive  the  forfeiture,  or  in  auy  way  recognizing  a  sub- 
sisting contract.  Whereas  in  this  case,  all  the  acts  of  the 
company  after  the  forfeiture  accrued,  and  prior  to  Young's 
death,  shown  to  the  court,  recognize  the  contract  as  still  sub- 
sisting, and  manifest  an  intention  not  to  claim  a  forfeiture. 

"  I  think,  upon  the  facts,  the  court  must  find  a  waiver  of 
any  forfeitures  which  had  accrued,  and  that,  under  the  cir- 
cumstances, after  the  death  of  the  assured,  it  was  too  late,  for 
the  first  time,  to  insist  upon  the  forfeiture."  ^ 

So  where  it  is  stipulated  that  a  record  shall  be  kept  of  the 
watchman's  performance,  and  it  was  known  to  the  insurer 
that  such  a  record  could  not  be  kept,  the  failure  to  keep  it 
works  no  forfeiture.^ 

1  And  see  also  Longhurst  v.  Star  Ins.  Co.,  ante,  §  487. 

2  Andes  Ins.  Co.  v.  Shipman,  77  111.  189.  See  also  Com.  Ins.  Co.  v.  Spank- 
neble,  52  id.  53. 

1162 


CH.  XXVIII.]  WAIVER    AND    ESTOPPEL.  [§  504 

§504.  Estoppel  where  Facts  arise  after  Loss.  —  So  also  an 
estoppel  arises  where  the  facts  arise  after  a  loss,  as  wliere  an 
offer  of  settlement  ^  after  personal  examination  by  an  agent  i,% 
made,  and  no  compliance  has  been  had  with  the  condition  that 
notice  of  a  loss  shall  be  given  forthwith,  or  a  particular  state- 
ment of  loss  furnished  ;  ^  or  notice  of  an  election  to  rebuild 
after  full  knowledge  that  misrepresentations  were  made  at  the 
time  of  taking  out  the  policy  ;3  or  defective  notices,  accounts, 
certificates,  or  proofs  of  loss  are  received  without  objection,  or 
objections  founded  on  other  grounds.'*  [Where  the  company 
knows  every  fact  of  avoidance  immediately  after  loss  and  yet 
for  a  year  misleads  the  insured  into  believing  that  it  means  to 
settle,  it  cannot  complain  if  it  is  held  estopped.^  Statements 
by  a  local  insurance  agent  that  the  plaintiff's  loss  was  "  all 
right "  and  that  the  company  would  pay  the  amount,  consti- 
tutes a  waiver  by  the  company  of  the  clause  in  the  policy  re- 
quiring formal  proof  of  loss,  and  also  the  one  barring  suits  not 


^  [A  known  cause  of  forfeiture  is  waived  even  by  the  agents  entering  into 
negotiations  for  settlement.  Oslikosh  G.  L.  Co.  v.  Germania  Fire  Ins.  Co.,  71 
Wis.  454.  Proceeding  to  adjust  the  loss  and  deal  with  the  insured  concerning 
proofs  of  loss  after  knowledge  of  a  breach  of  warranty,  waives  it  as  matter 
of  law.  Marthinson  v.  North  Brit.  &  Mer.  Ins.  Co.,  64  Mich.  372.  An  adjust- 
ment of  loss  and  a  promise  to  pay  waive  the  breach  of  a  condition  of  the  pol- 
icy if  made  with  full  knowledge.  Farmers'  &  Merchants'  Ins.  Co.  v.  Chesnut, 
50111.  Ill  at  116.] 

2  Lycoming  County  Mut.  Ins.  Co.  v.  Schreffler,  42  Pa.  St.  188;  Franklin  Fire 
Ins.  Co.  V.  Updegraff,  43  id.  .350. 

3  Bersche  t>.  Globe  Mut.  Ins.  Co.,  31  Mo.  546. 

*  Bumstead  v.  Dividend  Mut.  Ins.  Co.,  2  Ker.  (N.  Y.)  81 ;  Francis  v.  Somer- 
ville  Mut.  Ins.  Co.,  1  Dutch.  (N.J.)  78;  Underbill  v.  Agawam  Mut.  Ins.  Co.,  6 
Cush.  (Mass.)  440;  Kernochan  v.  New  York  Bowery  Fire  Ins.  Co.,  17  N.  Y.  428  ; 
Priest  V.  Citizens'  Mut.  Fire  Ins.  Co.,  3  Allen  (Mass.),  002  ;  Lewis  v.  Monmouth 
Mut.  Fire  Ins.  Co.,  52  Me.  492  ;  Baxter  v.  Chelsea  Mut.  Ins.  Co.,  1  Allen  (Mass.), 
294;  Bartlett  v.  Union  Mar.  &  Fire  Ins.  Co.,  40  Me.  500;  Noyes  v.  Washington 
County  Mut.  Ins.  Co.,  .30  Vt.  659  ;  Connell  v.  Milwaukie  Mut.  Fire  Ins.  Co.,  18 
Wis.  387  ;  Byrne  v.  Rising  Sun  Ins.  Co.,  20  Ind.  103  ;  Miller  v.  Eagle  Life  & 
Health  Ins.  Co.,  2  E.  D.  Smith  (N.  Y.  Superior  Ct.),  268;  Works  v.  Farmers' 
Mut.  Fire  Ins.  Co.,  57  Me.  281  ;  Turley  v.  N.  A.  Fire  Ins.  Co.,  25  Wend.  (N.  Y.) 
347 ;  Rathbone  v.  City  Fire  Ins.  Co.,  31  Conn.  193. 

5  [Niagara  Fire  Ins.  Co.  v.  Miller,  120  Pa.  St.  504 ;  Cans  v.  St.  Paul,  &c.  Ins. 
Co.,  43  Wis.  108  at  114:  McFarland  v.  Peabody  Ins.  Co.,  6  W.  Va.  425  at  434; 
Insurance  Co.  v.  Slockbower,  20  Pa.  St.  199  at  202.] 

1163 


§  504  A]      INSURANCE  :    FIRE,   LIFE,   ACCIDENT,  ETC.      [CH.  XXVIII. 

brought  within  one   year.^      Payment  of   the   loss  waives   a 
breach  of  warranty .2] 

[§  504  A.  Refusal  to  Pay  on  one  Ground  waives  others  ;  De- 
manding Proofs  with  Knowledge  of  Forfeiture  waives  it,  Contra. 
—  The  proofs  and  the  limitation  that  a  loss  shall  not  be  pay- 
able until  a  certain  time  after  the  proofs,  are  waived,  if  the 
company  object  solely  to  the  amount  claimed,  and  agree  to  an 
appraisal  and  immediate  payment.^  An  absolute  refusal  by 
the  insurers  to  pay  the  loss  waives  all  irregular  preliminaries  ;  * 
so  a  refusal  on  some  other  specified  grounds  will  waive  others.^ 
Demanding  proofs  waives  a  misrepresentation  or  other  cause 
of  forfeiture  known  to  the  company.^  A  request  for  proofs, 
a  statement  that  they  are  satisfactory,  and  a  promise  to  pay 
the  insurance,  constitute  a  waiver  of  a  known  cause  of  for- 
feiture.'^ Even  though  the  minds  of  the  parties  did  not  meet 
at  the  time  of  insurance,  the  building  being  of  wood,  but  the 
company  believing  it  to  be  of  brick  through  mistake  caused 
by  the  bad  penmanship  of  the  insured,  the  company  estopped 
itself  from  raising  the  defence  by  demanding  proofs  and  sub- 
mitting to  arbitration  after  knowledge  of  the  facts,  obtained 
three  days  after  the  fire.^  Promising  payment  and  expressing 
satisfaction  with  proofs  of  loss  after  knowing  of  a  cause  of 
forfeiture  is  a  waiver.^  And  without  any  demand  if  the  com- 
pany alloivs  the  plaintiff  without  objection  to  incur  the  expense 
of  proofs  of  loss  after  it  knows  of  a  cause  of  forfeiture,  it  is 
a  waiver.i*^     But  in  one  case  it  has  been  said  that  although  the 

1  [Ide  V.  Plioenix  Ins.  Co.,  2  Biss.  333,  335.] 

'^  [Nat.  Life  Ins.  Co.  v.  Minch,  53  N.  Y.  144  at  151.] 

3  [Snowden  v.  Kittanning  Ins.  Co.,  122  Pa.  St.  502.] 

4  [^.tna  Ins.  Co.  v.  Sparks,  62  Ga.  187  at  195,  Code  §  2813;  Portsmouth  Ins. 
Co.  V.  Reynolds,  32  Grat.  613  at  629] 

5  [German  Ins.  Co.  v.  Ward,  90  111.  550  at  551 ;  Marston  v.  Mass.  Life  Ins. 
Co.,  59  N.  H.  92  at  94 ;  Ben  Franklin  Fire  Ins.  Co.  v.  Flynn,  98  Pa.  St.  628.] 

«  [Rockford  Ins.  Co.  v.  Travelstead,  29  111.  App.  654  ;  German  Fire  Ins.  Co. 
r.  Grunert,  112  111.  68  ;  La  Fonderie  v.  La  Com.  d'Ass.,  27  L.  C.  Jur.  194  Q.  B. ; 
Cannon  v.  Home  Ins.  Co.,  53  Wis.  585  at  594.] 

'  [Silverberg  v.  Phenix  Ins.  Co.,  67  Cal.  36.] 

8  [Smith  V.  City  of  Lond.  Ins.  Co.,  11  Ont.  R.  38  (affirming  15  Can.  I.  C.  R. 
69).] 

9  [Cotton  States  Life  Ins.  Co.  v.  Edwards,  74  Ga.  220.] 
w  [Smith  I'.  St.  P.  Fire  &  Mar.  Ins.  Co.,  3  Dak.  80.] 

1164 


CH.  XXVIII.]  WAIVER   AND    ESTOPPEL.  [§  505 

company  was  orally  informed  that,  in  violation  of  the  policy, 
the  insured  building  was  unoccupied  at  the  time  of  loss,  and 
then  demanded  proofs  of  loss  as  required  by  the  policy,  they 
were  held  not  to  have  waived  the  breach  ;  thereby  it  was  the 
duty  of  the  insured  to  furnish  proofs  anyway  in  pursuance  of 
the  conditions  of  the  policy  without  any  request. ^  Asking  for 
proofs  of  loss  and  receiving  the  same,  is  not  a  waiver  of  for- 
feiture for  non-payment  of  dues.  If  the  mere  demand  for  for- 
mal proofs,  were  such  a  waiver,  the  company  would  have  to 
surrender  its  right  to  demand  proof  if  it  wished  to  take  advan- 
tage of  the  breach,  or  at  least  it  would  have  to  inform  the  in- 
sured of  its  future  line  of  defence.  The  plaintiff  has  been  put 
to  no  burdensome  expense,  and  there  is  no  estoppel.^] 

§  505.  What  Acts  or  Omissions  amount  to  an  Estoppel  or 
Waiver  after  Loss.  —  The  terms  "  estoppel  "  and  "  waiver," 
though  not  technically  identical,  are  so  nearly  allied,  and,  as 
applied  in  the  law  of  insurance,  so  like  in  the  consequences 
which  follow  their  successful  application,  that  they  are  used 
indiscriminately  by  the  courts.  To  constitute  a  waiver,  as  of 
a  particular  account  of  loss,  or  an  estoppel  against  setting  up 
the  want  of  such  an  account  as  a  defence  to  an  action  by  the 
insured  to  recover  a  loss,  there  should  be  shown  some  act  or 
declaration  by  the  company  during  the  currency  of  the  time 
within  which  the  account  is  required  dispensing  with  it,  or 
some  delay  or  omission  to  act,  from  which  the  insured  might 
reasonably  infer  that  the  underwriters  did  not  mean  to  insist 
upon  it.  There  is  a  time  when  objections  in  matters  of  form 
must  be  taken.  If  they  are  not  then  made,  they  never  can  be 
made.  The  law  does  not  say  that  the  procedure  is  perfect, 
but  that  the  question  is  not  open.  The  adherence  to,  and 
liberal  application  of,  this  principle  are  necessary  to  the 
maintenance  of  good  faith  and  fair  dealing  in  judicial  pro- 
ceedings.^    Thus  the  insured  is  estopped  to  object  to  a  failure 

1  [Fitchpatrick  v.  Hawkeye  Ins.  Co.,  53  Iowa,  335  at  340.] 

2  [Ronald  v.  Mut.  Reserve  Fund  Life  Ass.,  23  Abb.  N.  C.  271.  See  Phoenix 
Ins.  Co.  V.  Stevenson,  8  Ins.  L.  J.  922,  and  compare  Titus  v.  Glens  Falls  Ins.  Co., 
81  N.  Y.  410.J 

3  Blake  v.  Exchange  Mut.  Ins.  Co  ,  12  Gray  (Mass.),  265,  per  Thomas,  J. 

1165 


§  505]        INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXVIII. 

to  brino;  suit  within  the  time  limited,  by  an  offer  to  pay  the 
loss  afterwards,^  or  when  such  failure  is  induced  by  the  con- 
duct of  the  insurers ;  ^  or  to  bringing  suit  within  the  time 
before  the  expiration  of  which  the  loss  is  not  payable,  when 
the  insurers  deny  all  liability ;  ^  though  it  is  otherwise  if  the 
refusal  to  pay  is  conditional,  as  upon  the  ground  that  other 
suits  have  been  brought  against  them,  and  that  they  will  do 
nothing  while  these  suits  are  pending.*  So  parties  are  es- 
topped from  objecting  to  defective  notices,  accounts  of  loss, 
certificates,  and  preliminary  proofs  by  an  absolute  denial  of 
liability  ;  or  refusal  to  pay  on  the  merits  of  the  case  ;  ^  and  by 
a  part  payment  of  the  loss,^  or  a  promise  to  pay  it ; '  or  by  re- 
ceiving late  proofs  without  objecting  to  them  as  late.^  And 
if  the  agent  of  the  company,  after  an  examination  of  the  cir- 
cumstances attending  the  loss,  informs  the  insured  that  he 
cannot  recommend  the  company  to  pay  the  loss  because  it 
appears  by  his  statements  that  he  had  sold  more  goods  than 
he  had  purchased,  this  is  a  denial  of  all  liability  on  the  part 
of  the  company,  and  a  waiver  of  its  right  to  demand  the 
usual  proofs  of  loss.^  And  when  one  defect  alone  in  the 
proofs  is  objected  to,  others  are  waived.^^  But  if  the  proofs 
are  declared  to  be  defective,  the  insurers  need  not  go  further 
and  specify  wherein  they  are  defective,  although  requested  so 
to  do.  A  reference  to  the  policy  for  information  upon  that 
point  will  be  sufficient  to  avoid  an  estoppel  or  waiver."     And 

1  Brady  v.  West.  Ins.  Co.,  17  U.  C.  (C.  P.)  597. 

2  Ames  V.  New  York  Ins.  Co  ,  14  N.  Y.  254 ;  Grant  v.  Lexington  Ins.  Co., 
5  Ind.  23.     And  see  ante,  §§  360,  488. 

3  Norwich  &  N.  Y.  Transp.  Co.  v.  Western  Mass.  Fire  Ins.  Co.,  6  Blatchf. 
(U.  S.  C.  Ct.)  241.     And  see  ante,  §  469,  suhfnem. 

*  Ripley  v.  ^tna  Fire  Ins.  Co.,  30  N.  Y.  136. 

5  Norwich  &  N.  Y.  Transp.  Co.  v.  Western  Mass.  Fire  Ins.  Co.  6  Blatchf. 
(U.  S.  C.  Ct.)  241 ;  Manhattan  Fire  Ins.  Co.  v.  Stein,  5  Bush  (Ky.),  652  ;  Fran- 
cis V.  Ocean  Ins.  Co.,  6  Cow.  (N.  Y.)  404. 

6  Westlake  v.  St.  Lawrence  County  Mut.  Fire  Ins.  Co.,  14  Barb.  (N.  Y.)  206. 

7  Aurora  Fire  Ins.  Co.  v.  Eddy,  55  111.  222. 

8  Palmer  v.  St.  Paul,  &c.  Ins.  Co.,  44  Wis.  201. 

9  McBride  v.  Republic  Fire  Ins.  Co.,  Sup.  Ct.  Wis.,  2  Ins.  L.  J.  271. 
i'5  Ayres  v.  Hartford  Fire  Ins.  Co.,  17  Iowa,  176. 

11  Kimball  v.  Hamilton  Fire  Ins.  Co  ,  8  Bosw.  (N.  Y.  Superior  Ct.)  495;  Spring 
Garden  Mut.  Fire  Ins.  Co.  v.  Evans,  9  Md.  1.     But  see  ante,  §  468. 

1166 


CH.  XXVIII.]  WAIVER   AND    ESTOPPEL.  [§  506 

waiver  of  notice  is  not  a  waiver  of  a  particular  account  of  loss 
where  both  are  required.^  The  insurers  will  also  be  estopi)ed 
to  take  at  the  trial  any  technical  advantage  of  a  mistake  into 
which  they  have  led  the  insured.  Thus  where  the  original 
policy,  which  was  under  seal,  was  burned  with  the  property 
insured,  and  the  insured  applied  for  and  obtained  a  copy  of 
the  policy,  by  which  it  did  not  appear  that  the  original  was' 
under  seal,  upon  which  an  action  of  assumpsit  was  brought, 
upon  objection  by  the  insurers  that  the  original  policy  was 
under  seal,  and  that  therefore  the  action  should  have  been 
covenant,  the  court  refused  to  allow  them  to  deny  that  the 
copy  which  they  themselves  had  furnished  was  a  true  copy.^ 
So  receiving  a  premium  or  assessment  with  knowledge  estops 
the  insurers  from  denying  that  the  property  covers  the  policy, 
or  setting  up  a  prior  forfeiture ;  ^  and  if  it  be  a  second  pre- 
mium, they  will  be  estopped  to  set  up  the  collusion  and  fraud 
of  their  agent  with  the  insured,  if  known  to  them  before  the 
receipt  of  the  second  premium.^ 

§  506.  No  Estoppel  where  the  Facts  are  not  known.  —  We 
have  already  seen  that  this  estoppel  takes  place  as  well  upon 
the  acts  and  omissions  of  agents  as  upon  those  of  the  prin- 
cipals.^ And  it  need  not  be  said  that  if  there  is  no  knowl- 
edge, or  if  the  state  of  facts  be  not  such  that  knowledge 
ought  to  be  inferred  of  the  breach  of  condition  or  neglect  of 
duty,  there  can  be  no  waiver  of  matter  of  estoppel,  as  no  one 
can  be  presumed  to  have  waived  that  the  existence  of  which 
he  has  not  known.^  Thus,  a  failure  after  knowledge  of  for- 
feiture to  return  premiums  received  before  knowledge  is  not  a 

1  Desilver  v.  State  Mut.  Fire  Ins.  Co.,  38  Pa.  St.  1,30. 

2  Rockford  Ins.  Co.  v.  Nelson,  65  111.  415.  Strictly  there  can  be  no  waiver 
by  parol  of  the  conditions  of  an  instrument  under  seal.  Scott  v.  Niagara,  &c. 
Ins.  Co.,  25  U.  C.  (Q.  B.)  424 ;  Viele  v.  Germania  Ins.  Co.,  26  Iowa,  9. 

3  Block  V.  Columbian  Ins.  Co.,  42  N.  Y.  39.3 ;  Ryder  v.  Missouri  St.  Mut.  Ins. 
Co.,  12  Iowa,  126.  And  see  post,  §  55-3 ;  Elliot  v.  Lycoming,  &c.  Ins.  Co.,  66 
Pa.  St.  22;  Lyons  v.  Globe  Mut.  Fire  Ins.  Co.,  '27  U.  C.  (C.  P.)  567. 

*  Armstrong  v.  Turquand,  9  Irish  Law,  n.  s.  32. 

6  Ante,  §  498  et  seq. 

^  Finley  v.  Lycoming  County  Mut.  Ins.  Co.,  .30  Pa.  St.  311;  Forbes  v.  Ag,i- 
wam  Mut.  Fire  Ins.  Co.,  9  Cusli.  (Mass.)  470;  Allen  v.  Vermont  Mut.  Fire  Ins. 
Co..  12  Vt,  366. 

VOL.  II.  —  .30  1167 


§  507]         INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXVIII. 

waiver  of  the  forfeiture.^  And  this  rule  was  held  to  apply 
in  a  case  where  proofs  were  received  after  the  time  limited 
had  expired,  in  the  mistaken  supposition  that  they  were  fur- 
nished so  soon  as  they  reasonably  could  be.^  [To  establish  a 
waiver  of  a  forfeiture  the  proof  must  show  a  distinct  recog- 
nition of  the  validity  of  the  policy  after  a  knowledge  of  the 
forfeiture.^] 

§  507.  No  Estoppel  •where  Insured  has  not  been  prejudiced. 
—  An  estoppel  arises  where  the  insurer,  having  knowledge  of 
the  facts  to  which  he  has  a  right  to  take  exceptions,  or  which 
would  constitute  a  defence  against  any  claim  under  the  policy? 
if  he  chose  to  avail  himself  of  them,  so  bears  himself  there- 
after in  relation  to  the  contract  as  fairly  to  lead  the  assured 
to  believe  that  the  insurer  still  recognizes  the  policy  to  be  in 
force,  and  to  constitute  for  him  a  valid  protection.  Under 
such  circumstances  the  courts  refuse  to  allow  the  insurer  to 
take  an  unfair  advantage  of  the  acts,  declarations,  or  omis- 
sions of  the  insured  to  his  prejudice.*  It  is  not  the  intention 
of  the  insurer  alone,  but  the  effect  upon  the  insured  as  well, 
which  gives  vitality  to  the  estoppel,  and  therefore  if  the  cir- 
cumstances are  such  that  the  insured  could  by  no  possibility 
be  prejudiced,  it  is  doubtful  whether  the  insurer  can  be  fairly 
brought  within  the  scope  of  an  estoppel.  The  insured  must 
be  misled  to  his  prejudice.  The  waiver  that  is  spoken  of  in 
these  cases  is  another  term  for  estoppel.  It  does  not  arise  by 
implication  alone,  nor  except  from  some  conduct  by  one  party 
which  leads,  or  justly  may  lead,  in  reliance  upon  it,  another 
party  to  believe  a  certain  course  of  action  or  non-action  on 
his  part  will  fulfil  all  his  obligations  to  tlie  first  party,  so 
that  to  allow  the  first  party  to  disappoint  the  expectation  or 
belief  founded  upon  and  induced  by  his  conduct  would  be  a 
fraud.     To  constitute  an  estoppel  there  must  be  such  conduct 

1  Harris  v.  Equitable  Life  Ass.  Soc,  6  T.  &  C.  (N.  Y.)  108. 

2  American  Express  Co.  v.  Triumph  Ins.  Co.,  Ohio  (Dist.  Ct.),  5  Ins.  L.  J. 
466. 

■i  [Weed  V.  L  &  L.  Fire  Ins.  Co.,  116  N.  Y.  106.] 

*  Viele  r.  Germania  Fire  Ins.  Co.,  26  Iowa,  9;  Benson  t>.  Ottawa  Agr.  Ins. 
Co.,  42  U.  C.  (Q.  B.)  282;  McMaster  v.  Insurance  Co.  of  North  America,  65 
N.  Y.  222. 

1168 


CH.  XXVIII.]  WAIVER    AND    ESTOPPEL.  [§  507 

on  the  part  of  tlio  insurers  as  would  if  they  were  not  es- 
topped, operate  as  a  fraud  on  the  party  who  has  taken,  or 
neglected  to  take,  some  action  to  his  own  prejudice  in  reliance 
upon  it.  Where  nothing  has  been  done  or  neglected  by  their 
authority,  and  where  no  act  has  been  done  or  loft  undone  by 
the  insured,  in  reliance  upon  the  act  or  non-action  of  the  in- 
sured, there  can  be  no  estoppel.  Thus,  where  the  assured 
notified  the  company  after  the  loss  that  further  insurance  had 
been  obtained,  whereupon  the  company  appointed  an  ap- 
praiser, and  did  not  refund  the  unearned  premium,  it  was 
held  that  the  insurers  had  a  right  to  appraise  before  electing 
what  to  do,  and  the  insured  was  not  prejudiced.^  While  a 
refusal  to  pay  is  a  waiver  of  preliminary  proof,  and  such  other 
formalities  as  may  be  required  in  order  to  enable  the  insured 
to  bring  his  action,  it  is  not  a  waiver  of  breach  of  conditions 
already  made.  The  doctrine  of  waiver  is  not  to  be  so  ex- 
tended as  to  deprive  the  insurer  of  his  defence  merely  because 
he  negligently  or  incautiously,  when  a  claim  is  first  presented, 
while  denying  his  liability,  omits  to  disclose  the  ground  of  his 
defence,  or  states  another  ground  than  that  upon  which  he 
finally  relies,  unless  there  is  evidence  from  which  the  jury 
may  infer  that,  with  full  knowledge  of  the  facts,  there  was  an 
intention  to  abandon,  or  not  to  insist  upon,  the  particular 
defence  not  specified,  or  that  it  was  purposely  concealed 
under  circumstances  calculated  to,  and  which  actually  did, 
mislead  the  insured,  to  his  injury .2  [Where  the  officers  of  a 
company  knowing  of  a  breach  of  condition  met  with  the  ad- 
justers of  other  companies,  involved  and  discussed  the  loss, 
and  a  reduction  was  made  by  the  insured  on  the  supposition 
that  the  company  in  question  were  going  to  pay,  it  was 
held  that  there  was  no  waiver.^  When  a  policy  contained  the 
condition  that  "  if  the  interest  of  the  assured  in  the  property 

1  Jewett  V.  Home  Ins.  Co.,  29  Iowa,  562 ;  Security  Ins.  Co.  v.  Fay,  22  Mich. 
407;  Garber  v.  Globe,  &c.  Ins.  Co.,  C.  Ct.  (Mo.),  5  Big.  Life  &  Ace.  Ins.  Cas. 
221 ;  ante,  §  465 ;  Phoenix  Ins.  Co.  v.  Stevenson  (Ky.),  8  Ins.  L.  J.  722. 

2  Devens  v.  Merchants',  &c.  Ins.  Co.  (N.  Y.),10  Ins.  L.  J.  i;]3  :  83  N.  Y.  168, 
172,  referring  to  and  explaining  Brink  v.  Hanover  Ins.  Co.,  80  N.  Y.  108.  See 
also  Galveston  Ins.  Co.  v.  Heidenheimer  (Tex.),  9  Ins.  L.  J.  592. 

8  [Putnam  Tool  Co.  v.  Fitchburg  Mut.  Fire  Ins.  Co.,  145  Mass.  265.] 

1169 


§  508]         INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXVIII. 

be  not  truly  stated  it  shall  be  void,"  and  also  "  if  the  interest 
be  other  than  the  entire,  unconditional,  and  sole  ownership 
&c.,  it  must  be  so  stated  in  the  policy,"  otherwise  it  is  void  — 
and  where  a  warehouse-man  under  these  provisions  insured 
the  goods  of  his  principal  in  Ms  oivn  name^  it  was  held  that 
there  could  be  no  recovery  for  them  ^  although  the  agent  of 
the  insurance  company  knew  at  the  time  the  real  relations  of 
the  parties  to  the  subject-matter.     A  parol  waiver  of  the  con- 
ditions in  respect  to  proofs  of  loss,  increase  of  risk,  time  of 
paying  premiums,   keeping   hazardous    goods,  &c.,  has  been 
held  good,  but  the  conditions  as  to  the  subject  of  insurance 
and  the  ownership  thereof  cannot  be  waived  by  parol.     We 
cannot  allow  the  plaintiffs  to  maintain  an  action  on  a  policy 
in  which  they  are  not  named  and  which,  by  its  very  terms, 
excludes  all  property  except  such  as  is  owned  by  Ashem  in 
his  own  name.     When  a  policy  provided  that  in  case  of  loss 
of  the  ship  insured  the  master  and  crew  should  make  a  for- 
mal protest  at  once  before  a  notary,  such  a  condition  is  not 
waived  by  the  simple  direction  of  an  agent  of  the  company 
to  07ie  of  the  crew  to  go  before  an  officer  and  make  a  pro- 
test.2     Mere  knowledge  by  the  company  of  a  breach  of  con- 
dition is  not  a  waiver  if  the  assured  is  not  misled.^     The 
doctrine  of  estoppel  only  applies  where  the  party  claiming 
the  benefit  of  it  was  induced  to  alter  his  condition  for  the 
worse.*] 

§  508.  Evidence  ;  Silence  and  Intent.  —  Mere  silence,  it  has 
been  sometimes  said,  is  never  a  waiver ;  ^  but  it  is  conceived 

1  [Fuller  V.  Phoenix  Ins.  Co.,  61  Iowa,  350  at  352.] 

2  [Peoria  Mar.  &  Fire  Ins.  Co.  v.  Walser,  22  Ind.  73  at  85.] 

3  [N.  Y.  Cent.  Ins.  Co.  v.  Watson,  23  Mich.  486. 
*  [Smith  V.  Ferris,  1  Daly,  18  at  20.] 

5  Ayres  v.  Hartford  Fire  Ins.  Co.,  17  Iowa,  176.  [Where  it  came  to  the  notice 
of  the  secretary  through  conversation,  while  walking  on  the  street,  tliat  a  fac- 
tory covered  by  one  of  the  company's  policies  was  running  gins  contrary  to  con- 
ditions, it  was  error  to  charge  that  tlie  secretary's  knowledge  was  that  of  the 
company,  and  tliat  if  the  compam/  did  not  promptli/  noti/i/  the  insured  that  his  policy 
was  cancelled,  the  matter  was  waived.  Silence  alone  will  not  estop  the  company. 
Texas  Banking  Co.  v.  Hutchins,  53  Tex.  61,  69;  Donahue  v.  Windsor  Co.  Mut. 
Fire  Ins.  Co.,  56  Vt.  374.  Mere  inaction  of  the  company  for  thirty  days  or  so 
after  hearing  that  the  habits  of  the  assured  are  not  as  they  were  represented. 

1170 


CH.  XXVIII.]  WAIVER   AND    ESTOPPEL.  [§  508 

that  the  true  doctrine  on  this  point  is,  that  while  mere  silence 
in  some  cases,  where  that  silence  has  no  effect  upon  the  in- 
sured, may  not  operate  as  a  waiver,  yet  in  others,  where  it  has 
the  effect  to  mislead  the  insured,  it  will  so  operate.     Thus, 
where  in  an  application  the  insured  by  mistake  falsely  states 
that  there  is  no  incumbrance,  but  subsequently  and  before  the 
issue  of  the  policy  gives  notice  of  the  mistake,  this  would  be 
a  rectiftcation  of  the  mistake.     And  if  the  notice  be  not  given 
till  after  the  issue  of  the  policy,  if  the  company  do  not  elect 
to  cancel  the  policy,  it  is  questionable  if  they  would  not  be 
estopped  to  set  up  the  misrepresentation. ^     And  so  it  is  also 
sometimes  said  that  a  waiver  never  occurs  unless  intended, 
or  where  the  act  relied  on  as  a  waiver  is  such  that  it  ought  in 
equity  to  estop  the  party  from  denying  it.     Thus  an  assess- 
ment, by  mistake  of  the  treasurer  of  a  mutual  insurance  com- 
pany, on  a  premium  note,  upon  a  vote  to  assess  "  all  policies 
in  force  "    after  the  policy  has  been  declared  forfeited  for 
breach  of  condition,  though  the  assessment  be  paid,  is  no 
waiver.     The  assessment,  not  being  by  the  authority  of  the 
company,  is  not  their  act  and  of  course  they  can  intend  noth- 
ing by  it.     They  have  no  knowledge  of  the  act  and  to  con- 
stitute waiver  there  must  be  not  only  knowledge  of  the  thing 
waived,  but  the  act  of  waiver  must  be  knowingly  done.^     But 
this  also,  it  will  be  observed,  limits  the  knowledge  or  inten- 
tion to  the  act  that  constitutes  the  waiver,  and  with  this  limi- 

is  no  waiver.     Adreveno  v.  Mut.  Reserve  Fund  Life   Ass.,  38   Fed.   Rep.  806 
(Mo.),  1889.] 

1  Anson  v.  Winnesheik  Ins.  Co.,  23  Iowa,  84;  Guernsey  v.  Am.  Ins.  Co.,  17 
Minn.  104 ;  Williamsburg  Ins.  Co.  v.  Cary,  83  111.  453 ;  Westchester  Fire  Ins. 
Co.  V.  Earle,  33  Mich.  143. 

2  Diehl  V.  Adams  County  Mut.  Ins.  Co.,  58  Pa.  St.  443  ;  Beatty  v.  Lycoming 
County  Mutual  Ins.  Co.,  66  Pa.  St.  9.  [A  waiver  is  an  intentional  relinquish- 
ment of  a  known  right,  or  such  conduct  as  warrants  an  inference  of  such 
intent,  and  where  it  appears  that  there  was  no  such  intent  in  fact,  and  no 
understanding  on  the  part  of  the  insured  that  the  proofs  were  waived,  so 
tliat  he  was  not  misled,  it  will  be  held  that  there  has  been  no  waiver. 
Findeisen  v.  Metropole  Fire  Ins.  Co.,  57  Vt.  620.  Both  the  assured  and  the 
underwriter  must  understand  that  there  is  a  waiver  of  a  condition,  in  order 
to  make  it  operative.  The  understanding  of  one  party  without  sufficient  cause 
given  by  the  other,  is  not  enough.  Hambleton  v.  Home  Insurance  Co.,  6  Biss. 
91  at  95.] 

1171 


§  509]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXVIII. 

tation  is  no  doubt  the  law.  The  waiver  may  be  actually 
unintentional,  though  if  the  act  out  of  which  it  comes  be 
intentional,  the  waiver  is  constructively  so. 

§  509.  Agent  acting  under  Undisclosed  Instructions.  —  The 
energetic  language  of  the  court  in  a  very  recent  case  in  Illi- 
nois ^  not  only  leaves  no  doubt  as  to  the  position  of  that  court, 
but  well  expresses  the  spirit  of  the  modern  decisions  toucliing 
the  responsibility  of  insurance  companies  for  the  acts  of  their 
agents  in  violation  of  instructions.  "  We  desire  it  to  be  under- 
stood," is  the  language  of  the  court,  "  in  this  jurisdiction,  at 
least,  when  an  insurance  company  has  appointed  an  agent, 
known  and  recognized  as  such,  and  he,  by  his  acts,  known 
and  acquiesced  in  by  them,  induces  the  public  to  believe  that 
he  is  vested  with  authority  to  do  the  act,  and  nothing  to  the 
contrary  is  shown  or  pretended  at  the  time  of  doing  the  act, 
public  policy  and  the  safety  of  the  people  demand  that  the 
company  should  be  liable  for  such  acts  as  appear  on  their  face 
to  be  usual  and  proper  in  and  about  the  business  in  which  the 
agent  is  engaged.  It  is  the  fault  of  the  companies  in  sending 
out  agents  among  the  people,  gaining  public  confidence  by  the 
seeming  acquiescence  of  their  constituents  in  the  conduct  of 
their  business.  When  a  loss  happens,  they  should  not  be  per- 
mitted to  say  in  any  case  tliat  their  agent  acted  beyond  the 
scope  of  his  authority,  unless  it  shall  be  made  to  appear  that 
the  insured  was  informed  of  and  knew  the  precise  extent  of 
the  authority  conferred.  Any  other  principle  in  its  operation 
would  be  turning  loose  upon  an  unsuspecting,  honest,  and 
confiding  people  a  horde  of  plunderers,  against  which  no  ordi- 
nary vigilance  could  guard," — language  which,  if  it  savors 
somewhat  more  of  the  fervor  of  the  advocate  than  is  accus- 
tomed to  be  heard  from  the  bench,  it  must  be  confessed, 
ought  to  find  its  full  justification  in  the  indignation  which 
must  at  times  be  felt  at  the  pertinacity  with  which  insurers 
seek  to  shelter  themselves  behind  instructions,  the  existence 
of  which  is  not  only  not  known  to  otliers,  but  in  point  of  fact 
is  practically  denied  by  the  daily  conduct  both  of  themselves 
and  their  agents. 

1  iEtna  Ins.  Co.  v.  Maguire,  51  111.  342. 

1172 


CH.  XXVIII.]  WAIVER    AND    ESTOPPEL.  [§  510 

§  510.  Estoppel  where  the  Act  is  prohibited  by  the  Charter.  — 
We  have  already  seen  that  by  the  general  current  of  the 
authorities  insurance  companies  may  waive  a  compliance  with 
the  provisions  of  their  charters  and  by-laws,^  though  in  Massa- 
chusetts and  in  some  other  States  this  doctrine  is  not  admitted 
as  applicable  in  mutual  insurance  to  the  essentials  of  the  con- 
tract, but  only  as  to  such  matters  as  pertain  to  its  enforce- 
ment after  a  loss.2  [Where  by  the  very  terms  of  the  certi- 
ficate other  certificate  holders  are  to  receive  the  benefits 
accruing  from  forfeitures,  the  company  cannot  waive  a  forfei- 
ture without  the  consent  of  the  other  policy-holders.^  The 
company  cannot  waive  a  compliance  with  the  mode  of  con- 
tract prescribed  by  its  charter,  as,  for  example,  where  the  char- 
ter requires  the  policy  to  express  the  true  title  of  the  insured 
and  the  incumbrances.*]  A  case  in  Connecticut,  upon  full 
consideration,  adopts  and  approves  the  doctrine  of  the  Massa- 
chusetts cases,  in  an  opinion,  which,  as  it  presents  some  novel 
views,  we  give  at  length  :  — 

"  The  twelfth  section  of  the  charter  of  the  defendants  pro- 
vides that,  '  If  there  shall  be  any  other  insurance  upon  the 
whole  or  any  part  of  the  property  insured,  by  any  policy 
issued  by  said  company,  during  the  whole  or  any  part  of  the 
time  specified  in  such  policy,  then  every  such  policy  shall  be 
void,  unless  such  double  insurance  shall  exist  by  consent  of 
said  company,  indorsed  upon  the  policy,  under  the  hand  of 
the  secretary.'  There  was  such  double  insurance  in  this 
case,  at  the  time  this  policy  was  issued,  and  the  consent  of  the 
company  thereto  was  not  indorsed  upon  the  policy.  The 
charter,  therefore,  declares  the  policy  void,  and  it  is  void, 
unless  the  twelfth  section  is  of  such  a  character  that  its  pro- 
visions can  be  waived  by  the  defendants. 

"  If  this  provision  was  made  solely  for  the  benefit  of  the 
defendants,  there  might  be  force  in  the  claim  of  the  plaintiffs 

1  Ante,  §§  62,  143,  501. 

2  Ante,  §  147.  [Directors  cannot  waive  charter  provisions.  Gibbs  v.  Rich- 
mond Co.  Mut.  Ins.  Co.,  9  Daly,  203.] 

3  [Milligan  v.  Goddard,  1  How.  Pr.  U.  S.  377.] 
*  [Leonard  v.  American  Ins.  Co.,   97  Ind.  299. J 

1173 


§  510]        INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  rXVUI. 

that  it  could  be  waived,  on  the  ground  that  what  is  exclu- 
sively for  the  benefit  of  a  person,  either  natural  or  artificial, 
is  for  him  to  enjoy  or  not,  as  he  pleases ;  and  if  he  chooses  to 
forego  the  benefit,  he  has  a  right  to  do  so,  as  no  one  but  him 
is  interested  in  the  matter.  But  we  think  that  the  defend- 
ants are  not  solely  interested  in  this  provision  of  the  charter. 
It  was  made  to  guard  against  the  danger  of  over  insurance. 
It  is  well  known  that  over  insurance  encourages  incendiary 
fires,  and  insurers  are  therefore  extremely  careful  not  to 
insure  property  to  the  full  amount  of  its  value,  but  leave  the 
assured  to  be  himself  the  insurer  of  a  part  thereof,  that  he 
may  have  a  common  interest  with  them  in  the  preservation  of 
the  property. 

"  The  eleventh  section  of  the  defendants'  charter,  as  well  as 
the  one  under  consideration,  shows  what  solicitude  the  legis- 
lature entertained  upon  this  subject,  and  the  great  care  they 
exercised  to  prevent  this  evil. 

"  Such  being  the  tendency  of  over  insurance,  it  is  manifest 
that  it  endangers  not  only  the  welfare  of  insurers,  but  the 
welfare  of  all  their  policy-holders,  who  have  a  deep  interest 
in  their  solvency  in  case  of  loss  by  fire.  Insurance  companies 
insure  property  to  an  amount  many  times  their  capital,  and  it 
may  easily  happen  that  a  few  fraudulent  incendiary  fires,  scat- 
tered over  the  country,  should  involve  them  and  their  policy- 
holders in  heavy  and  perhaps  ruinous  losses.  But  the  evil  of 
over  insurance  does  not  stop  here.  Everywhere  insured  prop- 
erty is  mingled  indiscriminately  with  property  not  insured. 
The  burning  of  the  insured  property  burns  the  other  also,  and 
every  year  vast  amounts  of  property  not  insured  go  to  destruc- 
tion in  consequence  of  the  over  insurance  of  property  in  its 
neighborhood.  Surely  the  welfare  of  such  owners  should  be 
considered  by  legislatures,  and  provision  should  be  made  for 
them  when  corporations  like  these  are  created.  It  is  to  be 
considered,  also,  that  the  welfare  of  the  State,  which  has  an 
interest  in  all  the  property  of  the  State,  requires  that  this 
should  be  done. 

"  One  great  source  of  this  evil  is  the  insurance  of  the  same 
property  by  different  companies,  when  each  company  is  not 
1174 


CH.  XXVIII.]  WAIVER   AND    ESTOPPEL.  [§  510 

aware  of  the  act  of  the  other.  To  prevent  this  evil  as  far  as 
may  be,  in  the  present  case,  we  think,  the  legislature  inserted 
the  twelfth  section  in  the  defendants'  charter,  intendino- 
thereby  to  put  it  out  of  the  power  of  the  defendants  to  insure 
property  otherwise  than  is  provided  therein. 

"  The  evil  could  not  be  successfully  reached  by  merely  re- 
quiring the  consent  of  the  company  to  such  further  insurance. 
There   would  be  no  security  from  misunderstanding,  misre- 
membrance,  and  fraud.     The  difference  is  great  between  leav- 
ing tlie  consent  of  the  company  to  be  proved  by  the  vagueness 
and    uncertainty  of    parol    evidence,  and    requiring  it  to  be 
shown  by  a  formal  indorsement  upon  the  policy  by  the  hand 
of  their  secretary,  which  could  not  be  made  without  consid- 
eration and  deliberation  on  the  one  hand,  and    certainty  of 
the  fact  on  the  other.i      This  difference  is  all-important  in  a 
case  like  this,  and  indeed,  if  mere  consent  was  all  that  the 
legislature  intended  by  the  twelfth  section  of  this  charter, 
then  no  object  was  accomplished,  or  could  be  accomplished, 
by  inserting  it  in  the  charter;  for  if  the  defendants  should 
make  an  absolute  contract  of  insurance,  without  any  condition 
that  it  should  become  void  if  there  was  or  should  be  further 
insurance  on  the  property  by  any  other  company,  during  the 
whole   or  any  part  of  the  time  covered  by  the  policy,  they 
would  be  taken  by  jurors  as  having  given  consent  in  advance 
to  such  further  insurance  ;  or  the  mere  fact  of  such  absolute 
contract  would  be  sufficient  evidence  with  them  of  a  waiver 
of  the  condition.     It  would  be  urged  that  the  plaintiff  was 
ignorant  of  the  provisions  of  the  charter,  and  if  the  defend- 
ants intended  to  make  it  a  part  of  the  contract,  they  would 
have  informed  the  plaintiff  by  inserting  it  in  the  policy. 

"  Thus,  in  order  to  make  it  a  part  of  the  contract,  it  would 
have  to  be  inserted  in  the  policy  of  insurance,  whether  it  was 
embodied  in  the  charter,  or  not ;  and  if  inserted  in  the  policy 
it  would  have  all  the  effect  that  the  charter  could  give  it,  if 
the  legislature  intended  no  more  by  this  provision  than  mere 
consent.  We  think,  therefore,  that  the  legislature  had  more 
than  this  in  view,  and  intended  to  limit  the  power  of  the 
1  Hale  V.  Mechanics'  Mut.  Fire  Ins.  Co.,  6  Gray,  169. 

1175 


§  511]         INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC       [CH.  XXVIII. 

company  in  the  matter,  and  that  it  was  not  competent  for  the 
plaintiffs  to  prove  the  consent  of  the  defendants  to  the  double 
insurance  on  the  plaintiffs'  property  by  any  other  evidence 
than  an  indorsement  of  such  consent  on  the  policy,  under  the 
hand  of  the  secretary  of  the  company,  and  that  the  jury  should 
have  been  so  instructed."  ^ 

§511.  Waiver;  Stipulation  against;  Limitation  of  Agent's 
Authority.  —  A  clause  in  a  policy  of  insurance  that  "  notliin;^ 
but  a  distinct  specific  agreement,  clearly  expressed  and  indorsed 
on  the  policy,  shall  operate  as  a  waiver  of  any  printed  or 
written  condition,  warranty,  or  restriction  thereon,"  refers  to 
those  conditions  and  provisions  of  the  policy  which  enter  into 
and  form  a  part  of  the  contract  of  insurance,  and  are  essential 
to  make  it  a  binding  contract  between  the  parties,  and  which 
are  properly  designated  as  conditions^  and  not  to  those  stipu- 
lations which  are  to  be  performed  after  a  loss  has  occurred, 
such  as  giving  notice  and  furnishing  preliminary  proof  of  the 
loss.2  [On  the  other  hand  it  has  been  held  that  before  a  blank 
policy  is  filled  and  signed  a  general  agent  may  change  its 
conditions,  although  the  policy  provides  that  the  agent  has  no 
authority  to  waive  or  modify  any  of  its  conditions.  This  is 
only  a  limitation  of  the  agent's  power  to  waive  or  modify  the 
contract  when  once  made.  There  can  be  no  waiver  of  rights 
under  a  contract  until  the  contract  is  consummated.^  This  is 
clearly  not  the  plain  common-sense  meaning  of  the  clause. 
The  decisions  are  by  no  means  uniform  under  this  head.  It 
has  been  held  that  a  provision  that  there  shall  be  no  waiver 

A  Couch  V.  City  Fire  Ins.  Co.,  38  Conn.  181. 

2  Franklin  Fire  Ins.  Co.  v.  Chicago  Ice  Co.,  36  Md.  102.  [Bowes  v.  Nat.  Ins. 
Co.,  20  N.  B.  R.  4.38;  New  Orleans  Ins.  Ass.  c.  Matthews,  65  Miss.  301 ;  O'Key 
V.  State  Ins.  Co.,  29  Mo.  App.  105 ;  Carson  v.  Jersey  City  Ins.  Co.,  43  N.  J.  300. 
A  provision  in  the  policy  that  agents  have  no  autliority  to  make,  alter,  or  dis- 
charge contracts,  does  not  make  it  impossible  for  an  agent  to  bind  the  company 
by  making  representations,  lulling  the  insured  ifito  security  until  the  six  months' 
limitation  of  suit  is  past.  Jennings  v.  Metropolitan  Life  Ins.  Co.,  148  Mass. 
61.  In  this  case  the  agent  told  the  insured's  attorney  that  the  company  was  in- 
vestigating the  loss,  and  that  if  there  was  no  fraud  the  claim  would  be  paid. 
Relying  on  this  the  attorney  failed  to  sue  within  the  limit,  and  the  company 
was  held  to  be  estopped.]  Ante,  §§  363,  473. 

3  [Continental  Ins.  Co.  v.  Rucknian,  127  111.  364,  373] 

1176 


CH.  XXVIII.]  WAIVER    AND    ESTOPPEL.  [§  511 

without  a  distinct  agreement  indorsed  on  the  policy,  no  officer 
can  authorize  a  breach  of  condition  in  any  other  manner.^ 
And  the  policy  is  avoided  by  an  assignment  of  the  property 
and  the  policy  without  consent  of  the  company,  although  the 
agent  promises  to  have  the  proper  indorsements  made  on  the 
policy,  and  receives  subsequent  premiums.^  A  condition  that 
waiver  must  be  indorsed  on  the  policy  is  valid,  unless  the 
insured  has  been  induced  by  the  company  to  act  to  his  damage, 
on  the  understanding  that  the  provision  would  not  be  insisted 
on.^  Again  we  find  that  a  provision  in  a  policy  that  no  act  of 
any  agent  other  than  the  president  or  secretary  shall  be  held 
to  be  a  waiver  of  a  full  compliance  with  all  provisions  of  the 
policy  is  null  and  void.*  And  that  an  agent  may  waive  con- 
ditions in  the  policy,  though  it  is  contrary  to  its  express  terms 
for  him  to  do  so.^J  Notwithstanding  such  a  condition,  parol 
consent  of  the  president  of  the  company  to  the  removal  of  goods 
from  one  place  to  another  is  good.  It  is  a  waiver  of  the  stip- 
ulation itself.^  And  though  notice  to  the  insured  that  an  agent 
has  no  power  to  waive  conditions  must  have  its  effect,  and, 
prima  facie,  must  bind  the  insured  ;  yet,  if  it  appear  that 
the  insurers  have  customarily  permitted  the  agent  to  waive, 
and  have  ratified  his  conduct,  there  seems  to  be  no  reason  to 


1  [Gladding  v.  Cal.  Farmers'  Mut.  Fire  Ins.  Ass.,  G6  Cal.  6;  Enos  v.  Sun  Ins. 
Co.,  67  Cal.  021.] 

2  fShuggart  v.  Lycoming  Fire  Ins.  Co.,  55  Cal.  408.] 

3  [Universal  Ins.  Co.  v.  Weiss,  106  Pa.  St.  20.] 

*  [Day  V.  Dvvelling-House  Ins.  Co.,  81  Me.  244.] 

^  [Whited  V.  Germania  Fire  Ins.  Co.,  76  N.  Y.  415  at  421  (condition  against 
transfer  of  property);  Swartz  v.  Insurance  Co.,  15  Phil.  206  (waiver  by  ad- 
justment and  official  announcement  of  it).] 

•^  Maryland  Fire  Ins.  Co.  v.  Gusdorf,  4.3  Md.  506.  See  also  Carroll  v.  Charter 
Oak  Ins.  Co.,  1  Abb.  Ct.  of  App.  Dec.  (N.  Y.)  31G,  affirming  s.  c  38  Barb. 
(N.  Y.)  402  ;  Micliigan  State  Ins.  Co.  v.  Lewis,  30  Midi.  41.  See  also  Guernsey 
?'.  American  Ins.  Co.,  17  Minn.  104.  [The  condition  as  to  writing  may  be 
waived  as  well  as  any  other,  and  when  written  notice  is  required,  verbal  notice 
is  sufficient,  unless  prompt  objection  is  made  thereto.  Piedmont,  &c.  L.  Ins.  Co. 
V.  Young,  58  Ala.  476.  And  altiiough  by  the  terms  of  the  policy  its  conditions 
cannot  be  waived  except  by  indorsement  upon  it,  yet  if  an  agent  does  waive 
a  condition  and  the  company  afterward  adopts  his  act,  it  cannot  set  up  that 
provision  of  the  policy  against  the  insured.  Carroll  v.  Girard  Fire  Ins.  Co.,  72 
Cal.  297.] 

1177 


§  512]         INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXVIII. 

doubt  that  this  also  will  amount  to  a  waiver  of  the  limitation 
upon  the  power  of  the  agent.^  But  the  insurers  will  not  be 
estopped  from  setting  up  a  forfeiture  for  non-payment  of 
premium,  by  proof  that  the  agent  had  agreed  that  notice 
should  be  given  when  the  premium  should  fall  due,  when  it 
appears  that  a  policy  was  afterwards  accepted  containing  a 
distinct  notice  that  the  agent  could  not  waive  a  forfeiture, 
or  alter  that  or  any  other  condition  of  the  policy .^  And  if 
the  policy  provides  that  alteration  or  waiver  of  its  conditions 
cannot  be  done  "  unless  made  at  the  head  office,  and  signed 
by  an  officer  of  the  company,"  a  general  agent  is  without 
authority  to  act  in  the  matter.^  [If  there  is  no  provision  in 
the  policy  to  the  contrary  the  agent  may  modify  or  waive  any 
of  its  conditions.*  An  agent  having  power  to  attach  a  certain 
condition  to  a  policy  or  not  as  he  may  deem  proper,  may 
waive  it  afterwards."  A  secretary  of  an  insurance  company 
as  such  has  no  power  to  waive  any  part  of  the  written  con- 
tract without  the  knowledge  and  assent  of  the  corporation  or 
of  the  board  of  directors  or  other  officers  having  power  to  make 
contracts  of  insurance  in  the  name  of  the  company.  In  this 
case  the  secretary  attempted  to  waive  the  stipulation  in  an  open 
policy,  that  the  subject  insured  should  "  be  specified  by  appli- 
cation and  mutually  agreed  on  and  written  on  the  policy y^~\ 

§  512.  Estoppel;  Notice  from  Stranger. — If  the  object  of 
requiring  notice  of  increased  risk,  or  of  a  change  of  circum- 
stances calculated  to  produce  such  increase,  be  stated  to  be 
that  the  insurer  may  exercise  or  not  an  option  reserved  to  him 
to  cancel  the  policy,  which  he  reserves  the  right  to  do  at 
pleasure,  and  without  assigning  any  reason  therefor,  and  he 
obtains  notice   from   other   sources  of  such  facts,  since  this 

1  Globe  Mut.  Life  Ins.  Co.  v.  Wolff,  95  U.  S.  326.  But  see  Caton  v.  Ameri- 
can Life  Ins.  Co.,  33  N.  J.  487;  Mersereau  v.  Phoenix  Life  Ins.  Co.,  66  N.  Y. 
74;    o«te,  §  3.39. 

2  Union  Mut.  Ins.  Co.  v.  Mowrey,  96  U.  S.  544. 

a  Marion  v   Universal  Life  Ins.  Co.  (N.  Y.),  11  Reptr.  780. 
*  [ Silverberg  v.  Plienix  Ins.  Co.,  67  Cal  36  ;  Kruger  v.  Western  Fire  &  Mar. 
Ins.  Co.,  72  Cal.  91.] 

5  [Niagara  Fire  Ins.  Co.  v.  Brown,  123  III.  356.] 

6  [Plahto  V.  Mer.  &  M.  Ins.  Co.,  38  Mo.  248  at  255.] 

1178 


CH.  XXVIII.]  WAIVER    AND    ESTOPPEL.  [§  513 

accomplishes  the  purpose  for  wliich  the  condition  is  made,, 
and  to  all  intents  and  purposes  places  the  insurers  in  as  good 
a  position  as  if  the  facts  had  been  notified  to  them  by  the 
insured  himself,  this  knowledge,  so  obtained  by  the  insurers 
from  other  sources,  will  inure  to  the  benefit  of  tlie  insured, 
and  excuse  his  default,  if  any,  in  failing  to  give  notice.  Or, 
at  all  events,  if  the  insurer,  when  these  facts  come  to  his 
knowledge,  does  not  thereupon  elect  to  cancel  his  policy,  but 
allows  it  to  remain,  he  will  not  be  permitted  afterwards  to  set 
up  such  default  in  defence.^ 

§  513.  Collusion  between  Agent  and  Insured.  — Insurers,  how- 
ever, will  not  be  estopped  to  set  up  a  misrepresentation  or  con- 
cealment or  a  breach  of  warranty  in  defence  to  an  action,  if  it 
shall  appear  that  there  was  a  want  of  good  faith  on  the  part 
of  the  insured,  as  wOiere  it  is  known  to  the  insured  that  the 
agent  is  violating  his  instructions  in  taking  the  insurance,  and 
especially,  if  there  be  collusion  between  them,  to  falsely  de- 
scribe the  property  in  order  to  bring  it  into  the  category  of 
insurable  subjects,  upon  which  the  agent  is  permitted  to  take 
risks.  If,  for  instance,  it  is  known  to  both  that  the  company 
will  not  insure  hotels,  and  for  the  purpose  of  evading  this 
restriction  it  is  agreed  between  them  to  describe  the  insured 
property  as  a  boarding-house,  under  such  circumstances  the 
insurers  would  not  be  estopped  to  set  up  the  fraud.  If  they 
were,  then  the  insured  would  derive  advantage  from  his  own 
fraud.  And  this  would  be  counter  to  the  whole  purpose  and 
object  of  an  estoppel,  which  is  to  discountenance  and  circum- 
vent fraud.  And  it  is  only  when  its  enforcement  will  oper- 
ate to  this  end  that  it  can  properly  be  invoked.  Besides,  the 
knowledge  of  the  agent  is  imputable  to  the  principal,  on  the 
presumption  that  the  agent,  in  the  honest  discharge  of  his 
duty,  communicates  to  his  principal  all  the  material  facts, 
touching  the  negotiation,  which  come  to  his  knowledge,  —  a 
presumption  which  can  hardly  have  place,  when  the  facts 
to  be  communicated  would  convict  him  of  a  dereliction  of 
duty.2 

1  Eclipse  Ins.  Co.  v.  Schoemer,  2  Cincinnati  Superior  Court  Reporter,  474. 

2  Rockford  Ins.  Co.  v.  Nelson,  75  111.  548. 

1179 


INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXIX. 


CHAPTER  XXIX. 

OF   ACCIDENT    INSURANCE. 

Analysis. 

§  514.  Definition  of  accident.     (See  also   §§519,  520,  and  notes.    The  idea 

of  the  first  case  in  §  515  is  not  sustainable.)     Pitchfork  slipping 

out  of  worker's  hand  and  injuring  his  bowels  is  an  accident,  so 

sprain  by  lifting  heavy  weights. 

§  515.  Rupture  caused  by  voluntarily  jumping  from  cars  held  not  an  accident. 

§  515  a.  Rupture  of  blood-vessel  by  striking  Indian  clubs  against  a  stove,  is 

accident. 
§  516.  Death  by  drowning  may  or  may  not  be  accidental,  according  to  cir- 

cumstances, §  516  ;  see  also  §§  517,  518,  518  A. 
"outward  and  visible  means,"  §§  516,  517. 
§  517.  If  a  wound  causing  a  fall  into  water  and  consequent  drowning,  there 

is  an  accidental  death.    Drowning. 
§  517  A.  *'  External,  Violent,  and  Accidental"  means. 

Exertion  of  holding  a  runaway  horse.     Charbon  poison. 
§  518.  "  Cause  of  death  arising  within  the  system." 

§  518  A.  Disease,  epileptic  fit,  and  drowning,  company  liable. 

§  518  B.  Death  by  poison. 

§  519.  Sunstroke  not  accident  (?).    Some  violence,  casualty,   or  vis  major 

must  be  involved  (?);  see  §  529. 
§  520.  Death  by  robbers  probably  accidental. 

§  520  A.  "  Intentional  injuries  inflicted  by  assured  or  others." 

§  521.  A  railway  accident  is  one  occurring  in  the  course  of,  and  arising  out 

of,  the  fact  of  a  railway  journey. 
§§  522-523.     Total  disability  for  usual  occupation. 

§  523  A.  Act  not  incident  to  the  occupation  described  in  the  policy.     Death 

from  fits  plus  accident,  accident  plus  a  cold  ;   "  inhaling  gas  " 
held  to  mean  only  voluntary  inhaling.     Condition  that  death 
must  occur  within  ninety  days  after  the  accident. 
§§524-531  A.  Travelling,  §  524. 

On  foot,  §§  524,  528,  529. 
Conveyance,  §§  524,  525,  526,  528,  529. 
Engineer,  §§  526,  527. 
Alighting,  §§  524,  525. 
Getting  on  a  moving  train,  §§  524  A,  629. 
Standing  on  car  platform,  §  524  A. 
Limit  of  journey,  §  525. 
Negligence,  §§  524  A,  525,  530. 
Condition  to  be  careful,  §  531. 
Wilful  exposure,  §  530. 

1180 


CH.  XXIX.]  OF   ACCIDENT   INSURANCE.  [§  514 

Voluntary  exposure  to  unnecessary  danger,  §  531  A. 

Obvious  risk,  §  530. 

Violation  of  law,  §  530. 

Intoxication,  §  531. 
§§  532,  533.     Increase  of  risk.     Change  of  occupation.      Classification  of  risk, 

§  533. 
§  534.  Extent  of  risk. 

§  535.  Insurable  interest.     Amount  of  loss. 

§  536.  Notice  of  death  or  injury.     Preliminary  proof  (see  also  §  539). 

§  537.  Form  and  completion  of  the  contract. 

§538.  ■  Accidents  to  carriages. 

§  514.  Definition  of  Accident  ;  Injury  causing  Death  ;  Strain. 
—  What  is  an  accident  ?  This  question  arises  at  the  very 
threshold  in  the  consideration  of  this  branch  of  insurance,  and 
has  been,  and  is  likely  to  continue  to  be,  a  fruitful  source  of 
discussion. 1  No  satisfactory  definition  seems  yet  to  have  been 
given  by  the  courts,  though  numerous  cases  have  occurred 
where  they  have  been  called  upon  to  decide  whether  death  or 
injury  from  particular  causes  was,  or  was  not,  accidental.  In 
a  recent  case  in  the  Supreme  Court  of  Pennsylvania,^  it  ap- 
peared that  while  the  insured  was  pitching  hay  the  handle  of 
the  pitchfork  slipped  through  his  hands  and  struck  him  on 
the  bowels,  inflicting  an  injury  which  produced  peritoneal 
inflammation,  in  consequence  of  which  he  died,  and  this  was 
held  to  be  an  accidental  death.  And  the  same  would  have 
been  the  case,  say  the  court,  if  a  strain  had  been  the  cause  of 
the  inflammation  which  produced  death.  Death  by  accident 
was  defined  to  be  "  death  from  any  unexpected  event  which 
happens  as  by  chance,  or  which  does  not  take  place  according 
to  the  usual  course  of  things."  So  a  sprain  of  the  muscles 
of  the  back,  caused  by  lifting  heavy  weights  in  the  course  of 
business,  is  injury  by  accident  or  violence  "  occasioned  by 
external  or  material  causes  operating  on  the  person  of  the 
insured."  ^ 


1  [The  word  "  accident "  means  an  event  that  takes  place  without  one's  fore- 
sight or  expectation,  and  includes  an  injury  in  an  affray  without  fault  on  the 
part  of  the  plaintiff.  Supreme  Council,  &c.  v.  Garrigus,  104  Ind.  133,  see 
§  520.] 

2  North  American  Ins.  Co.  v.  Burroughs,  69  Pa.  St.  43. 

3  Martin  v.  Travelers'  Ins.  Co.,  1  F.  &  F.  505. 

1181 


§  515]  INSURANCE  :    FIRE,    LIFE,   ACCIDENT,   ETC.       [CH.  XXIX. 

§  515.  Accident  ;  Rupture  from  Jumping.  —  On  the  other 
hand,  it  has  been  said  by  a  learned  judge,  sitting  as  arbitrator, 
that  "  rupture  caused  by  jumping  from  the  cars  while  in 
motion,  and  afterwards  running  to  accomplish  certain  busi- 
ness purposes,  done  voluntarily  and  in  the  ordinary  way,  and 
without  any  necessity  therefor,  and  with  no  unforeseen  or 
involuntary  movement  of  the  body,  such  as  stumbling  or  slip- 
ping or  falling,  is  not  by  violent  and  accidental  means.  It 
might  be  otherwise  if,  in  jumping,  the  insured  should  lose 
his  balance  and  fall,  or  strike  against  some  unforeseen  object, 
or  in  running  should  stumble  or  slip."  ^  The  learned  arbi- 
trator based  his  award  upon  the  following,  amongst  other 
reasons  :  — 

"  The  policy  is  one  of  indemnity  against  '  bodily  injuries, 
effected  through  violent  and  accidental  means,  within  the 
meaning  of  this  contract  and  the  conditions  hereto  annexed.' 
Had  the  terms  of  the  contract  stopped  at  the  words  '  violent 
and  accidental  means,'  there  would  be  no  difficulty,  in  my 
judgment,  in  disposing  of  the  questions ;  for  there  was  no 
accident,  strictly  speaking,  in  the  means  through  which  the 
bodily  injury  was  effected.  It  would  not  help  the  matter  to 
call  the  injury  itself,  that  is,  the  rupture,  an  accident.  That 
was  the  result,  and  not  the  means,  through  which  it  was 
effected.  The  jumping  off  the  cars,  or  the  running,  was  the 
means  by  which  the  injury  was  caused.  Both  were  done  by 
the  claimant  voluntarily,  in  the  ordinary  way,  with  no  unfore- 
seen, accidental,  or  involuntary  movement  of  the  body  what- 
ever. There  was  no  stumbling  or  slipping  or  falling.  Tlicre 
was  nothing  accidental  in  his  movements,  any  more  than  there 
was  in  his  passing  down  the  steps  of  his  hotel,  or  in  his  walk- 
ing on  the  street,  during  each  of  which  he  might  have  had  a 
stroke  of  apoplexy,  or  a  hemorrhage,  a  rupture  of  a  blood- 
vessel in  the  head  or  the  lungs.  True,  in  jumping  from  the 
cars  and  running  there  was  more  violence,  or,  properly  speak- 
ing, more  force ;  but  there  was  no  more  accident  than  in  any 
ordinary  movements  of  the  human  body.     How,  then,  admit- 

1  Southard  v.  Tlie  Railway  Passengers'  Ass.  Co.,  34  Conn.  574,  per  Ship- 
man,  Judge  of  the  District  Court  of  the  United  States,  acting  as  arbitrator. 

1182 


CH.  XXIX.]  OP    ACCIDENT   INSURANCE.  [§  515 

ting  the  rupture  to  have  been  effected  by  jumping  from  the 
cars,  or  by  running  to  see  if  they  were  coming,  can  it  be  said 
that  it  was  caused  by  accidental  as  well  as  violent  means  ? 
All  the  accident  there  was,  was  the  result  of  ordinary  means, 
voluntarily  employed,  in  a  not  unusual  way. 

"  But  the  words  '  violent  and  accidental  means '  are  fol- 
lowed in  the  policy  by  the  words  '  within  the  intent  and  mean- 
ing of  this  contract  and  the  conditions  liercunto  annexed.' 
Now  we  are  to  consider  how  far  tlie  former  words  are  quali- 
fied by  the  other  parts  of  the  contract,  or  by  the  conditions 
thereto  annexed.  I  have  cited  from  the  policy  all  that  can 
have  any  bearing  on  the  question.  The  provision  ;\'hich  I 
have  cited  from  the  policy  excludes  from  indemnity  death  or 
injury  when  caused  by  '  duelling,  concealed  weapons,  when 
carried  by  the  insured,  fighting,  wrestling,  over-exertion,  and 
lifting  (except  in  case  of  perilous  necessity),  suicide,  sun- 
stroke ; '  and  also  '  death  or  injury  happening  in  consequence 
of  war,  riot,  invasion,  riding  or  driving  races,  unnecessary 
exposure  to  danger  or  peril,  or  violation  of  the  rules  of  any  com- 
pany or  corporation.'  It  also  excludes  '  death  or  injury  hap- 
pening while  the  insured  is,  or  in  consequence  of  his  having 
been,  under  the  influence  of  intoxicating  drinks,  or  engaged 
in  any  unlawful  act.'  Now  it  may  be  said  that  this  specific 
exclusion  from  the  scope  of  indemnity  of  death  or  injury  hap- 
pening from  causes  and  under  circumstances  expressly  set 
forth,  leaves,  by  fair  implication,  death  or  injury  from  all 
other  causes,  and  under  all  other  circumstances,  included  in 
the  contract  of  indemnity  ;  thus  logically  inverting  or  com- 
plementing the  maxim,  expressio  imius  est  exclusio  alterius. 
But  in  applying  this  well-known  rule  of  construction,  refer- 
ence must  be  had  to  the  main  body  of  the  contract  and  to  its 
subject-matter.  It  is  not,  nor  does  it  purport  to  be,  a  contract 
of  indemnity  against  death  or  injury  effected  by  all  means. 
The  cause  of  the  death  or  injury  must  in  all  cases  be  'violent 
and  accidental,'  or  the  event  is  without  the  scope  of  the  con- 
tract. The  instrument  by  its  terms  embraces  only  cases 
where  the  elements  of  force  and  accident  concur  in  effecting 
the  injury.     The  cases  excluded  are  only  those  which  belong 

VOL.  II.  —  31  1183 


§  515]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXIX. 

to  the  same  class.  The  contract  declares  to  the  insured  that 
though  he  may  be  killed  or  injured  through  violent  and  acci- 
dental means,  yet  if  the  calamity  occurs  under  certain  circum- 
stances, the  insurers  will  not  be  liable.  Violent  and  accidental 
death  or  injury  might  occur,  and  often  does  occur,  under  the 
circumstances  enumerated  in  the  excluding  clause. 

"  The  contract,  as  I  have  already  intimated,  in  its  broadest 
scope  only  embraces  within  its  indemnity  personal  injuries 
effected  through  forcible  and  accidental  means  ;  and  the  pro- 
viso simply  excludes  from  this  class  of  injuries  all  that  occur 
under  the  circumstances  enamerated.  All  others  of  this  class 
are  included.  The  degree  of  violence  or  force  is  not  material, 
and  had  the  insured  in  this  case  in  jumi)ing  from  the  car  lost 
his  balance  and  fell,  or  struck  upon  some  unseen  object  and 
wounded  himself,  or  in  running  had  stumbled  or  slipped  on 
the  ice,  his  injury  might  be  attributed  to  accidental  as  well  as 
violent  means,  and  assuming  that  there  was  no  want  of  due 
diligence  on  his  part,  his  misfortune  would  have  been  covered 
by  the  policy.  But,  as  I  have  already  stated,  the  injury  which 
he  received  was  in  no  sense  the  result  of  accident.  He  jumped 
from  the  car  with  his  eyes  open,  for  his  own  convenience,  and 
not  from  any  perilous  necessity.  He  encountered  no  obstacle 
in  doing  so.  He  alighted  erect  on  the  ground  just  as  he  in- 
tended to  do.  So  in  running  he  ran  from  no  peril  or  necessity, 
but  for  his  own  convenience,  voluntarily,  and,  from  all  that 
appears,  without  stumbling,  slipping,  or  falling.  In  both 
cases  he  accomplished  just  what  he  intended  to,  in  the  way  he 
intended  to,  and  in  the  free  exercise  of  his  choice.  No  acci- 
dent of  any  kind  interfered  with  his  movements,  or  for  an  in- 
stant relaxed  his  self-control.  All  that  he  claims  is,  that,  some 
hours  after,  it  was  discovered  that  a  muscle  in  the  walls  of 
the  abdomen  had  given  way  under  the  strain  to  which  he  had 
voluntarily  put  it,  under  circumstances  free  from  all  peril  or 
necessity.  Assuming  that  this  rupture  was  caused  either  by 
his  jumping  or  running,  or  both,  does  not  help  the  matter, 
unless  we  call  running  and  jumping  accidents.  I  therefore 
am  of  opinion  that  tlie  alleged  injury  did  not  result  from  an 
accident,  within  the  meaning  of  the  contract." 
1184 


CH, 


XXIX.]  OF    ACCIDENT    INSURANCE.  [§  515  a 


[In  what  seems  a  far  more  sensible  case  it  was  held  that 
the  jury  are  at  liberty  to  find  death  by  accident  where  B. 
jumps  from  a  platform  four  or  five  feet  high  wliich  produced 
a  disorder,  probably  stricture  of  the  duodenum,  so  that  he 
could  retain  nothing  on  his  stomach,  vomited,  and  passed 
nothing  but  decomposed  blood  and  mucus,  and  died  in  nine 
days.  Two  others  jumping  at  the  same  time  were  uninjured. 
The  injury  was  not  such  a  result  as  ordinarily  and  naturally 
proceeds  from  the  conduct  of  the  insured.  Something  unusual, 
unforeseen,  unexpected,  that  is,  accidental  occurred,  to  which 
the  death  is  attributable.^] 

§  515  a.  Accidental  Means;  Rupture;  Gymnastic  Ezercise; 
Overdose  of  Opium.  —  In  a  case  where  the  injury  was  received 
while  exercising  with  Indian  clubs,  one  of  them  striking 
against  a  stove,  the  instruction  to  the  jury  was  as  follows: 
"  If  the  deceased  voluntarily  took  into  his  hands  the  clubs  for 
exercise,  and  used  them  for  such  exercise  in  the  way  and  pre- 
cisely as  he  intended  to  do,  and  without  anything  occurring 
to  interfere  with  his  intended  and  usual  movements  in  such 
exercise,  —  that  is,  if  he  voluntarily  used  these  clubs  in  the 
ordinary  way  for  taking  such  exercise,  without  the  occurrence 
of  any  unusual  circumstance  interrupting  or  interfering  with 
such  use,  or  causing  any  unforeseen,  accidental,  or  involun- 
tary movement  of  the  body,  and  in  such  use  of  clubs  there 
occurred  the  rupture  of  a  blood-vessel,  and  consequent  injury, 
as  claimed,  —  I  do  not  tliink  it  could  be  said,  in  such  case,  that 
the  means  through  which  the  injury  occurred  v>^as  accidental. 
But  if  while  engaged  in  such  exercise  there  occurred  any  un- 
foreseen accident  or  involuntary  movement  of  the  body  of  the 
deceased,  which  brought  about,  in  connection  with  the  use  of 
the  clubs,  the  injury,  or  if  there  occurred  any  unforeseen  or 
unexpected  circumstance  which  interfered  with  or  obstructed 
the  usual  course  of  such  exercise,  and  there  was  thereby  pro- 
duced an  involuntary  movement,  strain,  or  wrenching  of  the 
body,  by  means  of  which  the  alleged  injury  was  occasioned, 
that  would  be   an  accident  within   the   policy  ;    that  is,  the 

1  [U.  S.  Mut.  Ace.  Ass.  V.  Barrv,  131  U.  S.  100.] 

1185 


§   516]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXIX. 

means  by  wliich  the  injury  was  effected  would  in  such  case  be 
accidental."  ^ 

Death  by  inadvertently  taking  an  overdose  of  opium  pre- 
scribed by  a  physician  is  caused  by  "  medical  treatment  for 
disease,"  and  is  not  a  case  of  bodily  injury  effected  through 
"  external,  violent,  and  accidental  means,"  occasioning  death.^ 

§  516.  Accident  ;  Dro'wning  ;  Secondary  Cause  ;  External 
Sign  ;  Outward  and  Visible  Means.  —  In  Trew  V.  Railway  Pas- 
sengers' Assurance  Company,^  the  question  arose  whether  a 
man  who  was  drowned  while  bathing,  nothing  being  known  of 
the  particular  circumstances  under  which  the  drowning  hai> 
pened,  came  to  his  death  by  "  accident  or  violence,"  and  the 
conclusion  of  the  court  seemed  to  be  that  whether  such  death 
was  accidental  or  not  would  depend  upon  the  circumstances. 
These  the  plaintiff  could  not  show,  and  as  the  burden  of  proof 
was  upon  him  he  must  fail,  as  there  was  nothing  by  which  the 
jury  or  the  court  could  determine  one  way  or  the  other.  All 
the  evidence  there  was,  was  as  consistent  with  the  theory  that 
he  died  of  natural  causes  as  from  accident.  "  If  a  person," 
said  Martin,  B.,  by  way  of  illustration,  "  mistook  the  depth  of 
the  water,  and  in  plunging  into  it  struck  his  head  against  a 
rock  and  was  killed,  that  would  be  a  death  from  injury  caused 
by  accident ;  but  death  from  apoplexy  would  not."  "  This 
case,"  said  Watson,  B.,  "  ranges  within  that  class  where,  if  the 
state  of  facts  is  consistent  with  one  view  or  the  other,  there  is 
no  evidence  for  the  jury.  Here  there  is  no  evidence  how  the 
assured  died  (except  that  there  was  some  evidence  that  he 
was  drowned  while  bathing);  he  may  have  died  from  apoplexy, 
or  he  may  liave  been  struck  by  a  boat.  If  a  man  was  found 
dead  in  a  railway  carriage,  we  could  not  assume  that  he  died 
from  an  accident ;  but  if  he  was  found  with  marks  of  violence 
upon  his  person,  the  case  would  be  different.  There  is  noth- 
ing to  lead  to  the  supposition  that  the  assured  died  in  tlie  one 
way  rather  than  the  other."  But  this  decision  was  reversed 
in  the  Exchequer  Chamber,^  Cockburn,  C.  J.,  delivering  the 

1  Dyer  J.,  McCarthy  v.  Travelers'  Ins.  Co.,  C.  Ct.  (Wis  ),  8  Ins.  L.J.  208. 

2  Bayliss  v.  Travelers'  Ins.  Co.,  C.  Ct.  (N.  Y.),  6  Ins.  L.  J.  109. 

3  5  H.  &  N.  (Exch.)  211.  *  6  H.  &  N.  839. 

1186 


CH.  XXIX.]  OF    ACCIDENT    INSURANCE.  [§  516 

opinion  of  the  court.  "  We  are  all  of  the  opinion,"  said  the 
learned  Chief  Justice,  "  that  this  nonsuit  was  wrong,  and  that 
the  judgment  of  the  Court  of  Exchequer  in  refusing  to  set  it 
aside  was  erroneous.  It  is  said  that,  assuming  the  deceased 
died  by  drowning,  drowning  is  not  one  of  the  cases  compre- 
hended in  this  policy  of  assurance.  Mr.  Lush  ingeniously 
argued  that  the  policy  only  applies  to  cases  where,  from  acci- 
dent or  violence,  some  injury  occurs,  from  which  death  may, 
or  may  not,  ensue ;  and  if  it  ensues  within  three  months,  the 
sum  assured  is  payable.  But  he  contended,  in  effect,  that 
where  the  cause  of  death  produces  immediate  death  without 
the  intervention  of  any  external  injury,  the  policy  does  not 
apply  ;  and  whereas  from  the  action  of  the  water  there  is  no 
external  injury,  death  by  the  action  of  the  water  is  not  within 
the  meaning  of  this  policy.  That  argument,  if  carried  to  its 
extreme  length,  would  apply  to  every  case  where  death  was 
immediate.  If  a  man  fell  from  the  top  of  a  house,  or  over- 
board from  a  ship,  and  was  killed,  or  if  a  man  was  suffocated 
by  the  smoke  of  a  house  on  fire,  such  cases  would  be  excluded 
from  the  policy,  and  the  effect  would  be  that  policies  of  this 
kind,  in  many  cases  where  death  resulted  from  accident,  would 
afford  no  protection  whatever  to  the  assured.  We  ought  not 
to  give  to  those  policies  a  construction  which  will  defeat  the 
protection  of  the  assured  in  a  large  class  of  cases.  We  are, 
therefore,  of  opinion  that,  if  there  was  evidence  for  the  jury 
that  the  deceased  died  by  drowning,  that  was  a  death  by  acci- 
dent within  the  terms  of  this  policy.  The  next  question  is, 
whether  there  was  evidence  for  the  jury  that  the  assured  met 
with  his  death  by  drowning.  It  appears  that  he  went  to 
Brighton  for  recreation,  and  there  is  no  reason  to  suppose  that 
he  intended  to  commit  suicide.  He  left  his  lodgings  for  the 
purpose  of  bathing,  and  his  clothes  were  found  by  the  water- 
side, but  he  himself  was  not  afterwards  seen.  A  body  was 
found  in  the  water  at  a  distance  from  the  place  where  he  went 
to  bathe,  but  not  at  such  a  distance  that  it  might  not  have 
been  carried  there  by  the  waves.  There  was  some  evidence 
that  this  was  the  body  of  the  assured,  and  assuming  that  it 
was,  the  question  ought  to  have  been  submitted  to  the  jury 

1187 


§  517]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXIX. 

whether  he  met  with  his  death  hj  drowning.  If  they  found 
that  he  died  in  the  water,  they  might  reasonably  presume  that 
he  died  from  drowning.  It  is  true  tliat  death  occurs  in  the 
water  in  some  instances  from  natural  causes,  as  apoplexy,  or 
cramp  in  the  heart ;  but  such  cases  are  rare,  and  bear  a  small 
proportion  to  the  number  of  deaths  which  take  place  from  the 
action  of  the  water.  We  think  it  ought  to  be  submitted  to 
the  jury  to  say  whether  the  deceased  died  from  the  action  of 
the  water,  or  natural  causes.  If  they  are  of  opinion  that  he 
died  from  the  action  of  the  water,  causing  asphyxia,  that  is  a 
death  from  external  violence  within  the  meaning  of  this  policy, 
w^hether  he  swam  to  a  distance  and  had  not  strength  enough  to 
regain  the  shore,  or  on  going  into  the  water  got  out  of  his 
depth." 

Apparently  to  meet  such  a  case  as  the  one  last  cited  a  pro- 
vision has  been  inserted  saving  the  insurers  from  liability  un- 
less the  injury  be  marked  by  some  "  external  and  visible 
sign,"  and  tlie  accident  is  the  sole  cause  of  the  death. ^  And 
mider  this  it  was  held  that  a  complaint  of  soreness  and  stiff- 
ness was  not  an  external  or  visible  sign,  while  a  discharge  of 
blood  from  the  nostrils,  if  caused  by  the  injury,  would  be.  It 
was  also  recently  held,  in  England,  that  where  a  man  falls  into 
the  w^ater  while  in  an  epileptic  fit  and  is  drowned,  the  death  is 
accidental,  and  by  an  injury  caused  by  some  "  outward  and 
visible  sign."  ^ 

A  condition  that  the  insurance  shall  not  cover  a  "  case  of 
death  or  disability,  the  nature,  cause,  or  manner  of  which  is 
unknown  or  incapable  of  direct  and  positive  proof,"  does  not 
apply  to  a  case  where  the  death  is  obviously  by  violence,  as 
where  a  man  is  found  dead  in  a  river  or  on  a  railroad  track, 
bruised  and  torn,  yet  nothing  is  known  of  the  precise  manner 
in  which  it  happened.^ 

§  517.  Accident ;  Drowning.  —  In  Mallory  v.  Travelers'  In- 
surance Company,  it  was  shown  that  the  insured  disappeared 

1  Whiteliouse  v.  Travelers'  Ins.  Co.,  U.  S.  C.  Ct.  (N.  H.),  7  Ins.  L.  J.  23. 
-  Winspear?;.  Accident  Ins.  Co.,  43  L.  T.  Rep.  n.  s.  (Ct.  of  App.)  459;  s.  c. 
11  Reptr.  519;  post,  §  518,  at  tlie  end. 

8  Wright  V.  Sun  Mut.  Life  Ins.  Co.,  29  U.  C.  (C.  P.)  221. 

1188 


CH.  XXIX.]  OF   ACCIDENT   INSURANCE.  [§  517  A 

on  Sunday  evening,  when  he  was  seen  walking  on  a  raih-oad 
track,  and  his  body,  with  a  cut  on  the  back  of  the  head,  was 
found  in  a  creek  which  passed  under  the  raih-oad  through  a 
culvert.  A  motion  was  made  for  a  nonsuit,  on  the  ground 
that  there  was  no  evidence  to  go  to  the  jury  of  death  by  acci- 
dent. But  tliis  motion  the  court  refused  to  allow,  and  left  it 
to  the  jury  to  find  whether  the  death  was  by  accident  or  not, 
charging  them  that  the  injury  on  the  head  need  not  be  the  cause 
of  the  death,  but  that  if  it  lead  to  other  results,  accidental, 
from  which  death  ensued,  the  company  would  be  liable.  On 
appeal  it  was  held  tliat  the  circumstances  attending  the  finding 
of  the  body  were  sufficient  to  require  the  submission  to  the 
jury  of  the  question  whether  the  death  of  the  insured  was  the 
result  of  accident  or  of  disease,  or  some  other  cause  not  in- 
sured against.  The  actual  cause  of  death  was  not  certainly 
proved  by  the  evidence  in  the  case  ;  but  when  considered  in 
connection  with  the  presumption  that  sane  persons  do  not 
ordinarily  commit  acts  the  probable  consequence  of  which 
will  be  self-destruction,  it  was  sufficient  to  justify  the  infer- 
ence that  the  deceased  fell  off,  or  was  hurled  off  by  a  violent 
blow,  from  the  culvert  into  the  stream  below,  and  was 
drowned.  The  policy  provided  for  the  payment  of  a  gross 
sum  in  case  of  death  from  accident,  and  also  for  the  payment 
of  a  fixed  rate  per  week  in  case  of  injury  not  fatal  but  dis- 
abling. It  also  provided  that  no  claim  should  be  made  under 
the  policy,  in  respect  of  any  injury,  unless  the  same  shall  be 
caused  by  some  "  outward  and  visible  means."  And  it  was 
hekl  that  this  last  provision  applied  only  to  non-fatal  injuries.^ 
[§  517  A.  External,  Violent,  and  Accidental.  —  A  death  in  a 
plunge  bath  was  held  not  to  be  from  "  external,  violent,  and 
accidental  means,"  ^  But  death  by  drowning,  the  boat  being 
overturned  by  fierce  waves  seven  or  eight  feet  high,  is  death  by 
external,  violent,  and  accidental  means.^  A  frightened  horse 
ran  away,  and  though  the  carriage  was  not  upset,  the  insured 

1  Mallory  v.  Travelers'  Ins.  Co.,  47  N.  Y.  52. 

2  [Tennant  v.  Travelers'  Ins.  Co.,  31  Fed.  Rep.  322  (Cal.),  1887.] 

3  [Tucker  v.  Mut.  Ben.  Life  Co.,  50  Hun,  50.     See  Searles  v.  Manhattan  Ele- 
vated R.  Co.,  101  N.  Y.  661] 

1189 


§  517  A]       INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXIX. 

was  SO  wrought  upon  by  fright  or  exertion  in  restraining  the 
horse  that  he  died  within  an  hour.  This  was  held  a  death 
through  external,  violent,  and  accidental  means,  and  it  was 
decided  that  the  clause  providing  that  insurance  shall  not  ex- 
tend to  cases  in  which  there  were  no  external  and  visible 
signs  upon  the  body  did  not  relate  to  fatal  injuries,  but  only 
to  those  not  resulting  in  death. ^ 

Death  caused  by  charbon  poison,  that  is,  the  absorption  of  a 
putrid  animal  substance  through  some  portion  of  the  skin, 
causing  malignant  pustule,  is  death  by  extei'nal,  accidental,  and 
violent  means.  The  putrid  substance  reached  the  body,  not 
through  the  stomach  or  lungs,  but  through  the  skin,  the  exter- 
nal covering.  The  means  were  accidental.  It  is  too  improbable 
to  suppose  that  the  deceased  intentionally  put  his  hand,  in- 
fected with  putrid  meat,  upon  his  lip  in  order  to  produce  death. 
If  he  had  intended  suicide  this  would  not  have  been  the  mode 
selected.  The  probability  is  that  he  knew  nothing  of  the  dan- 
ger whatever.  Lastly,  the  means  were  violent.  The  degree 
of  violence  is  of  no  moment.  The  bite  of  a  fly  or  sting  of  a 
bee  or  a  rattlesnake,  sunstroke,  freezing,  drowning,  are  all  vio- 
lent in  the  sense  of  an  insurance  policy.  In  this  case  whether 
a  fly  that  had  been  feeding  on  the  putrid  substance  lit  upon 
an  abraded  spot  on  the  lip  of  the  deceased,  or  he  put  his  hand 
to  his  lip  with  the  poison  upon  it,  the  contact  however  deli- 
cate was  violent,  within  the  meaning  of  the  policy .^  That  is 
to  say,  in  plain  English,  the  word  violent,  so  far  as  it  refers 
to  the  movement  of  masses,  is  of  no  effect  in  the  policy.  If 
the  injury  is  external  and  accidental,  the  plaintiff  may  recover. 
Violent  is  ambiguous.  It  is  impossible  to  tell  what  degree  of 
force  is  intended,  therefore,  since  it  is  to  be  taken  against  the 
company,  all  degrees  of  force  are  included.  The  sense  of  the 
word  "  violent"  may  be  looked  at  in  another  way.  Force  is 
not  merely  in  the  movement  of  masses.  There  is  such  a  thing 
as    molecular   and    atomic    violence.      Heat,  electricity,    and 

1  [McGlincliey  v.  Fidelity  &  Casualty  Co.,  80  Me.  251  (another  illustration 
of  the  tendency  of  the  courts  to  go  back  of  the  worded  contract,  to  what  they 
deem  the  fair  purpose  of  it,  even  at  the  risk  of  making  a  new  agreement).] 

-  [Bacon  v.  U.  S.  Mut.  Ace.  Ass.,  44  Hun,  599.] 

1190 


CH.  XXIX.]  OF    ACCIDENT    INSURANCE.  [§51 7  A 

sound  may  cause  damage  that  would  surely  be  violent.  If  a 
tremendous  sound  should  disrupt  the  drum  of  the  ear,  or 
mighty  heat  scorch  the  flesh,  no  one  would  claim  that  the 
damage  was  not  by  violence.  So  the  atomic  force  of  a  poison 
that  from  simple  contact  is  able  to  pierce  to  the  farthest  parts 
of  the  body,  displays  a  violence  greater  than  that  of  an  arrow 
that  can  only  overcome  the  stop  of  six  or  eight  inclies  of  tissue. 
But  however  kindly  we  look  at  the  decision,  and  however  we 
strive  to  entangle  the  contract  in  a  net  of  scientific  thought 
that  refuses  to  disclose  any  breaks  in  nature  corresponding  to 
the  words  we  use,  yet  the  fact  remains  that  the  word  "  vio- 
lent "  has  a  well-understood  meaning,  that  it  is  in  the  contract, 
has  a  right  to  be  there,  and  effect  should  be  given  to  it.  The 
line  between  violent  and  non-violent  accidents  is  hard  to  draw 
if  we  get  a  microscope  and  try  and  draw  a  hair  line  that  will  be 
scientifically  justifiable  considering  every  attribute  connoted 
by  the  words,  but  if  we  stand  off  and  look  at  the  matter  in  the 
clear  light  of  every-day  common  sense,  a  death  by  drowning  or 
by  suffocation  or  by  the  encroachments  of  poison  is  not  violent. 
If  a  runaway  knocks  a  man  off  a  bridge  into  the  water,  or  a 
strong  wave  upsets  his  boat  and  he  drowns,  there  is  violence 
in  the  compound  proximate  cause.  But  if  he  is  asleep  and  the 
water  rises  about  him  or  the  gas  floods  his  room,  there  is  no 
violence.  If  such  a  death  is  violent,  if  a  man  passing  a  pest 
house  and  getting  a  taint  or  a  breath  that  brings  him  down 
with  small-pox  or  scarlet-fever,  dies  by  violence,  then  there  is 
no  death  that  is  not  violent  and  the  word  is  nullified  in  the 
contract.  If  the  courts  think  such  a  term  in  the  policy  is 
unreasonable,  let  them  say  so  and  give  their  reasons  ;  but,  for 
the  sake  of  sane  law,  do  not  make  decisions  that  wipe  sections 
of  the  English  language  out  of  existence. 

A  clause  in  an  accident  policy  requiring  direct  and  positive 
proof  that  the  injury  was  caused  by  external  and  violent 
means,  cannot  alter  the  rules  of  evidence  in  the  courts.^  In 
some  cases  the  very  nature  of  the  injury  and  the  presumption 
that  it  was  not  voluntary  may  be  sufficient  to  satisfy  the  re- 
quirement, as  where  the  arm  of   the  deceased  was  broken, 

1  [Utter  V.  Insurance  Co.,  65  Mich.  546  ] 

1191 


§  518]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.       [CH.  XXIX. 

causing  disease  of  which  he  died,  and  the  manner  and  circum- 
stances of  the  breaking  did  not  a]:)pear.^] 

§  518.  Accident;  "  Cause  of  Death  arising  -writhin  the  System  ;" 
"  Secondary  Cause  ;"  External  and  Material  Cause.  —  In  the  case 
of  Fitton  V.  The  Accidental  Death  Insurance  Company ,2  the 
deceased  met  with  a  violent  fall,  by  which  he  immediately 
became  ruptured  in  the  bowels,  and  afflicted  with  strangu- 
lated hernia  in  the  abdomen,  for  which  a  surgical  opera- 
tion was  necessarily  performed,  in  consequence  of  which, 
and  the  hernia,  he  died.  The  question  was  whether  this 
was  a  death  within  the  exception  of  a  policy  which  pro- 
vided that  the  company  did  not  insure  against  death  or 
disability  arising  from  rheumatism,  gout,  hernia,  erysipelas, 
or  any  other  disease  or  cause  arising  within  the  system  of  the 
insured,  before,  or  at  the  time,  or  following  such  accidental 
injury,  whether  causing  such  death  or  disability  directly  or 
jointly  with  such  accidental  injury.  And  it  was  held  that 
such  a  death  did  not  arise  from  a  cause  within  the  system,  and 
so  was  not  within  the  exception.  In  Smith  v.  The  Accident 
Insurance  Company,^  where  the  facts  were  that  death  fol- 
lowed from  erysipelas,  caused  by  and  expressly  found  to  be 
the  result  of  an  accidental  incised  wound,  and  supervening 
four  days  after  the  wound  was  received,  and  the  provisions  of 
the  policy  were  identical  with  those  in  the  case  last  cited,  ex- 
cept that  the  word  "  cause  "  was  qualified  by  the  word  "  second- 
ary," three  of  the  judges  held  this  to  be  within  the  exception, 
and  distinguished  it  from  Fitton  v.  The  Accidental  Death  Insur- 
ance Company,^  on  the  ground  that  there  the  accident  caused 
the  hernia  at  the  very  moment  the  accident  happened,  and  Avas 
part  and  parcel  of  it,  while  here  the  erysipelas  supervened  only 
after  a  lapse  of  four  days,  and  so  was  a  "  secondary  "  cause 
within  the  meaning  of  the  policy.^     In  other  words,  hernia 


1  [Peck  V.  Equit.  Ace.  Ass.,  52  Hun,  255.] 

2  17  C.  B.  N.  s.  122  ;  s.  c.  34  L.  J.  28  (C.  P.). 

3  22  L.  T.  861.  4    Ubi  supra. 

^  In  Harris  v.  Travelers'  Ins.  Co.,  Superior  Ct.  Chicago,  1808.  cited  in  Ameri- 
can Law  Review,  July,  1878,  p.  589,  it  was  held  that  death  hy  suicide,  three 
months  after  an  accident,  hy  an  insane  person,  whose  insanity  was  caused  by  an 

1192 


CH.  XXIX.]  OF    ACCIDENT   INSURANCE.  [§  518 

supervening  immediatel}^  to  the  accidental  violence  would  not 
be  within  the  exception  of  the  policy,  wliile  erysipelas  super- 
vening to  the  same  accidental  violence  four  days  afterwards 
would, —  a  distinction  which  seems  to  rest  not  on  the  ques- 
tion whether  the  disease  was  caused  by  the  violence,  but  on 
the  lapse  of  time  intervening  between  the  violence  and  the 
appearance  of  the  disease  caused  thereby,  and  would  there- 
fore seem  to  be  unsatisfactory,  if  for  no  other  reason,  because 
it  is  impracticable.^  The  contract  might  make  a  limitation  as 
to  time,  but  as  it  does  not,  it  is  difficult  to  see  how  the  courts 
can  say  violence  producing  fatal  disease  at  one  time  is  within 
the  exception,  while  producing  it  at  another  time  it  is  not. 
What  is  the  limited  time  which  takes  the  case  out  of  or  brings 
it  within  the  exception  ?  ^ 

accident,  was  not  covered  by  the  policy,  as  the  accident  was  not  the  proximate 
cause. 

1  Wliether  a  cause  is  proximate  or  remote  does  not  depend  alone  upon  tiie 
nearness  in  point  of  time  in  whicii  certain  events  occur.  The  question  is  not 
controlled  by  time  or  distance,  nor  by  the  succession  of  events.  An  efficient 
adequate  cause  being  found  must  be  deemed  the  true  cause,  unless  some  other 
cause  not  incidental  to  it,  but  independent  of  it,  is  shown  to  have  intervened 
between  it  and  the  result.  Kellogg  v.  Railway  Co.,  26  Wis.  223;  McCarthy  v. 
Travelers'  Ins.  Co.,  8  Ins.  L.  J.  208;  ante,  §§  302,  459.  See  also  Insurance  Co. 
V.  Tweed,  7  Wall.  (U.  S.)  44  ;  Travelers'  Ins.  Co.  v.  Seaver,  19  id.  531,  539. 

2  Kelly,  C.  B.,  dissented,  and  thought  that  the  defendants  were  liable  on  the 
policy;  the  effect  of  the  condition  being  to  exempt  the  company  from  liability 
only  in  respect  of  a  death  from  erysipelas,  where  the  erysipelas  "arose  within 
the  system,"  and  was,  as  it  were,  collateral  to,  and  not  caused  by,  the  accident 
to  the  insured  ;  and  that  where  an  insurance  company  think  fit  to  introduce  an 
exception  to  the  liability  for  which  they  have  contracted  under  the  policy  of 
insurance,  they  are  bound  to  express  that  exception  in  clear  and  unambiguous 
language,  so  as  to  leave  no  reasonable  doubt  upon  the  subject  ;  and  if  there  is 
any  ambiguity,  that  is  enough  to  take  the  case  out  of  the  exception,  and  the 
construction  should  be  against  the  company.  As  death  under  similar  circum- 
stances is  very  likely  to  happen,  presenting  a  like  case  for  the  decision  of  other 
courts,  the  views  of  the  learned  Chief  Baron,  so  clearly  and  ably  presented, 
are  here  given  in  full :  — 

"  This  is  unquestionably  a  doubtful  and  difficult  case,  and  after  listening  to 
the  opinions  of  my  learned  brethren,  I  cannot  but  in  some  measure  mistrust  my 
own  judgment ;  but  I  am  of  opinion  that  the  plaintiff  is  entitled  to  recover. 
The  facts,  as  found  by  the  arbitrator,  are  clear.  The  deceased,  who  was  in- 
sured by  the  defendants  against  accidents  generally,  whilst  washing  his  feet  in 
an  earthenware  bath  sustained  an  injury,  by  cutting  one  of  them  near  the  ankle 
on  the  ragged  edge  of  the  bath.     For  that  wound  a  surgeon  attended  him,  and 

1193 


§  518]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.       [CH.  XXIX. 

In  a  still  later  case,  in  England,  where  the  insured  went  in 
to  bathe,  and  while  in  a  shallow  pool  was  seized  with  a  fit 

he  was  taken  to  a  hospital.  Five  days  after  the  accident  erysipelas  super- 
vened, and  in  two  days  more  he  died  of  that  disease.  It  is  expressly  found 
that  the  erysipelas,  which  was  the  immediate  cause  of  death,  resulted  from 
the  wound,  and  that  unless  he  had  been  wounded  he  would  not  have  had 
erysipelas. 

"  The  question  is  whether  this  death,  thus  occasioned,  is  within  the  mean- 
ing of  the  defendants'  policy.  Now,  I  entirely  agree  with  the  observations  of 
Willes,  J.,  in  Fitton's  case,  that  it  is  extremel}-  important,  with  reference  to  in- 
surances, that  there  should  be  a  tendency  ratlier  to  hold  for  the  assured  than 
for  the  company,  where  any  ambiguity  arises  on  the  face  of  the  policy  ;  and  I  will 
add  that  it  appears  to  me  to  be  equally  important  that  where  an  insurance  com- 
pany think  fit  to  introduce  an  exception  to  a  liability  which  they  have  con- 
tracted to  bear,  they  should  express  that  exception  in  clear,  unambiguous  terms. 
But  when  I  read  this  condition,  I  cannot,  especially  having  regard  to  the  princi- 
ples of  construction  laid  down,  and  the  decision  arrived  at  in  Fitton's  case,  see 
that  the  exception  as  to  erysipelas  is  so  worded  as  to  protect  the  defendants 
here.  The  Court  of  Conmion  Pleas,  in  the  case  referred  to,  put  a  judicial  con- 
struction on  this  very  clause,  save  that  the  words  '  secondary  cause  '  have  been 
introduced  since  their  decision.  There,  Williams,  J.,  in  his  judgment,  says: 
'Looking  at  the  language  of  the  policy,  and  taking  the  first  condition  alto- 
gether, upon  the  best  interpretation  I  can  put  upon  it,  I  am  of  opinion  that  it 
means  to  exempt  the  company  from  liability  only  where  the  hernia  arises 
within  the  system  ; '  and  I  am  of  opinion,  In  conformity  with  the  opinion  there 
delivered  by  Williams,  J.,  that  it  is  the  effect  of  the  condition  to  exempt  the 
company  from  liability  only  in  respect  of  death  from  erysipelas,  where  the  ery- 
sipelas arises  within  the  system  and  is  collateral  to  the  accident. 

"  But  let  us  proceed  to  look  a  little  more  closely  at  the  words  of  the  condi- 
tion. After  stating  the  accidents  or  causes  of  death  that  are  insured  against, 
it  goes  on  to  specify  those  causes  which  are  not,  including  '  rheumatism,  gout, 
hernia,  erysipelas,'  and  then  come  the  words  which  have  been  so  fully  discussed 
'  or  other  disease  or  secondary  cause  or  causes  arising  within  the  system  of  the 
assured  before,  or  at  the  time,  or  following  such  accidental  injury.'  Now,  ac- 
cording to  the  view  taken  by  the  rest  of  the  court,  erysipelas  is  for  all  purposes 
expressly  excepted  from  the  series  of  events  which  create  a  liability  in  the  de- 
fendants. But  if  this  be  the  true  view,  why  not  have  stopped  at  the  word  'ery- 
sipelas,' and  have  added  '  however  caused,  whether  by  an  accident  or  otherwise  ? ' 
Moreover,  it  should  be  remarked  that  this  unqualified  and  unlimited  construc- 
tion is  inconsistent  with  the  decision  In  Fitton's  case,  where  the  death  of  the 
insured  was  from  hernia  caused  by  the  accident.  It  is  clear  to  me,  therefore, 
that  we  must  construe  these  words  with  reference  to  those  which  follow,  and 
place  some  limitation  upon  them. 

"  To  revert  once  more  to  the  language  actually  used,  let  us  contrast  for  a 
moment  what  the  defendants  have  said  with  what  they  might  have  said.  In- 
stead of  excepting  rheumatism,  hernia,  &c.,  whether  causing  death  'directly  or 
jointly '  with  the  injury,  they  might  have  excepted  them  in  unambiguous  terms, 
'  whether  produced  by  the  accident  or  otherwise  ; '  and  In  the  same  manner  they 

1194 


OH.  XXIX.]  OF   ACCIDENT    INSURANCE.  [§  518 

whereby  he  became  insensible,  and  fell  with  his  face  down- 
wards, so  that  his  face  was  partially  submerged,  and  he  was 

niiglit  have  gone  through  a  whole  catalogue  of  consequences  likely  to  super- 
vene on  a  cut  or  a  bruise,  —  such,  for  instance,  as  mortification  or  hemorrhage, 
—  and,  by  excepting  them  expressly,  have  really  rendered  the  policy  almost 
nugatory.  Indeed,  they  might  effect  this  purpose  under  the  present  words,  if 
my  learned  brethren  are  right,  by  merely  increasing  the  diseases  specified  by 
name.  But  could  it  be  contended  that  by  an  express  mention,  say  of  hemor- 
rhage or  mortification,  the  defendants  could  exonerate  themselves  where  death 
had  ensued  from  mortification  or  hemorrhage  supervening  on  a  cut  ?  The 
death  would  still  be  from  the  cut,  and  the  policy,  in  my  judgment,  would  be 
available  ;  for  the  general  effect  and  true  construction  of  such  a  document  seems 
to  me  to  be,  that  it  covers  not  only  the  actual  injury  itself,  but  any  disease, 
like  lockjaw,  mortification,  or  erysipelas,  which  is  caused  by  and  may  be  re- 
garded as  the  natural  and  probable  consequence  of  the  injury. 

"  It  remains  to  be  considered  whether  the  words  of  the  condition,  which  have 
been  introduced  since  the  decision  in  Fitton's  case,  make  any  difference  in  the 
extent  of  the  defendants'  liability.  Without  these  words,  I  think  that  decision 
is  a  clear  authority  for  the  plaintiff  here.  But  it  is  by  them  provided  that  the 
policy  does  not  insure  against  death  from  the  enumerated  disorders,  or  '  any 
other  disease  or  secondary  cause  arising  within  the  system  of  the  insured.' 
Now  I  pause  upon  the  word  '  secondary,'  because  it  certainly  does  introduce 
doubt  as  to  the  true  construction  of  the  sentence.  If  it  means  that  whenever  the 
hernia  or  erysipelas,  causing  death,  is  the  secondary  consequence  of  the  acci- 
dent, the  defendants  are  not  to  be  liable,  then  the  present  case  would  be  within 
the  exception.  But  I  do  not  think  it  can  be  taken  in  this  unqualified  sense. 
It  api)ears  to  me  to  be  no  more  than  a  general  word,  descriptive  of  the  charac- 
ter of  the  previously  enumerated  maladies,  and  that  it  must  be  read  with  refer- 
ence to  the  words  immediately  following. 

"  The  whole  sentence  thus  read  hears  to  my  mind  a  plain  and  intelligible, 
and  but  for  the  opinion  of  my  learned  brethren  I  should  have  said  an  obvious, 
meaning.  It  enumerates  a  certain  class  of  maladies  which  are  of  a  secondary 
character,  and  which  may  all  of  tliem  arise  within  the  system,  and  continue 
collaterally  to  and  parallel  with  the  injury  sustained  ;  and  it  provides  that  where 
death  is  caused  by  any  of  these  secondary  diseases  arising  within  the  system, 
then  the  policj'^  shall  not  attach,  even  though  the  disease,  unless  aggravated  by 
or  conjointly  with  the  injurj'^,  would  not  have  been  fatal.  I  do  not  see  how  it 
is  possible  to  reject  these  words, '  arising  within  the  system,'  from  our  considera- 
tion ;  and  I  find  no  words  in  the  condition  capable  of  being  construed  to  except 
the  secondary  disease  of  erysipelas  altogether,  in  such  a  case  as  this,  wiiere  it 
did  not  'arise 'at  all  within  the  system, —  where  (as  the  arbitrator  finds)  it 
never  would  have  arisen  but  for  the  accident,  and  where  it  was  the  direct  con- 
sequence of  that  accident.  My  conclusion  as  to  this  construction  of  the  condi- 
tion is  strengthened  by  the  remaining  words  of  the  condition.  The  company 
are  not  to  be  liable  for  a  secondary  cause  arising  within  the  system  'before,  or 
at  the  time  of,  or  following  such  accidental  injury,  whether  causing  such  death 
directly  or  jointly  with  such  accidental  injury.'  The  very  use  of  this  word 
'  before  '  is  an  additional  reason  for  construing  the  whole  condition  as  I  do.     It 

1105 


§  518  A]       INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXIX. 

suffocated  by  the  access  of  water,  to  his  lungs,  this  was  held 
to  be  a  death  by  accident,  and  occasioned  by  an  "  external 
and  material  cause  operating  upon  the  person  of  the  insured." 
Death  here  was  the  result  of  the  action  of  the  water  on  the 
lungs,  and  the  consequent  interference  with  respiration,  and 
the  fact  of  falling  into  the  water  from  sudden  insensibility  was 
an  accident.! 

[§  518  A.  Disease  as  distinguished  from  external  and  acci- 
dental injury  means  a  disorder  originating  internally.  An  exter- 
nal accident  may  often  produce  death  through  the  disorganiza- 
tion of  internal  organs,  as  in  cases  of  snake-bites,  bullet-wounds, 
malignant  pustule,  <fec. ;  still  the  accident  is  the  cause.  But  if 
impurities  taken  into  the  stomach  or  lungs  produce  fever  or 
other  disease  and  death  results,  the  disease  is  the  proximate 
cause.2  Where  the  policy  excepts  death  arising  from  natural 
disease  although  accelerated  by  accident,  and  it  appears  that 
the  insured  died  of  kidney  disease  (with  which  he  had  been 
long  afflicted)  accelerated  by  a  fall,  there  can  be  no  recovery .^ 

sliows  that  the  real  intention  was  to  provide  against  secondary  diseases  arising 
witliin  tiie  system,  and  whicli  might  and  probably  would,  therefore,  be  before 
the  accident,  in  point  of  time,  and  wholly  independent  of  and  collateral  to  it, 
and  not  against  tliose  which,  like  the  erysipelas  here,  were  the  direct  conse- 
quence of  the  accident,  and  but  for  tliat  would  never  have  existed  at  all.  And 
the  last  material  words  of  the  condition,  '  wliether  causing  such  death  directly 
or  jointly  with  such  injury,'  also  seem  to  me  applicable  to  a  class  of  diseases 
causing  death  either  directly  or  jointly  with  the  injury,  but  being  in  their  na- 
ture wholly  collateral  to  it.  Taking,  then,  the  condition  as  a  whole,  I  am  of 
opinion  that  it  points  to  a  particular  class  of  diseases  which  arises  within  the 
system  eitlier  before,  at,  or  after  the  injury,  and  exempts  the  defendants  from 
liability  wlien  death  is  caused  by  any  of  them,  either  directly  or  jointly  with 
the  injury,  but  that  it  does  not  apply  to  any  of  these  diseases  when  they  super- 
vene on  the  injury,  are  caused  solely  by  it,  and  are  its  natural  consequence.  In 
my  judgment,  this  construction  is  the  one  which  is  the  more  reasonable  and 
natural  of  the  two  contended  for;  but  even  if  I  were  in  doubt,  I  should  still 
think  that  the  ambiguity  of  the  language  used  is  such  as  to  warrant  me  in  act- 
ing on  the  well-known  principle  of  construction  applicable  to  policies  of  insur- 
ance, and  in  giving  the  benefit  of  that  ambiguity  to  the  assured.  As,  however, 
my  learned  brethren  are  of  a  contrary'  opinion,  the  judgment  of  the  court  must 
be  for  the  defendants." 

1  Reynolds  i'.  The  Accidental  Ins.  Co.,  22  L.  T.  n.  s.  820.  See  also  ante, 
§517. 

2  [Bacon  v.  U.  S.  Mut.  Ace.  Ass.,  44  Hun,  599,  605.] 

3  [Anderson  v.  Scottish  Ace.  Ins.  Co.  (Lim.),  27  Scot.  L.  R.  20,  Oct.,  1889.] 

1196 


CH.  XXIX.]  OP    ACCIDENT    INSURANCE.  [§  519 

A  policy  insuring  against  injury  by  "  accidental,  external,  and 
visible  means,"  but  not  an  injury  resulting  from  "  natural 
disease,  or  weakness  or  exhaustion  consequent  upon  disease," 
covers  death  by  drowning,  the  insured  having  fallen  in  an 
epileptic  fit  into  a  stream  he  was  fording.^] 

[§  518  B.  Death  by  Poison.  —  A  policy  excepting  "  death  by 
poison  in  any  manner  or  form  "  does  not  thereby  except  death 
from  malignant  pustule,  caused  by  the  infliction  of  animal 
poison  upon  the  surface  of  the  body.  "  Death  by  poison  "  is 
well  understood  to  refer  to  a  substance  taken  internally,  and 
does  not  include  a  rattlesnake  bite,  or  blood-poisoning  result- 
ing from  a  bullet-wound,  or  charbon  poison  resulting  from  the 
contact  of  putrid  animal  substance  with  an  abraded  portion  of 
the  body,  or  the  thin  parts  of  the  lips  wliich  absorb  the 
poison.2  Whether  a  bite  from  a  venomous  insect  is  within  a 
policy  that  excepts  injury  "  by  poison  in  any  form  or  manner" 
is  for  the  jury.^] 

§  519.  Accident ;  Sunstroke.  —  In  a  case  involving  the  ques- 
tion whether  death  by  sunstroke  was  a  death  by  "  accident " 
within  the  meaning  of  the  policy,  it  was  said  that  in  the  term 
"  accident "  some  violence,  casualty,  or  vis  major  is  necessa- 
rily involved,  and  that  disease  produced  by  a  known  natural 
cause,  as  in  the  case  of  sunstroke,  cannot  be  considered  as 
accidental,  any  more  than  disease  or  death  engendered  by 
exposure  to  heat,  cold,  damp,  the  vicissitudes  of  climate,  or 
atmospheric  influences  ;  unless,  perhaps,  in  cases  where  the 
exposure  is  actually  brought  about  by  circumstances  which 
may  give  it  the  character  of  accident.  Thus,  by  way  of  illus- 
tration, if,  from  the  effects  of  ordinary  exposure  to  the  ele- 
ments, sucli  as  is  common  in  the  course  of  navigation,  a 
mariner  should  catch  cold  and  die,  such  death  would  not  be 
accidental  ;  although  if,  being  obliged  by  shipwreck  or  other 
disaster  to  quit  the  ship  and  take  to  the  sea  in  an  open  boat, 
he  remained  exposed  to  wet  and  cold  for  some  time  and  death 
ensued  therefrom,  the  death  might  properly  be  held   to   be 

1  [Winspear  v.  Accident  Ins.  Co.,  6  Q.  B.  D.  42.] 

^  [Bacon  v.  U.  S.  Mut.  Ace.  Ass.,  44  Hun,  699,  602.] 

^  [Preferred  Mut.  Ace.  Ass.  v.  Beidelman,  1  Monaglian  (Pa.*),  481.1 

1197 


§  520]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXIX. 

the  result  of  accident.  It  is  true  that  in  one  sense  disease  or 
death  through  the  direct  effect  of  a  known  natural  cause,  such 
as  we  have  referred  to,  may  be  said  to  be  accidental,  inasmuch 
as  it  is  uncertain  beforehand  whether  the  effect  will  ensue  in 
any  particular  case.  Exposed  to  the  same  malaria  or  infec- 
tion, one  man  escapes,  another  succumbs.  Yet  diseases  thus 
arising  have  always  been  considered  not  as  accidental,  but  as 
proceeding  from  natural  causes.^ 

"  In  the  present  instance,  the  disease  called  sunstroke,  al- 
though the  name  would  at  first  seem  to  imply  something  of 
external  violence,  is  an  inflammatory  disease  of  the  brain, 
brought  on  by  exposure  to  the  too  intense  heat  of  the  sun's 
rays.  It  is  a  disease  to  w^hich  persons  exposing  themselves 
to  the  sun  in  a  tropical  climate  are  more  or  less  liable,  just 
as  persons  exposed  to  the  other  natural  causes  above  referred 
to  are  liable  to  disastrous  consequences  therefrom."  ^ 

§  520.  Accident ;  Death  by  Robbers.  —  In  Rii)ley,  Adminis- 
trator V.  The  Railway  Passengers'  Insurance  Company,  where 
it  appeared  that  a  man  was  waylaid  and  killed  by  robbers, 
the  question  arose,  and  was  discussed,  but  without  result, 
whether  this  was  death  by  violent  and  accidental  means,  the 
court  inclining,  however,  to  the  opinion  that  it  was  ;  and  to  de- 
fine an  accident  as  "  any  event  which  takes  place  without  the 
foresight  or  expectation  of  the  person  acted  upon  or  affected  by 
the  event,"  ^  in  accordance  with  the  common  acceptation  of 
its  meaning  amongst  those  who  seek  insurance,  rather  than 
with  the  more  restricted  limits  of  lexicographical  definition.* 

1  [There  is  a  total  misconception  here  of  the  nature  of  accident.  The  pro- 
ceeding from  natural  causes  has  nothing  to  do  with  the  matter.  All  events 
accidental  or  not  so  proceed.  It  is  upon  the  element  of  foresight  that  the  dis- 
tinction really  rests.  Accidental  is  opposed  to  foreseen  or  foreseeable  by  one  of 
ordinary  prudence  and  understanding  under  the  circumstances,  §§  514,  520.] 

2  Sinclair  v.  The  Maritime  Passengers'  Ass.  Co.,  7  Jur.  n.  s.  367,  369. 

3  [Actual  foresight  does  not  seem  necessary  to  take  the  case  out  of  the  realm 
of  accident.  It  is  enough  if  the  person  ought  to  have  foreseen.  A  result  nat- 
urally and  ordinarily  follovvmg  from  the  conduct  of  the  assured  is  not  accidental, 
although  he  might  not  have  foreseen  the  consequence.  See  U.  S  Mut.  Ace  Ass. 
V.  Barry,  131  U.  S.  100.] 

4  District  Court  of  the  United  States  for  the  Western  District  of  Michigan, 
1870,  2  Big.  Life*&  Ace.  Ins.  Cas.  738 ;  s.  c.  16  Wall.  (U.  S.)  336. 

1198 


CH.  XXIX.]  OP   ACCIDENT   INSURANCE.  [§  521 

[§  520  A.  Intentional  Injuries  inflicted  by  the  Insured  or 
Others.  —  A  construction  of  the  clause  exempting  the  company 
from  liability  in  case  of  "  intentional  injuries  inflicted  by  the 
insured  or  by  another"  which  limits  its  application  to  injuries 
intended  hy  the  ifisured  and  holds  the  company  for  an  injury 
inflicted  by  a  robber,  cannot  be  sustained.^  One  who  is  assas- 
sinated comes  to  his  death  by  accideyital  means.  The  intent  of 
the  wrong-doer  does  not  prevent  the  event  from  being  un- 
foreseen by  the  insured.^  But  a  policy  excepting  intentional 
injuries  inflicted  by  the  assured  or  any  other  person,  does  not 
cover  an  assassination.^] 

§  521.  Railway  Accident.  —  A  railway  accident  is  one  oc- 
curring in  the  course  of  travelling,  and  arising  out  of  the  fact 
of  the  journey.  It  does  not  necessarily  depend  on  any  acci- 
dent to  the  railway  or  machinery  connected  with  it.*  It  is  an 
accident  which  is  attributable  to  the  fact  that  the  injured  party 
is  a  passenger  on  the  railway,  and  arises  out  of  an  act  im- 
mediately connected  with  his  being  such  passenger.^  It  is 
difficult  to  lay  down  any  more  specific  rule,  because  of  the 
multiplicity  of  circumstances  under  which  these  accidents 
may  occur.  Much  is  to  depend  upon  the  circumstances  of 
each  particular  case.  The  case  last  above  cited  was  one 
where  a  passenger,  in  alighting  at  his  journey's  end,  slipped 
from  the  carriage-step,  without  negligence  on  his  part,  and 
was  injured.  This  was  held  to  be  an  accident  covered  by  the 
policy.  After  taking  time  to  consider,  the  court,  by  Pollock, 
C.  B.,  say  :  — 

"  The  plaintiff,  who  was  about  to  take  a  journey  by  means 
of  two  distinct  railways,  had  insured  himself  with  the  de- 
fendants against  death  or  personal  injury  arising  from  rail- 
way accident  whilst  travelling,  the  contract  fixing  the 
damage  in  the  former  event  at  one  thousand  pounds.     In 

^  [De  Graw  v.  Nat.  Accident  Soc,  51  Hun,  142 ;  Fischer  v.  Travelers'  Ins. 
Co.,  77  Cal.  246.] 

2  [Hutchcraft's  ^,  <'r  v.  Travelers'  In-   '^o.,  87  Ky.  300.] 

3  [Id.] 

*  Per  Alderson,  B.,  Theobald  v.  The  Railway  Passengers'  Ass.  Co.,  £6  Eng. 
L.  &  Eq.  432 ;  s.  c.  10  Exch.  44. 
6  Per  Pollock,  C.  B.,  id. 
VOL.  ir.  __  32  1199 


§  521]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXIX. 

getting  out  from  one  of  the  carriages  on  a  rainy  morning, 
his  foot  slipped,  whereby  he  was  severely  injured.  It  was 
conceded  by  the  defendant's  counsel  that  there  was  no  negli- 
gence on  the  part  of  the  plaintiff  in  reference  to  the  accident. 
And  the  first  question  is,  whether  this  is  a  railway  accident 
within  the  meaning  of  the  policy.  We  are  of  opinion  that  it 
is.  However  much  the  company  may  desire  that  we  should 
lay  down  a  general  rule  as  to  what  is  a  railway  accident,  I  do 
not  know  that  we  are  called  on,  or  should  be  doing  our  duty, 
were  we  to  lay  down  any  rule  beyond  what  is  necessary  to 
decide  the  actual  case  before  us.  Considering  the  great 
number  of  particulars  that  may  enter  into  the  decision  of 
questions  of  this  nature,  and  the  very  complicated  character 
they  may  assume  under  circumstances  that  at  present  we  may 
not  anticipate,  I  think  (and  I  believe  the  rest  of  the  court 
concur  with  me  in  thinking)  that  in  the  single  instance 
brought  before  us,  under  certain  circumstances,  some  of  which 
are  not  of  a  general  nature,  it  would  be  assuming  too  much  to 
lay  down  a  rule  to  govern  all  cases.  On  the  present  occasion, 
it  is  quite  plain  that  the  plaintiff  was  a  traveller  on  the  rail- 
way ;  it  is  quite  plain  that  though,  at  the  time  of  the  accident 
his  journey  had  in  one  sense  terminated,  by  the  carriage  hav- 
ing stopped,  he  had  not  ceased  to  be  connected  with  the 
carriage,  for  he  was  still  on  it.  The  accident  also  happened 
without  negligence  on  his  part,  and  while  doing  on  act  which 
as  a  passenger,  he  must  necessarily  have  done  ;  for  a  passen- 
ger must  get  into  the  carriage,  and  get  out  of  it  when  the 
journey  is  at  an  end,  and  cannot  be  considered  as  discon- 
nected with  the  carriage  and  railway,  and  with  the  machinery 
of  motion,  until  the  time  he  has,  as  it  were  safely  landed 
from  the  carriage  and  got  upon  the  platform.  The  accident 
is  attributable  to  his  being  a  passenger  on  the  railway,  and  it 
arises  out  of  an  act  immediately  connected  with  his  being 
such  a  passenger.  Under  these  circumstances,  we  think  this 
was  a  railway  accident  within  the  meaning  of  the  policy  ;  and, 
consequently,  the  action  is  in  our  judgment  maintainable, 
and  so  much  of  this  rule  as  prays  for  a  nonsuit  must  be 
discharged." 
1200 


CH.  XXIX.]  OF   ACCIDENT   INSURANCE.  [§  522 

And,  by  way  of  illustration  at  the  argument,  said  Pollock, 
C.  B. :  "  Suppose  a  person  suddenly  rose  from  his  seat  and 
struck  his  head  with  great  violence  against  the  top  of  tlie  car- 
riage, so  as  to  cause  a  contusion  of  the  brain  ;  would  that  be 
a  railway  accident?"  "  Or  suppose,"  said  Parke,  B.,  "  a  per- 
son on  getting  out,  not  observing  tliat  the  window  was  closed, 
jHished  his  head  through  the  glass  ?  "  "  As  to  railway  acci- 
dents," said  Alderson,  B.,  "  my  notion  of  a  railway  accident 
is  an  accident  occurring  in  the  course  of  travelling  by  a  rail- 
way, and  arising  out  of  the  fact  of  the  journey.  It  does  not 
necessarily  depend  on  any  action  to  the  railway  or  machin- 
ery connected  with  it." 

§  522.  Accident ;  Total  Disability.  —  Total  disability  from 
the  prosecution  of  one's  usual  employment  means  inability  to 
follow  his  usual  occupation,  business,  or  pursuits  in  the  usual 
way  Though  he  may  do  certain  parts  of  his  accustomed 
work,  and  engage  in  some  of  his  usual  employments,  he  may 
yet  recover,  so  long  as  he  cannot  to  some  extent  do  all  parts, 
and  engage  in  all  such  employments.  Thus,  a  farmer  who 
cannot  attend  to  his  other  ordinary  duties,  though  he  may 
milk  his  cows,  and  a  merchant  who  cannot  get  about  to  look 
after  his  business  as  he  ordinai-ily  does,  though  he  may  be 
able  to  keep  his  books,  are  totally  disabled  within  the  mean- 
ing of  such  a  provision.^  And  in  another  case,^  a  substan- 
tially similar  conclusion  was  reached  as  to  the  meaning 
of  the  words  "  wholly  disabled."  In  that  case,  said  Pol- 
lock, C.  B, :  — 

"  The  action  is  upon  a  policy  of  insurance  against  injury 
by  accident  or  violence,  effected  with  the  defendants,  the 
Accidental  Death  Insurance  Company,  and  the  question 
turns  upon  the  meaning  of  tlie  conditions  in  this  policy, 
'  that  in  case  such  accident  or  violence  shall  not  cause  the 
death  of  the  insured  immediately,  but  shall  cause  any  bodily 
injury  to  the  insured  of  so  serious  a  nature  as  wholly  to  dis- 

1  Sawyer  v.  The  United  States  Casualty  Co.  (Superior  Court  of  Mass.,  per 
Reed,  J.),  8  Law  Reg.  n.  s.  2.3.3;  s.  c.  1  Big.  Life  &  Ace.  Ins.  Cas.  289. 

■2  Hooper  v  Accidental  Death  Ins.  Co.,  5  H.  &  N.  (E.xch.)  545;  s.  c.  affirmed 
in  Exch.  Ch.  6  H.  &  N.  839. 

1201 


§  522]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXIX. 

able  him  from  following  his  usual  business,  occupation,  or 
pursuits,  a  compensation  shall  be   paid.'     The  plaintiff  met 
with  a  serious  sprain  of  the  ankle,  in  consequence  of  which 
he  was  unable  to  leave  his  room  for  some  weeks,  and  was 
confined  to  the  house   for  some  time  longer.     During  that 
time  it  was  clear  that  he  Tvas  'disabled  from  following  his 
usual  business,  occupation,  or  pursuits.'     Was  he  'wholly' 
disabled  ?     In  the  course  of   the    argument,  Mr.    Chambers 
admitted  that  if  the  plaintiff  had  been  a  dancing-master  he 
would  have  been  within  the  meaning  of  this  policy.     There 
is  no  sound  distinction  between  the  case  of  a  dancing-master 
and  that  of  the  plaintiff,  w^ho  is  an  attorney.     For  though  a 
dancing-master  with  a  sprained  ankle  cannot  dance,  he  may 
play  upon  an  instrum.cnt  and  instruct  other  people  how  to 
use  their  limbs  in  dancing.     In  the  case  of  an  attorney,  even 
if  he  were  prostrate  on  his  bed,  deprived  of  sense  and  mo- 
tion, if  he  had  lost  all  consciousness  and  power  of  interfer- 
ence, in  one  sense,  and  to  some  extent  he  might  carry  on  his 
usual  business  and  occupation,  for  even  if  he  were  without  a 
partner,  the  business  would  not  necessarily  be  stopped,  but 
might  be  carried  on  by  his  clerks.     It  cannot  have  been  con- 
templated that  in  such  a  case  no  compensation  should  be 
paid.     We   must,   therefore,   endeavor   to   find    out   what   is 
the  true  meaning  of   the  language  used  in  the    policy.     It 
may  well  be  that  the  sense  intended  to  be  conveyed  was,  that 
if  the  person  insured  should  be  wholly  disabled  from  carrying 
on  his  business  as  he  usually   carried  it  on,  the    company 
would  be  liable.     That  is  the  case  here ;  the  plaintiff  might 
and  could  have  done  something  which  he  was  in  the  habit  of 
doing  before,  but   he    was  wlioUy    incapable   of   doing   that 
which  he  usually  did  before.     If  a  man  is  so  incapacitated 
from  following  his  usual  business,  occupation,  or  pursuits  as 
to  be  unable  to  do  so,  he  is  '  wholly  disabled  '  from  following 
them.      His   'usual   business    and    occupation'   embrace   the 
whole  scope  and  compass  of  his  mode  of  getting  his  liveli- 
hood.    If  it  be  objected  that  this  construction  would  lead  to 
the  result  that  a  person  slightly  incapacitated  would  get  the 
same  compensation  as  one  entirely  incapacitated  from  doing 
1202 


CH.  XXIX.]  OP    ACCIDENT   INSURANCE.  [§  523 

anything  whatever,  that  is  the  fault  of  the  defendants  in 
using  language  of  a  vague  and  perplexing  character.  It  ap- 
pears to  us  they  intended  that,  when  the  insured  was  wholly 
incapable  of  performing  a  very  considerable  part  of  his  usual 
business,  he  should  receive  a  compensation  in  respect  of  that 
disablement.  If  it  were  necessary  to  resort  to  such  a  rule  of 
construction  (which  1  think  it  is  not)  in  construing  this 
policy,  that  construction  must  be  adopted  which  is  most  ad- 
vantageous to  the  insui'cd.  I  think,  however,  that  putting 
a  reasonable  construction  on  the  language  used,  the  parties 
must  have  meant  that  if  the  insured  was  so  disabled  as  to  be 
incapable  of  following  his  usual  business,  occupation,  or  pur- 
suits, he  would  be  '  wholly  disabled  from  following  his  usual 
business,  occupation,  or  pursuits,'  and  entitled  to  the  stipu- 
lated compensation.  Our  judgment  must  therefore  be  for 
the  plaintiff." 

"  Wholly  disabled  "  is  equivalent  to  quite  disabled,  and  a 
man  is  so  unless  he  can  do  what  he  is  called  upon  to  do  in 
the  ordinary  course  of  his  business.  It  is  not  the  same  thing 
as  "  unable  to  do  any  part  of  his  business."  ^  Where  the 
policy  provided  against  liability  unless  for  injuries  which 
totally  disabled  the  insured,  and  prevented  him  from  the 
transaction  of  all  kinds  of  business,  it  was  held  that  the  lan- 
guage was  clear  and  explicit,  and  that  an  instruction  that  the 
plaintiff  might  recover,  though  able  to  do  some  part  of  his 
accustomed  work,  so  long  as  he  could  not  to  some  extent  do 
all  parts,  and  that  the  ability  of  the  insured  to  engage  in 
some  business  would  not  prevent  recovery  unless  it  was  one 
which  he  was  qualified  to  engage  in  as  an  occupation,  and 
transact  in  the  ordinary  way,  was  erroneous.  Under  such  a 
policy  there  can  be  no  liability  for  partial  disability .^ 

§  523.  Accident ;  Total  Disability.  —  A  case  was  recently 
])resented  in  New  York  where  there  was  a  succession  of  acci- 
dents. The  insured  sprained  his  knee,  not,  however,  so  se- 
verely that  it  compelled  him  to  suspend  his  usual  w^ork,  which 
he  continued  for  some  two  weeks,  when  a  wrenching  of  the 

1  Per  Wilde,  B.,  in  Hooper  v.  Accidental  Death  Ins.  Co.,  5  H.  &  N.  546. 

2  Lyon  V.  Railway  Pass.  Ass.  Co.,  46  Iowa,  631. 

1203 


§  523  A]       INSURANCE  :    fire,    life,    accident,    etc.       [CH.  XXIX. 

same  knee  compelled  liim  to  quit  labor,  and  totally  disabled 
him  for  some  time ;  and  it  was  held  that  though  if  it  had 
appeared  from  the  nature  of  the  first  injury  that  the  insured 
would  at  some  time  become  incapable  of  labor  from  it,  he 
might  perhaps  have  recovered,  notwithstanding  the  superven- 
tion of  the  second  injury.  Yet,  as  he  actually  continued  his 
work  after  the  first  injury  for  sixteen  days,  and  until  the  hap- 
pening of  the  second  injury,  it  could  not  be  said  that  he 
became  totally  disabled  by  the  first.^  [Where  the  policy 
allows  recovery  only  in  case  of  "  total  disability "  for  "  the 
prosecution  of  anij  and  every  kind  of  business  pertaining  to 
his  occupation,"  it  is  error  to  charge  that  the  plaintiff  may 
recover  if  he  was  rendered  unable  "  to  do  his  accustomed 
labor,  that  is,  all  kinds  of  his  accustomed  labor  to  some  extent."  ^ 
But  the  clause  "  immediately  and  wholly  disable  and  prevent 
him  from  the  prosecution  of  any  and  every  kind  of  business 
pertaining  to  the  occupation  under  which  he  is  insured,"  is 
satisfied,  if  the  insured  is,  by  the  injury,  rendered  unable  to 
do  all  the  suhstantial  acts  necessary  in  his  business.  It  is  not 
necessary  for  him  to  show  that  he  was  disabled  to  such  an 
extent  that  he  had  no  physical  ability  to  do  anything  in  the 
prosecution  of  his  business.^  Where  tlie  insured  is  described 
as  a  "  leather  cutter  and  merchant "  and  is  to  receive  in- 
demnity if  disabled  by  accident  from  pursuing  his  "  occupa- 
tion," he  must  show  disability  both  as  a  leather  cutter  and  as 
a  merchant.*] 

[§  523  A.  Act  aside  from  Occupation  ;  Fits  plus  Accident  ; 
Accident  plus  Cold  ;  "  Inhaling  Gas  ; "  "  Death  within  ninety 
days." — Operating  a  buzz-saw  not  beiug  incident  to  the  occu- 
pation, named  in  the  policy,  that  of  a  retired  gentleman,  and 
being  dangerous,  the  insured  cannot  recover  for  an  injury 
received  while  so  employed.^  A  policy  excepting  death  "  aris- 
ing  from   fits,"    acting   directly    or    jointly    with   accidental 

1  Rhodes  v.  Railway  Passengers'  Ass  Co.,  5  Lans.  (N.  Y.)  71. 

2  [Saveland  v.  Fidelity  &  Casualty  Co.,  67  VVis.  174,  177,  and  cases  cited.] 

3  [Young  V.  Travelers'  Ins.  Co.,  80  Me  244,] 

4  [Ford  V.  U.  S.  Mut.  Accident  Relief  Co.,  148  Mass.  153.] 
6  [Knat)p  V.  Preferred  Mut.  Ace.  Ass.,  53  Hun,  84.] 

1204 


CH.  XXIX.]  OF   ACCIDENT   INSURANCE.  [§  524 

injury,  was  held  to  cover  a  case  where  the  insured  was  seized 
with  a  fit  and  fell  under  the  wheels  of  an  engine.^  Where 
after  an  accident,  death  was  caused  by  pneumonia  caused  by 
a  cold  which  would  not  have  been  fatal  but  for  the  weakness 
produced  by  the  accident,  it  was  held  within  an  accident 
policy .2  An  accident  policy  provided  that  it  did  not  extend 
to  death  by  "  inhaling  gas."  The  insured  was  found  dead  in 
his  bed,  the  gas  having  been  in  some  way  turned  on.  The  court 
held  that  the  inhaling  of  gas  excepted  in  the  policy  was  a  vol- 
untary inhaling  only,  and  that  the  present  case  was  not  with- 
in the  exception,  another  curious  case  of  twisting  language 
out  of  shape  to  favor  the  individual  at  the  expense  of  the 
corporate  life.^  If  the  policy  limits  the  liability  of  the  com- 
pany to  deaths,  occurring  within  ninety  days  after  the  accident, 
it  is  a  perfect  defence  for  the  company  that  a  longer  period 
than  ninety  days  intervened  between  injury  and  death.  And 
this  is  true  even  though  the  company  had  no  right  under  its 
constitution  to  insert  such  a  clause.  The  plaintiff  must  stand 
on  the  contract  as  made  or  he  has  no  contract  to  rest  upon. 
He  cannot  reject  one  portion  of  the  contract  as  made  and 
claim  the  benefit  of  the  rest  of  it.*] 

§  524,  Accident ;  Travelling  ;  Alighting ;  On  Foot ;  Convey- 
ance.—  A  person  may  be  said  to  be  travelling  in  a  carriage 
while  alighting  therefrom,  until  he  has  completely  discon- 
nected himself  and  landed.  And  an  accident  happening  to 
the  insured  after  the  train  has  stopped  at  the  station  by  slip- 
ping off  the  step  of  the  car,  is  a  railway  accident  "  in  a  car- 
riage on  a  line  of  railway."^  And  so  one  is  "  travelling  in  a 
conveyance"  provided  for  the  transportation  of  passengers, 
if,  while  in  the  prosecution  of  the  journey  had  in  view  when 
the  insurance  was  procured,  he  elects  to  go  on  foot,  this  being 


1  [Lawrence  v.  Accidental  Ins.  Co.,  7  Q.  B.  D.  216.     What  is  this  but  making 
a  new  contract  for  tlie  parties  ■*] 

2  [Isitt  V.  R.  R.  Pass.  Ass.  Co.,  22  Q.  B.  D.  504.] 

3  [Paulv.  Travelers'  Ins   Co.,  112  N.  Y.  472] 

*  [Palmer  v.  Commercial  Ass.  Co.,  53  Hun,  601  ;  see  §  535.] 
6  Theobald  v.  Railway  Passengers'  Ass.  Co.,  26  Eng.  L.  &  Eq.  432 ;  s.  C.  10 
Exch.  44. 

1205 


§  524]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXIX. 

a  usual  mode  of  making  the  transit  from  the  steamboat  wharf 
to  the  raihoad  station,  although  a  conveyance  by  means  of 
public  hack  may  be  had  for  hire  by  travellers  so  desiring  to 
make  the  transit,  which  he  might  have  taken.^  In  this  case 
the  plaintiff  was  in  the  prosecution  of  his  journey,  and  while 
proceeding  on  foot  in  tlie  evening  slipped  and  fell.  The 
court  below  held  that  the  plaintiff  could  not  recover,  but 
seemed  to  be  of  the  opinion  that  if  he  had  taken  a  hack,  and 
the  accident  had  happened  during  the  transit,  he  could  have 
recovered.  The  case  was  distinguished  from  that  of  Theo- 
bald V.  The  Railway  Passengers'  Assurance  Company ,2  by 
the  fact  that  in  that  case  the  passenger  was  in  the  carriage, 
while  in  this  case  he  was  not.  But  the  Appellate  Court  did 
not  recognize  the  distinction,  and  held  that  the  distance 
walked,  if  in  the  prosecution  of  the  journey,  and  a  usual 
mode  of  such  prosecution,  was  immaterial.  It  may  be  added, 
that,  if  accident  in  such  a  transit  is  not  covered  by  the  policy 
on  the  ground  of  the  distinction  attempted  between  the  Eng- 
lish and  American  cases,  and  on  the  ground  that  in  the  latter 
case  there  was  no  actual  connection  with  the  carriage  at  the 
time  of  the  accident,  it  would  seem  that  the  plaintiff  could 
not  recover,  even  had  he  taken  a  hack ;  if  the  accident  had 
happened  during  the  transit  on  foot  from  the  deck  of  the 
steamer  to  the  hack,  such  a  rule  would  exclude  all  accidents 
while  the  passenger  is  on  foot,  though  these  perhaps  are  of 
most  frequent  occurrence,  and  even  though  they  might  happen 
in  changing  cars,  or  in  passing  to  or  from  the  cars  at  a  sta- 
tion where  a  passenger  may  have  alighted  to  obtain  refresh- 
ment. Construing  the  policy  so  as  to  carry  into  effect  the 
intention  of  the  parties,  inferrible  from  the  language  used  as 
interpreted  by  the  light  of  extrinsic  facts  presumably  well 
known  to,  and  taken  into  consideration  by,  both  the  parties, 
these  incidental  and  necessary  parts  of  the  journey  must  be 
considered  as  covered  by  the  policy.^ 

1  Northrup  v.  Tlie  Railway  Passengers'  Ass.  Co.,  43  N.  Y.  516  ;  reversing  s.  c. 
2  Lans.  (N.  Y.)  166. 

2  Ubi  supra. 

3  Northrup  r.  The  Railway  Passengers'  Ass.  Co.,  43  N.  Y.  516. 

1206 


CH.  XXIX.]  OF   ACCIDENT   INSURANCE.  [§  525 

[§524  A.  Getting  on  a  Moving  Train;  Standing  on  Platform. — 
A  condition  against  liability,  if  the  insured  (except  a  railroad 
employee)  is  injured  while  getting  on  a  moving  steam  vehicle, 
is  valid,  and  a  breach  of  it  by  a  banker  insured  as  such  avoids 
the  policy,!  A  petition  alleging  that  the  plaintiff  fell  into  a 
doze  and  unconsciously  walked  on  the  platform  of  the  car, 
and  so  was  injured,  sufficiently  shows  that  the  injury  was  not 
"self-inflicted"  or  the  result  of  "  voluntary  exposure  to  un- 
necessary danger."  ^  One  who  stands  on  the  platform  of  a 
railway  car  in  violation  of  a  known  rule  of  the  company  is 
negligent  and  cannot  recover  for  injury  from  being  thrown 
from  the  steps  under  an  accident  policy  requiring  care.^  A 
passenger  who  goes  on  to  the  platform  of  a  railway  car  be- 
cause he  is  overcome  with  heat  or  nausea,  does  not  voluntarily 
expose  himself  to  unnecessary  danger  within  the  meaning  of 
an  accident  policy,  nor  can  it  be  said  that  such  conduct  is  a 
violation  of  "  a  rule  of  a  corporation  "  where  the  rule  is  con- 
tinually disregarded  by  both  passengers  and  trainmen.*  If, 
however,  the  policy  specifically  excepts  injuries  resulting  from 
being  on  the  platform  of  a  moving  car,  the  exception  is 
good.^] 

§  525.  Accident ;  Travelling  in  Public ;  Conveyance  Alight- 
ing ;  Limit  of  Journey  ;  Negligence.  —  Upon  the  questions 
whether  the  insured  is  actually  a  traveller,  and  in  a  convey- 
ance, the  very  recent  and  interesting  case  of  Tooley  v.  Rail- 
way Passengers'  Assurance  Company^  is  also  precisely  in 
point.  In  that  case  the  policy  provided  that  the  insurers 
should  be  liable  for  injuries  "  when  accidentally  received  by 
the  assured  while  actually  travelling  in  a  public  conveyance, 
provided  by  common  carriers  for  the  transportation  of  passen- 
gers." The  assured  took  passage  from  Chicago,  having  pur- 
chased a  ticket  for  Kankakee.  The  train  stopped  at  that 
l)lace,  and    he   alighted,  standing   in  the  door  of   the  depot 

1  [Miller  v.  Travelers'  Ins.  Co.,  39  Minn.  548.] 
-  [Scheiderer  v.  Travelers'  Ins.  Co.,  58  Wis.  13.] 

3  [Bon  V.  Railway  Pass.  Ass.  Co.,  50  Iowa,  064.] 

4  [Marx  V.  Travelers'  Ins.  Co.,  39  Fed.  Rep.  321  (Col),  1889.] 

5  [Hull  V.  Equitable  Ace.  Ass.,  18  Ins.  L.  J.  778  (Minn.),  July  15,  1889.] 

6  U.  S.  C.  Ct.,  Southern  Dist.  111.,  2  Ins.  L.  J.  275. 

1207 


§  525]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXIX. 

while  the  engine  took  water,  until  the  train  started,  moving 
slowly  to  the  coal-house  for  the  purpose  of  taking  fuel,  when 
he  walked  rapidly  or  ran  to  the  train,  and  reaching  the  for- 
ward platform  of  the  rear  car,  threw  out  his  hand  as  if  at- 
tempting to  get  on  board,  when  he  fell  between  the  cars  and 
was  run  over,  receiving  injuries  from  which  he  soon  after 
died.  It  was  claimed  that  this  was  not  an  accident  witliin 
the  view  of  the  policy,  because  it  was  not  in  a  conveyance. 
But  the  court  instructed  the  jury  that  "  travelling  in  a  public 
conveyance  "  could  not  be  literally  construed,  and  that,  if  the 
accident  happened  while  the  insured  was  either  getting  on  or 
off  the  train,  or  attempting  to  do  so  for  any  reasonable  pur- 
pose incident  to  railway  travel,  it  came  witliin  the  terms  of 
the  policy.^  As  the  point  is  one  now  undergoing  discussion, 
we  give  the  most  important  parts  of  the  charge,  which  was 
by  Drummond,  J. :  — 

"  There  are  some  general  facts  which  cannot  be  contro- 
verted. John  Tooley,  on  the  24th  day  of  January,  1871, 
took  from  the  agent  of  the  defendant,  at  Quiucy,  Illinois, 
two  policies  of  insurance  at  three  thousand  dollars  each  ;  that 
amount  was  to  be  paid  on  each  policy  in  case  of  the  death  of 
Tooley  within  two  days.  It  was  provided  that  the  liability 
should  not  exist  unless  while  he  was  actually  travelling  in  a 
pul)lic  conveyance  of  common  carriers,  and  in  compliance  with 
the  rules  and  regulations  ;  and  besides,  he  was  not  to  neglect 
the  use  of  due  diligence  for  self-protection. 

"  Tooley,  on  the  afternoon  of  the  25th  of  January,  took  the 
Champaign  accommodation  train  at  Chicago,  and  proceeded 
to  Kankakee,  where  the  train  arrived  shortly  after  seven 
o'clock.  It  seems  the  practice  was  for  the  train  to  stop  at 
the  station,  and  then  pass  on  to  the  coal-bin,  provided  they 
took  the  entire  train  beyond  Kankakee.  Accordingly,  on  this 
evening  the  train  stopped  at  the  station,  and  several  persons 
left  the  cars,  Tooley  among  others.  The  train  remained  at 
the  station  several  minutes  and  took  in  water.  The  bell  was 
then  rung,  the  conductor  signalled  with  his  light,  and  the 
train  went  on  to  take  in  coal.  There  was  a  platform  extend- 
1  See  also  Champlin  v.  Railway  Pass.  Ass.  Co.,  6  Lans.  (N.  Y.)  71. 

1208 


CH.  XXIX.]  OF    ACCIDENT   INSURANCE.  [§  525 

iiig  from  the  station-house,  alongside  of  the  railroad  track, 
toward  the  water-tank  and  coal-bin.  When  the  train  moved 
on,  Tooley,  who  was  standing  by  a  door  of  the  station-house, 
started  forward  on  this  platform  to  overtake  the  train.  When 
he  reached  tlie  train,  he  extended  his  hands  to  grasjD  the  car- 
rails,  and  fell  between  the  two  passenger  cars,  —  the  train 
consisting  of  an  engine,  tender,  baggage  car,  and  two  passen- 
ger cars.  A  car  passed  over-  him,  and  he  was  killed.  The 
first  question  is,  What  was  the  measure  of  responsibility  of 
the  defendant  under  these  policies  of  insurance  ?  The  lan- 
guage of  the  policies  is,  '  Provided  always  that  this  insurance 
shall  only  extend  to  bodily  injuries,  fatal  or  non-fatal,  as 
aforesaid,  when  accidentally  received  by  the  insured  while 
actually  travelling  in  a  public  conveyance,  provided  by  com- 
mon carriers  for  the  transporting  of  passengers  in  the  United 
States  or  the  Dominion  of  Canada,  and  in  compliance  with  all 
rules  and  regulations  of  such  carriers ;  and  not  neglecting  to 
use  due  diligence  for  self-protection.' 

"  These  are  the  only  conditions  material  to  be  considered 
in  the  examination  of  this  case.  Tooley  must  have  been  ac- 
tually a  traveller  in  or  upon  the  train ;  but  it  cannot  be  said 
that  the  responsibility  ceased  whenever  he  stepped  out  of  the 
car  to  alight  at  a  station,  and  that  it  never  became  operative 
again  until  his  foot  entered  the  car  to  resume  his  journey. 
That  would  be  giving  too  narrow  a  measuring  to  the  clause 
of  the  policy.  We  think  that  the  fair  construction  of  the 
liability  assumed  by  the  defendant  in  this  respect  was,  that  it 
included  injuries  received  by  Tooley  while  necessarily  get- 
ting on  or  off  the  train  as  a  traveller  upon  it. 

"  Secondly,  and  it  is  a  question  of  fact  to  be  determined 
by  the  jury,  Was  Tooley,  at  the  very  time  that  the  injury  was 
received  by  him,  a  traveller  on  the  train  ?  And  this  will 
depend  upon  the  fact  whether  his  journey  terminated  at  Kan- 
kakee. It  is  claimed  on  the  part  of  the  defence  that  that  was 
the  termination  of  his  journey  ;  and  if  so,  then  he  was  not  a 
traveller  on  this  train  at  the  time  of  the  accident. 

"  I  will  call  your  attention  to  some  of  the  facts  having  a 
bearing  on  this  question.     The  conductor  states,  in  his  evi- 

1209 


§  525]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXIX. 

dence,  that  when  he  took  up  the  tickets  of  the  passengers, 
Tooley's  ticket  was  only  for  Kankakee.  That  is  a  fact 
proper  to  be  considered  by  tlie  jury,  in  order  to  determine 
whether  or  not  his  journey  extended  beyond  Kankakee, — 
not  conclusive,  of  course,  because,  as  a  matter  of  experience, 
we  know  that  where  men  commence  a  journey,  they  do  not 
always  buy  their  ticket  to  the  termination  of  the  journey, 
and  various  circumstances  may  happen  during  the  progress 
of  a  journey  which  change  the  purpose  of  the  traveller.  He 
may  start  with  the  intention  of  only  proceeding  to  a  certain 
point.  During  the  journey  he  may  change  his  mind  and  pro- 
ceed further  on.  There  are  many  reasons,  to  which  it  is 
unnecessary  to  call  your  attention,  which  indicate  that  this  is 
only  one  incident  having  a  bearing  upon  the  main  fact  of 
this  part  of  the  case,  whether  or  not  his  journey  terminated 
at  Kankakee. 

"  Mr.  Merwin  states  in  his  evidence  —  the  truth  of  which  is 
a  question  for  the  jury — that,  in  a  conversation  he  had  with 
Tooley,  he  said  that  he  intended  or  expected  to  go  to  Mat- 
toon,  which  was  south  of  Champaign  where  the  train  stopped. 
The  way  that  arose  was  this :  it  was  in  relation  to  the  seats ; 
he  wanted  two  seats,  as  he  said,  so  that  he  could  sleep,  as  he 
'  thought  or  expected  to  go  to  Mattoon.' 

"  Now  as  qualifying  this,  perhaps,  and  to  some  extent  in- 
consistent with  the  statement  of  Merwin,  is  that  of  the  con- 
ductor. The  conductor  says  that  twice,  just  before  they 
arrived  at  Kankakee,  he  woke  up  Tooley,  and  told  him  that 
the  next  station  was  Kankakee  ;  and  there  was  no  remark 
made  by  him  intimating  in  any  way  that  he  intended  to  go 
further  than  Kankakee,  and  therefore  it  was  not  necessary 
for  him  to  be  disturbed.  It  is  for  you  to  say  how  much 
bearing  this  may  have  upon  the  question  whether  his  journey 
terminated  at  Kankakee,  and  how  far  it  may  affect  the  state- 
ment of  Merwin.  Tliere  is  this  other  fact,  that  when  the 
train  started  at  Kankakee,  Tooley  attempted  to  get  on  it. 
That  is  claimed  to  be  conclusive  evidence  of  his  purpose 
to  proceed  further.  It  is  for  you  to  say  what  bearing  that 
may  have  upon  this  particular  question  that  we  are  now 
1210 


CH.  XXIX.]  OF   ACCIDENT   INSURANCE.  [§  525 

considering.  Then,  again,  in  relation  to  whether  or  not  he 
had  any  baggage  with  him.  It  is  said  that  there  was  a 
satchel  or  valise  there,  and  that  it  was  not  found  after  his 
death.  How  far  this  may  have  any  bearing  upon  the  ques- 
tion is  a  matter  to  be  determined  by  the  jury.  The  only 
light  in  which  it  is  material  this  question  should  be  consid- 
ered is,  how  far  it  may  affect  the  conduct  of  Toolcy  on  the 
general  question  of  negligence.  If  his  journey  ceased  at 
Kankakee,  then  it  cannot  be  claimed,  under  the  undisputed 
facts  of  this  case,  that  the  defendant  would  be  liable,  because, 
on  the  assumption  that  he  was  going  no  further  than  Kanka- 
kee, in  attempting  to  get  on  the  train  as  he  did,  it  was  at  his 
own  risk. 

"  If  he  was  going  beyond  Kankakee  on  the  train,  then 
there  are  other  considerations  which  may  affect  the  question 
of  negligence.  According  to  the  view  which  we  take  of  the 
contract  between  the  parties,  if  he  were  a  passenger  pro- 
ceeding beyond  Kankakee  on  the  train,  he  had  the  right  to 
leave  the  car  at  Kankakee  and  return  to  it ;  that  is  to  say,  he 
had  the  right  to  get  off  of  the  train,  —  he  was  not  bound,  in 
other  words,  to  remain  inside  of  the  car  all  the  time.  There 
is,  perhaps,  one  circumstance  which  I  ought  to  refer  to  in 
connection  with  the  question  of  the  termination  of  the  journey 
at  Kankakee,  and  it  is  this :  that  he  did  not  purchase  a  ticket 
at  Kankakee,  and  it  is  in  evidence  that  the  train  stopped 
there  several  minutes ;  and  if  you  believe  the  testimony  on 
this  point,  he  certainly  had  ample  time  to  purchase  a  ticket 
before  the  train  started  onto  obtain  coal.  Still  that,  of  course, 
is  not  conclusive.  He  had  the  right,  I  suppose,  under  the 
practice  and  management  of  the  train,  to  pay  his  fare  on  the 
cars.  It  is  onl}^  a  circumstance  to  be  taken  into  consideration 
by  the  jury.  One  of  the  conditions  of  these  policies,  is,  as 
has  been  stated,  that  Tooley  sliould  comply  with  all  the  rules 
and  regulations  of  common  carriers.  We  are  not  prepared  to 
say  that  it  was  incumbent  on  him,  under  the  circumstances 
of  the  case,  to  make  himself  acquainted  with  all  the  rules 
which  might  be  contained  upon  the  time-card.  We  must 
give  this  clause  of  the  policy  a  reasonable  construction.     A 

1211 


§  525]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXIX. 

policy  was  issued,  we  suppose,  to  any  applicant.  It  is  what 
is  called  an  accident  policy,  and  we  are  to  infer  that  the 
meaning  of  this  clause  was  that  the  traveller  should  only 
make  himself  acquainted  with  those  general  rules,  as  to  the 
management  of  the  trains,  and  the  conduct  of  railroads, 
which  are  presumed  to  be  known  to  travellers,  under  these 
circumstances.  For  instance,  Tooley,  as  far  as  we  know, 
was  a  stranger  on  this  road.  We  cannot  say  that  when  he 
went  on  the  train  he  was  obliged,  because  of  this  clause  iu 
the  polic}^,  to  examine  the  time-card  and  ascertain  all  the 
minutisB  connected  with  the  management  of  trains,  but  only 
such  rules  as  a  general  traveller  might  be  presumed  to  know 
and  ought  to  know.  Any  other  construction  than  this  would 
operate  as  a  snare  upon  travellers.  To  hold  that  the  traveller 
must  become  acquainted  with  every  minute  rule  which  may 
be  prescribed  on  the  back  of  a  time-card,  we  think  caimot 
be  said  to  be  the  true  meaning  of  this  clause  of  the  policy. 
But  perhaps  if  he  did  not  know  the  time  the  train  stopped  at 
a  particular  place,  there  might  be  a  question  whether  it  was 
not  his  duty  to  make  some  inquiry  of  the  employees  of  the 
train,  the  conductor,  or  others. 

"  It  is  to  be  observed,  in  deciding  this  question  of  the 
negligence  of  Tooley,  which  is  the  last  question  to  be  con- 
sidered, and  to  which  I  call  the  attention  of  the  jury,  that 
tliis  is  not  an  action  between  the  representative  of  Tooley 
and  the  railroad,  but  between  the  representative  of  Tooley 
and  the  underwriters  upon  this  clause  in  the  policy,  '  not 
neglecting  to  use  due  diligence  for  self-protection.'  ^  And  per- 
haps there  can  be  no  better  rule  stated  than  that  which  was 
agreed  upon  by  the  counsel,  namely,  that  it  was  his  duty  to 
use  that  degree  of  caution  and  diligence  which  a  prudent 
man  would  use  under  the  circumstances  in  which  he  was 
placed  ;  we  think,  also,  in  order  to  determine  this  question  of 
diligence  on  the  part  of  Tooley,  it  is  proper  to  take  into  con- 
sideration whether  or  not,  when  he  alighted  at  Kankakee, 
which  he  had  a  right  to  do,  any  notice  was  given  of  the  move- 
ment of  the  train.     That  may  be  an  element  which  may  have 

1  Post,  §  531. 

1212 


CH.  XXIX.]  OF    ACCIDENT   INSURANCE.  [§  525 

a  bearing  upon  the  question  whether  he  was  negligent  or  not. 
Was  there  any  notice  given,  either  by  the  ringing  of  a  bell, 
or  by  word  of  mouth  from  the  conductor  or  any  of  the 
employees  of  the  company  ?  If  a  person,  having  a  right  to 
leave  a  train  at  a  station,  is  informed  or  notified  in  any  way 
that  the  train  is  going  to  start,  and  an  opportunity  given  to 
him  to  take  his  place  again  upon  the  train,  and  he  chooses  to 
remain  until  the  train  is  put  in  motion,  and  then  is  injured  in 
getting  on  the  train,  it  may  be  said  that  he  is  negligent,  —  in 
other  words,  that  he  takes  the  risk  of  getting  on  the  train 
while  thus  in  motion.  But  if,  having  alighted  at  a  station, 
he  has  no  notice  given  to  him  of  the  movement  of  the  train, 
or  he  has  not  the  opportunity,  after  notice  is  given,  to  get  on 
the  train,  and  intending  to  go  further  he  attempts  to  get  on 
the  train  and  is  injured,  we  think  there  is  not  the  same 
measure  of  responsibility  upon  him,  —  in  other  words,  that 
the  question  of  negligence  is  not  to  be  tried  by  the  same  tests 
precisely,  because  we  must  make  some  allowance  under  some 
circumstances.  It  would  be  natural  for  a  man,  —  for  even  a 
prudent  man,  —  intending  to  go  farther  on  the  train,  to  make 
an  effort,  even  when  the  train  is  in  motion,  to  regain  his  place 
on  the  train. 

"  But  while  that  is  so,  it  is  to  be  understood  he  must  use 
due  diligence  in  trying  to  get  on  the  train,  and  to  that  ques- 
tion I  will  now  direct  your  attention  for  a  few  moments,  on 
the  supposition  that  he  intended  to  go  farther,  and  he  had 
not  an  opportunity  to  get  on  the  train,  or  he  was  not  notified 
that  the  train  was  about  to  move.  It  was  after  seven  o'clock 
in  the  evening.  Tooley  proceeded  along  the  platform.  There 
has  some  question  been  made  whether  the  bell  was  rung.  We 
think  it  perliaps  ought  to  be  assumed  in  this  case  that  that 
fact  has  been  established.  It  is  proved  that  that  was  the 
practice  of  the  engineer  just  before  the  train  started ;  that  it 
was  a  signal  to  the  conductor  that  the  engineer  was  ready  to 
proceed.  It  is  also  distinctly  sworn  to  by  the  conductor  that 
the  bell  was  rung,  and  it  is  a  fact  stated  by  one  or  two  of  the 
witnesses  that  the  remark  was  made, 'the  bell  is  ringing,' 
which,  under  the  circumstances,  of  course  is  a  very  material 

1213 


§  525]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXIX. 

fact.  This  is  not  otherwise  contradicted  than  by  the  state- 
ments of  several  witnesses  that  they  did  not  hear,  or  do  not 
recollect  that  they  heard,  the  bell.  However,  we  leave  this 
question  to  be  determined  by  the  jury.  Of  course,  negative  tes- 
timony is  not  so  material  or  important  as  positive  testimony, 
if  you  believe  that  these  witnesses  stated  the  truth.  There 
is  some  controversy  as  to  the  character  of  the  night.  Several 
of  the  witnesses  say  that  it  was  a  clear  night ;  some  that  it 
was  moonlight ;  and  some  state  that  it  had  been  snowing  or 
storming.  There  is  no  doubt  of  this  fact,  or  I  think  we  may 
assume  it,  that  the  intent  of  Tooley  was,  when  he  heard  the 
bell,  or  an  intimation  was  given  in  that  way,  or  by  the  move- 
ment of  the  cars,  to  get  on  the  train.  He  proceeded  rapidly 
along  the  platform.  He  tried  to  get  on  the  train.  Now,  did 
he  act  prudently,  as  a  prudent  man,  in  getting  on  the  train  ? 
Mr.  Lawrence  says,  when  he  came  around  the  corner  of  the 
station-house  and  he  saw  a  man  running  or  walking  fast,  that 
he  called  out  to  him  that  the  train  was  only  going  to  coal  up, 
or  something  to  that  effect.  Now  it  is  true  that  Mr.  Tooley 
was  not  bound  to  take  any  declaration  made  by  an  outsider 
or  an  indifferent  person  as  true,  in  relation  to  the  train  or  its 
motions.  The  only  effect  of  that  is  this  :  that  it  changes  the 
measure  of  his  responsibility,  and  gives  color  to  his  conduct, 
to  his  action.  And  you  are  to  treat  it  in  a  different  manner 
from  what  you  would,  provided  he  had  no  intimation  whatever 
given  to  him  ;  because,  if  a  man,  after  being  notified  of  a  par- 
ticular fact  which  should  govern  or  rule  his  conduct,  chooses 
to  act  in  such  a  way  as  to  encounter  risk  or  danger,  you  will 
see  that  the  rule  of  diligence  is  different.  It  is  material  for 
the  jury  to  consider  this  in  that  light  alone.  And  then  it  will 
be  a  question,  as  far  as  it  bears  upon  the  conduct  of  Tooley, 
whether  or  not  he  heard  what  was  said  by  Mr.  Lawrence,  and 
of  course  it  is  simply  a  matter  of  inference  whether  or  not  he 
did  hear  ;  positively  we  cannot  know.  This  seems  to  be  cer- 
tain, that  words  or  the  sound  attracted  his  attention  as  he 
turned  round ;  and  it  is  for  you  to  say  whether  he  heard,  in 
such  a  way  as  to  give  him  warning,  that  the  train  was  not 
to  go  farther  than  the  coal-bins,  —  whether  or  not  he  heard 
1214 


CH.  XXIX.]  OF   ACCIDENT   INSURANCE.  [§  526 

the  language,  or  whether  he  heard  a  sound  merely,  without 
distinguishing  or  understanding  what  was  said.  All  these  are 
to  some  extent  matters  of  conjecture,  and  it  is  for  the  jury  to 
determine  how  far  they  may  affect  this  question.  He  passed 
by  the  rear  platform  of  the  rear  car ;  we  think  that  is  a  fact 
to  be  taken  into  consideration  by  the  jury  in  determining 
whether  he  did  or  did  not  act  as  a  prudent  man,  if  he  believed 
that  the  train  was  going  on,  and  wanted  to  get  on  the  train 
to  resume  his  journey.  Of  course  you  will  understand  that 
the  danger  was  much  less  in  getting  on  the  rear  platform 
than  on  the  forward  platform  of  the  car.  The  fact  is,  that  he 
did  not  attempt  to  get  on  the  rear  platform  of  the  car.  The 
train  was  moving  slowly.  It  does  not  appear  that  he  was 
actually  running,  although  walking  very  fast.  He  attempted 
to  get  on  to  the  cars,  either  on  to  the  forward  platform  of  the 
rear  car,  or  between  the  two  cars.  If,  in  point  of  fact,  when 
he  slipped  and  fell,  he  was  attempting  to  get  on  between  the 
cars,  it  is  difficult  to  reconcile  it  with  our  ideas  of  prudence  on 
the  part  of  any  man  under  such  circumstances.  That  may  be 
an  important  fact  for  you  to  inquire  into,  —  whether  that  is 
so  or  not,  as  I  believe  it  is  stated  by  one  of  the  witnesses.  It 
is  very  much  a  question  for  the  jury,  under  these  rules  which 
the  court  has  laid  down,  whether  this  man,  under  the  circum- 
stances, conceding  that  he  was  going  further,  acted  prudently  ; 
whether  or  not  he  was  guilty  of  negligence." 

§  526.  Accident ;  Travelling  ;  Conveyance  ;  Engineer.  —  A 
railway  passenger's  insurance  company  which  insures  against 
"  any  accident  while  travelling  by  public  or  private  convey- 
ance," is  liable  for  the  death  of  an  engineer  actually  engaged 
in  running  trains,  by  an  accident  occurring  on  the  railroad 
upon  which  he  is  employed.  So  it  was  held  in  Brown  v.  The 
Railway  Passengers'  Assurance  Company.^  "  The  main  point," 
say  the  court,  in  giving  the  opinion,"  is  whether  the  intestate, 
Brown,  was  killed  by  an  accident  which  is  covered  by  the 
policy.  The  clause  insuring  him  provides  that  the  death 
must  be '  caused  by  an  accident  while  travelling  by  public  or 
private  conveyance  provided  for  the  transportation   of  pas- 

1  45  Mo.  221. 
VOL.  II.  —  33  1215 


§  527]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.       [CH.  XXIX. 

sengers.'  It  is  strongly  contended  that  a  locomotive  or  engine 
is  not  a  conveyance  provided  for  the  transportation  of  pas- 
sengers. This  is  certainly  true ;  and  if  the  ticket  applies 
solely  and  exclusively  to  passengers  or  travellers,  the  position 
that  the  company  is  not  liable  cannot  be  controverted.  A 
passenger  would  have  no  right  to  go  upon  an  engine,  and  if 
he  was  so  indiscreet  as  to  venture  on  such  a  place,  and  injury 
ensued,  he  would  not  be  protected.  But  this  ticket  was  de- 
signed to  include  and  serve  something  more  than  the  ordinary 
risk  incurred  by  the  passenger  or  traveller.  The  locomotive 
is  a  necessary  part  of  the  conveyance.  The  ticket  was  a  gen- 
eral ticket,  as  contradistinguished  from  a  mere  passenger  or 
travelling  ticket.  The  premium  on  one  is  double  what  it  is 
on  the  other.  When  the  ticket  was  sold  it  was  known  that 
Brown  was  an  engineer,  and  the  conclusion  is  unquestionable 
that  he  believed  that  he  was  insured  while  pursuing  his  em- 
ployment or  occupation.  The  company  so  thought  ;  for  it 
gave  no  instructions  against  insuring  railroad  employees  till 
after  the  disastrous  accident  happened.  ...  As  Brown  was 
not  insured  as  a  passenger  or  traveller,  but  against  all  acci- 
dents without  regard  to  the  capacity  in  which  he  was  acting, 
the  reasonable  inference  is,  that  the  ticket  was  intended  to 
cover  the  risk  and  accident  by  which  he  met  his  death.  If  it 
be  conceded  that  the  meaning  of  the  ticket  is  doubtful  or 
ambiguous,  still  the  question  must  be  decided  for  the  plaintiff, 
as  the  promisor  could  not  fail  to  apprehend  that  the  promisee 
labored  under  the  impression  that  he  was  indemnified,  and 
where  such  is  the  case,  the  construction  must  be  most  favor- 
able to  the  insured." 

§  527.  The  case  cited  in  the  last  section  has  been  criticised,^ 
as  founded  upon  an  obvious  misapprehension,  the  court  hav- 
ing mistaken  a  "  traveller's  risk,"  which  this  was,  for  a  "  gen- 
eral accident "  risk,  which  it  was  not.  However  this  may  be, 
it  seems  well  decided  upon  the  contract  itself.  The  insured 
was  clearly  travelling  by  a  conveyance  provided  for  the  trans- 
portation of  passengers,  unless  it  be  said  that  a  person  whose 
business  requires  him  to  travel  all  the  time  is  less  a  traveller 

1  See  American  Law  Review,  July,  1873,  art.  Accident  Insurance. 

1216 


CH.  XXIX.]  OP    ACCIDENT   INSURANCE.  [§  527 

than  one  whose  business  requires  him  to  travel  only  occasion- 
ally. He  may  not  have  been  a  passenger,  but  he  clearly  was 
a  traveller,  liable  to  all  accidents  which  threaten  travellers, 
and  presumably  purchasing  under  the  same  contract  the  same 
protection.  Would  it  be  pretended  that  a  stage-driver  pur- 
chasing a  like  ticket  at  the  same  time  with  the  passengers  is 
not  entitled  to  the  same  protection  ?  The  suggestion  of  the 
court,  that  the  engineer  had  greater  rights  under  such  a  con- 
tract than  a  passenger  would  have,  seems  more  open  to  criti- 
cism. Though  the  court  seems  to  have  conceded,  inadver- 
tently, perhaps,  that  a  locomotive  is  not  a  conveyance,  it 
almost  immediately  adds,  what  is  obviously  true,  that  a  loco- 
motive is  a  necessary  part  of  the  conveyance.  Certainly  cars 
without  a  locomotive  could  not  be  said  to  be  a  conveyance 
])rovided  for  the  transportation  of  passengers,  any  more  than 
a  carriage  without  a  horse,  or  a  steamboat  without  an  engine. 
No  doubt  all  the  parts  of  a  train  of  cars  constitute  the  convey- 
ance,  and  unless  the  insured  is  restricted  by  the  terms  of  the 
contract  to  some  particular  part,  it  would  seem  that  whoever 
holds  a  ticket  may  recover  without  reference  to  the  pai'ticular 
part  of  the  conveyance  he  may  have  been  on  at  the  time  of 
the  accident.  If  he  be  anywhere  on  the  conveyance  —  even 
tliough  negligently,  yet  without  misconduct  or  fraud  ^  —  at 
the  time  of  the  accident,  he  is  within  the  terms  of  the  con- 
tract ;  so  that  whether  the  passenger  be  on  the  engine,  or  the 
engineer  on  some  other  part  of  the  train  for  the  time  being, 
their  rights  and  obligations  under  the  contract  being  the  same, 
would  be  questions  of  no  moment.  There  seems,  therefore, 
to  be  no  ground  for  the  distinction  suggested  between  the 
rights  of  a  passenger  and  those  of  the  engineer,  unless  there 
is  something  in  the  contract  to  require  it.  Even  under  the 
very  doubtful  ^  doctrine  of  contributory  negligence,  though, 
perhaps,  the  passenger  might  fail  to  recover,  so  also  might  the 
engineer,  if  the  accident  happen  by  reason  of  his  being  some- 
where else  than  upon  the  engine.  Certainly  an  insurance 
company  ought  not  to  be  allowed  to  issue  such  a  ticket  to  an 

1  See  ante,  §§  408-411,  and  post,  §  529. 

2  See  post,  §  529. 

1217 


§  528]  INSURANCE  :    FIRE,  LIFE,   ACCIDENT,   ETC.       [CH.  XXIX. 

engineer,  known  to  be  such,  and  then  to  say  if  he  stays  upon 
the  engine  and  attends  to  his  duties  he  is  not  within  the 
terms  of  the  policy,  but  if  he  does  not  stay  upon  the  engine, 
then  the  accident  happens  through  his  neglect,  and  therefore 
he  cannot  recover,  unless  the  policy  which  they  have  issued 
gives  them  such  advantages  in  terms  so  clear  and  unequivocal 
as  to  admit  of  no  other  possible  construction. 

§  528.  Accident  ;  Travelling  on  Foot ;  Conveyance.  —  On  the 
other  hand,  it  has  been  held  that  travelling  on  foot  is  not 
travelling  by  private  conveyance  within  the  meaning  of  a 
policy  insuring  against  accidents  while  "  travelling  by  public 
or  private  conveyance."  In  this  case,  the  plaintiff  had  com- 
pleted the  greater  part  of  his  journey  by  steamer,  and  there 
being  no  public  conveyance,  was  proceeding  on  foot  to  his 
home  some  few  miles  distant  from  the  port  where  he  left  the 
steamer.i  Conveyance,  as  a  mode  of  travelling,  in  its  ordinary 
and  popular  acceptation,  it  was  said  in  that  case  means  a 
vehicle  or  instrument  of  conveyance  other  and  different  from 
the  person  or  thing  to  be  conveyed  ;  and  it  cannot  properly 
be  said  that  a  man  walking  on  foot  is  a  private  conveyance  to 
liimself.  And  this  case  was  affirmed  in  the  Supreme  Court 
of  the  United  States,^  Chase,  C.  J.,  giving  the  opinion,  which, 
after  stating  the  case,  concluded  as  follows  :  — 

"  The  question  is  whether,  when  he  (tlie  plaintiff)  received 
the  injuries,  he  was  travelling  by  public  or  private  conveyance. 
That  he  was  travelling  is  clear  enough  ;  but  was  travelling  on 
foot  travelling  by  public  or  private  conveyance?  The  con- 
tract must  receive  the  construction  which  the  language  used 
fairly  warrants.  What  was  the  understanding  of  the  parties  ? 
or,  rather,  what  understanding  must  naturally  have  been  de- 
rived from  the  language  used  ?  It  seems  to  us  that  walking 
would  not  naturally  be  presented  to  the  mind  as  a  means  of 
public  or  private  conveyance.  Public  conveyance  naturally 
suggests  a  vessel  or  vehicle  employed  in  the  general  convey- 
ance of  passengers.     Private  conveyance  suggests  a  vehicle 

1  Ripley  et  al.  Adm.  v.  Railway  Passengers'  Ass.  Co  ,  2  Big.  Life  &  Ace.  Ins. 
Cas.  738;  Ripley  v.  Insurance  Co..  16  Wall.  336. 

2  16  Wall.  (U.  S.)  336 ;  s.  c.  3  Big.  Life  &  Ace.  Ins.  Cas.  832  and  note. 

1218 


CH.  XXIX.]  OF   ACCIDENT   INSURANCE.  [§  529 

belonging  to  a  private  individual.  If  this  was  the  sense  in 
which  the  language  was  understood  by  the  parties,  the  de- 
ceased was  not,  when  injured,  travelling  within  the  terms  of 
the  policy.     There  is  nothing  to  show  that  it  was  not." 

§  529.  Same  Subject.  —  Such,  undoubtedly,  is  the  logical 
consequence  of  a  strict  interpretation  of  the  letter  of  the  con- 
tract, and  the  exact  point  made  was  doubtless  well  decided. 
But  we  venture  to  suggest  the  inquiry  whether  the  construc- 
tion is  not  too  literal  and  narrow.  Upon  the  principle  of  the 
cases  cited  in  the  last  two  sections,  the  plaintiff  being  engaged 
in  the  actual  prosecution  of  his  journey,  and  by  the  appro- 
priate and  usual  means,  might  have  been  held  to  be  travelling 
by  public  conveyance,  for  it  was  by  public  conveyance  tliat 
the  journey  was  accomplished.  And  tliis  is  strictly  in  accord- 
ance with  the  ordinary  use  of  language.  A  man  who  goes  on 
a  journey  is  said  to  be  travelling.  If  he  goes  by  rail  or 
steamer,  he  is  travelling  by  public  conveyance.  More  or  less 
travel  on  foot  is  necessary  to  this  mode  of  travel  in  changing 
cars,  or  passing  from  steamer  to  railway,  or  in  getting  to  and 
from  the  stations.  But,  in  a  general  sense,  all  this  is  travel- 
ling by  public  conveyance.  It  would  seem  to  be  immaterial 
whether  the  walking  be  done  in  the  middle  or  at  one  of  the 
termini  of  the  journey,  provided  it  be  incidental  to,  and  part 
of,  the  journey  ;  nor  can  the  distance  walked  make  any  differ- 
ence, provided  it  also  is  a  part  of  the  journey.  By  the  same 
literalness  of  construction  a  passenger  sitting  still  in  a  train 
stopping  at  a  station,  and  not  under  motion,  might  be  injured 
by  a  train  in  motion,  and  yet  have  no  claim,  because  he  was 
not  actually  travelling,  —  for  sitting  still  is  not  literally  trav- 
elling. So  a  passenger  required  to  leave  one  car  and  to  get 
into  another,  or  to  go  from  one  train  to  another  at  the  same 
station,  or  going  to,  or  returning  from,  the  refreshment  room, 
being  on  foot  during  the  process,  is  certainly  not  literally  "  in 
a  conveyance."  But  is  he  not  travelling  all  the  while,  in  a 
general  and  substantial  sense,  in  the  prosecution  of  his  jour- 
ney, in  and  by  a  public  conveyance  ?  Is  not  one  who  stands 
upon  the  platform  at  a  way  station,  having  left  the  car  for 
refreshments,  and  is  knocked  down  and  injured  by  the  rushing 

1219 


§  530]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXIX. 

throng,  within  the  protection  of  such  a  policy,  although  at  the 
moment,  in  a  literal  sense,  he  is  neither  travelling  by  a  con- 
veyance, nor  in  any  other  way  ?  May  not  a  man  be  said  to 
be  'travelling  by  public  conveyance  who  is  actually  engaged 
in  and  about  doing  certain  acts  which  are  fairly  incidental  to, 
and  necessary  for,  the  prosecution  or  completion  of  the  jour- 
ney ?  The  bare  question  whether  a  man  going  on  foot  is 
going  by  conveyance  must  undoubtedly  be  answered  in  the 
negative.  But  the  broader  question,  whether  a  man  who  is 
prosecuting  a  journey  by  railway  and  steamboat,  while  engaged 
in  what  is  incidental  to  the  journey,  whether  he  is  sitting  still 
in  a  motionless  car,  or  standing  still  on  the  station  platform, 
or  walking  to  and  fro  thereon,  waiting  for  a  start,  or  going 
into  the  station  for  refreshments,  or  returning  tlierefrom  after 
having  obtained  them,  is  not  in  a  reasonable  and  substantially 
accurate  sense  "  travelling  by  public  conveyance,"  may,  per- 
haps, require  an  affirmative  answer.^ 

§  530.  Accident  ;  Negligence  ;  Wilful  Exposure  ;  Violation  of 
Law;  Obvious  Risk. — It  has  been  held  that  if  the  injury  is 
attributable  to  the  insured's  own  negligence,  it  is  not  acci- 
dental, as  when  a  passenger  inadvertently,  but  needlessly,  puts 
his  arm  out  of  the  car-window  while  the  train  is  running  with 
its  usual  velocity,  whereby  his  hand  is  injured  by  contact  with 
a  post  standing  near  the  track.-  And  the  case  of  Theobald  v. 
Railway  Passengers'  Assurance  Company  ^  has  been  supposed 

1  Since  this  chapter  was  printed,  tlie  case  of  Chaniplin  v.  Travelers'  Pas- 
senger Ins.  Co.,  6  Lans.  (N.  Y.)  71,  has  come  to  hand,  in  which  it  is  expressly 
decided  that  the  doctrine  of  contributory  negligence  on  tlie  part  of  the  plaintiff 
does  not  apply  as  a  defence  in  actions  on  policies  of  insurance.  In  the  same  case, 
it  appearing  that  the  msured  attempted  to  jump  on  to  an  omnibus — a  public 
conveyance  used  for  carrying  passengers —  while  it  was  in  motion,  that  he  suc- 
ceeded in  getting  on  to  tiie  steps,  which  were  at  the  rear  of  the  omnibus,  but  was 
unable,  by  reason  of  the  jar  of  the  vehicle,  to  maintain  his  footing,  and  received 
injuries  of  a  serious  nature,  from  hitting  his  knee  against  the  wheel,  it  was  also 
held  that  the  insured  was  travelling.  "  It  would  be  a  very  strained  construction," 
say  the  court,  "  of  a  contract  like  this  to  hold  that  he  was  not  travelling.  If  he 
was  not  travelling,  it  is  difficult  to  say  what  he  was  doing.  We  think  that  as 
lie  was  actually  going  from  one  place  to  another,  he  was  travelling."  See  also 
Gallin  v.  Lon.  &c.  Ry.  Co.,  L.  R.  10  Q.  B.  212. 

2  Morel  V.  The  Mississippi  Valley  Life  Ins.  Co.,  4  Bush  (Ky.),  535. 
8  10  Exch.  44 ;  s.  c.  26  Eng.  L.  &  Eq.  432. 

1220 


CH.  XXIX.]  OP   ACCIDENT    INSURANCE.  [§  530 

to  support  the  sume  doctrine.  But  the  point  was  not  decided, 
the  court  merely  adverting  to  the  fact  that  the  plaintiff  was 
without  negligence.  In  Brown  v.  Railway  Passengers'  Insur- 
ance Company/  it  was  also  suggested  that  the  negligence  .of  a 
passenger  having  a  "  traveller's  ticket "  might  defeat  his  re- 
covery. But  that  was  not  a  point  in  the  case  ;  and  the  case 
from  Kentucky  stands  alone,  without  the  support  of  any 
authority,  and  is  based,  it  is  conceived,  upon  a  mistaken  ap- 
plication, in  an  action  upon  contract,  of  the  doctrine  of  con- 
tributory negligence  as  it  is  applied  in  actions  upon  tort. 
Indeed,  there  is  no  reason  for  supposing  that  protection  from 
loss  or  injury  from  negligence  is  not  one  of  the  motives  which 
operate  in  accident,  as  well  as  in  fire  and  life  insurance.  And 
unless  there  are  stipulations  to  the  contrary  in  the  policy,  in 
accident  insurance,  as  in  life  and  fire  insurances,  injury  by  ne- 
gligence is  covered  by  the  contract  ;2  nor  will  ordinary  negli- 
gence vitiate  a  policy  which  stipulates  that  the  company 
will  not  be  liable  for  wilful  and  wanton  exposure  to  un- 
necessary danger,  as  this  stipulation  affords  a  reasonable  in- 
ference that  ordinary  negligence  is  not  excepted.^  In  this 
case  the  plaintiff  attempted  to  get  upon  a  train  of  cars  while 
they  were  in  slow  motion,  and  fell  under  them  and  was  killed. 
The  opinion  of  the  court  we  give  at  some  length,  as  involving 
an  interesting  discussion  of  the  relation  of  negligence  to  insur- 
ance against  accidental  injury  and  death,  the  scope  and  mean- 
ing of  the  word  "  accident,"  and  the  grounds  upon  which  the 
doctrine  of  contributory  negligence,  as  applied  in  actions  of 
tort,  is  not  applicable  in  cases  of  insurance.  The  opinion  was 
by  Paine,  J.  : — • 

"  The  position  most  strongly  urged  by  the  respondent's 
counsel  in  tliis  court  was,  that  inasmuch  as  the  negligence  of 
the  deceased  contributed  to  produce  the  injury,  therefore  the 
death  was  not  occasioned  by  an  accident  at  all,  within  the 
meaning  of  the  policy.  I  cannot  assent  to  this  proposition. 
It  would  establish  a  limitation  to  the  meaning  of  the  word 

1  45  Mo.  221. 

2  See  cuite,  §  408  ef  serj. 

3  Schneider  v.  The  Provident  Life  Ins.  Co.,  24  Wis.  28. 

1221 


§  530]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXIX. 

'  accident,'  which  has  never  been  established  either  in  law  or 
common  understanding.  A  very  large  proportion  of  those 
events  which  are  universally  called  accidents,  happen  through 
some  carelessness  of  the  party  injured,  which  contributes  to 
produce  them.  Thus  men  are  injured  by  the  careless  use  of 
firearms,  of  explosive  substances,  of  machinery,  the  careless 
management  of  horses,  and  in  a  thousand  ways  where  it  can 
readily  be  seen  afterward  that  a  little  greater  care  on  their 
part  w^ould  have  prevented  it.  Yet  such  injuries  having -been 
unexpected,  and  not  caused  intentionally  or  by  design,  are 
always  called  accidents,  and  properly  so.  Nothing  is  more 
common  than  items  in  the  newspapers  under  the  heading 
'  accidents  through  carelessness.' 

"  There  is  nothing  in  the  definition  of  the  word  that  ex- 
cludes the  negligence  of  the  injured  party  as  one  of  the  ele- 
ments contributing  to  produce  the  result.  An  accident  is 
defined  as  '  an  event  that  takes  place  without  one's  foresight 
or  expectation  ;  an  event  which  proceeds  from  an  unknown 
cause,  or  is  an  unusual  effect  of  a  known  cause,  and  therefore 
not  expected.' 

"  An  accident  may  happen  from  an  unknown  cause.  But 
it  is  not  essential  that  the  cause  should  be  unknown.  It  may 
be  an  unusual  result  of  a  known  cause,  and  therefore  unex- 
pected to  the  party.  And  such  was  the  case  here,  conceding 
that  the  negligence  of  the  deceased  was  the  cause  of  the 
accident. 

"  It  is  true  that  accidents  often  happen  from  such  kinds  of 
negligence.  But  still  it  is  equally  true  that  they  are  not  the 
usual  result.  If  they  were,  people  would  cease  to  be  guilty  of 
sucli  negligence.  But  cases  in  which  accidents  occur  are  very 
rare  in  comparison  with  the  number  in  which  there  is  the 
same  negligence  without  any  accident.  A  man  draws  his 
loaded  gun  toward  him  by  the  muzzle,  the  servant  fills  the 
lighted  lamp  with  kerosene  a  hundred  times  without  injury. 
The  next  time  the  gun  is  discharged,  and  the  lamp  explodes. 
The  result  was  unusual,  and  therefore  as  unexpected  as  it  had 
been  in  all  the  previous  instances.  So  there  are,  undoubtedly, 
thousands  of  persons  who  get  on  and  off  from  cars  in  motion 
1222 


CH.  XXIX.]  OF    ACCIDENT   INSURANCE.  [§  530 

without  accident,  where  one  is  injured.  And,  therefore,  when 
an  injury  occurs,  it  is  an  unusual  result,  and  unexpected,  and 
strictly  an  accident.  There  are  not  many  authorities  on  the 
point.  The  respondent's  counsel  cites  Theobald  v.  The  Rail- 
way Passengers'  Assurance  Company ,i  not  as  a  direct  author- 
ity, but  as  containing  an  implication  that  the  negligence  of  the 
injured  party  would  prevent  a  recovery.  I  do  not  think  it  can 
be  construed  as  conveying  any  such  intimation.  The  insur- 
ance there  was  against  a  particular  kind  of  accident,  - —  that 
was  a  railway  accident ;  and  the  only  question  was,  whether 
the  injury  was  occasioned  by  an  injury  of  that  kind.  The 
court  held  that  it  was,  and  although  it  mentions  the  fact  that 
there  was  no  negligence  on  the  part  of  the  assured,  that  can- 
not be  considered  as  any  intimation  who,t  would  have  been  the 
effect  of  negligence,  if  it  had  existed. 

"  The  general  question  as  to  what  constitutes  an  accident 
was  considered  in  two  subsequent  cases  in  England.  The  first 
was  Sinclair  v.  The  Maritime  Passengers'  Assurance  Com- 
pany,^ in  which  the  question  was,  whether  a  sunstroke  was  an 
accident  within  the  meaning  of  the  policy.  The  court  held 
that  it  was  not,  but  was  rather  to  be  classed  among  diseases 
occasioned  by  natural  causes,  like  exposure  to  malaria,  <fec. ; 
and  while  admitting  the  difficulty  of  giving  a  definition  to 
the  term  '  accident '  which  would  be  of  universal  application, 
they  say  they  may  safely  assume  '  that  some  violence,  casualty, 
or  vi8  major  is  necessarily  involved.'  There  could  be  no  ques- 
tion in  this  case,  of  course,  but  that  all  these  were  involved. 

"  In  the  subsequent  case  of  Trcw  v.  Railway  Passengers' 
Assurance  Company,^  the  question  was  whether  a  death  by 
drowning  was  accidental.  The  counsel  relied  on  the  language 
of  the  former  case,  and  urged  that  there  was  no  external  force 
or  violence.  But  the  court  held  that  if  the  death  was  oc- 
casioned by  drowning,  it  was  accidental,  within  the  meaning 
of  the  policy.  And  in  answer  to  the  argument  of  counsel,  they 
said :  '  If  a  man  fell  from  a  house-top,  or  overboard  from  a 
ship,  and  was  killed  ;  or  if  a  man  was  suffocated  by  the  smoke 

1  26  Eng.  L.  &  Eq.  432.  2  3  gl.  &  El.  478. 

3  6  H.  &  N.  839. 

1223 


§  530]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXIX. 

of  a  house  on  fire,  —  such  cases  would  be  excluded  from  the 
])olicy,  and  the  effect  would  be,  that  policies  of  this  kind,  in 
many  cases  where  death  resulted  from  accident,  would  afford 
no  protection  whatever  to  the  assured.  We  ought  not  to  give 
to  these  policies  a  construction  which  will  defeat  the  protec- 
tion of  the  assured  in  a  large  class  of  cases.' 

"  There  was  no  suggestion  that  there  was  any  question  to 
be  made  as  to  the  negligence  of  the  deceased ;  and  yet  the 
court  said :  '  We  think  it  ought  to  be  submitted  to  the  jury  to 
say  whether  the  deceased  died  from  the  action  of  the  water,  or 
natural  causes.  If  they  are  of  the  opinion  that  he  died  from 
the  action  of  the  water,  causing  asphyxia,  that  is  a  death  from 
external  violence,  within  the  meaning  of  this  policy,  ivhether 
he  stvavi  to  a  distance  and  had  not  strength  enough  to  regain  the 
shore,  or,  on  going  into  the  water,  got  out  of  his  dejjthJ 

"  Now,  either  of  these  facts  would  seem  to  raise  as  strong 
an  inference  of  negligence,  as  an  attempt  to  get  upon  cars  in 
slow  motion.  Yet  the  court  said  that  although  the  drowning 
was  occasioned  by  either  one  of  them,  it  would  have  been  an 
accidental  death,  within  the  meaning  of  the  policy,  and  the 
plaintiffs  entitled  to  recover.  I  cannot  conceive  that  it  would 
liave  made  such  a  remark,  except  upon  the  assumption  that 
the  question,  whether  the  injured  party  was  guilty  of  negli- 
gence contributing  to  the  accident,  does  not  arise  at  all  in  this 
class  of  cases.  I  think  that  is  the  true  conclusion,  both  upon 
principle  and  authority,  so  far  as  there  is  any  upon  the  sub- 
ject ;  and  the  only  questions  are,  first,  whether  the  death  or 
injury  was  occasioned  by  an  accident  within  the  general  mean- 
ing of  the  policy,  and,  if  so,  whether  it  was  within  any  of  the 
exceptions. 

"  This  conclusion  is  also  very  strongly  supported  by  that 
provision  of  the  policy  under  which  the  plaintiff  was  non- 
suited. That  necessarily  implies  that  any  degree  of  negli- 
gence, falling  short  of  '  wilful  and  wanton  exposure  to 
unnecessary  danger,'  would  not  prevent  a  recovery.  Such  a 
provision  would  be  entirely  superfluous  and  unmeaning  in 
such  a  contract,  if  the  observance  of  due  care  and  skill  on 
the  part  of  the  assured  constituted  an  element  to  his  right  of 
1224 


CH.  XXIX.]  OF    ACCIDENT    INSURANCE.  [§  530 

action,  as  it  does  in  actions  for  injuries  occasioned  by  the  neg- 
ligence of  the  defendant. 

"  The  question  therefore  remains,  whether  the  attempt  of 
the  deceased  to  get  upon  the  train  was  within  this  j)rovision, 
and  constituted  a  '  wilful  and  wanton  exposure  of  himself 
to  unnecessary  danger.'  I  cannot  think  so.  The  evidence 
showed  that  the  train,  having  once  been  to  the  platform,  had 
backed  so  that  the  cars  stood  at  some  little  distance  from  it. 
Wliilc  it  was  waiting  there,  the  deceased  was  walking  back 
and  forth  on  the  platform.  It  is  very  probable  that  he  ex- 
pected the  train  to  stop  there  again  before  finally  leaving. 
But  it  did  not.  It  came  along,  and  while  moving  at  a  slow 
rate,  not  so  fast  as  a  man  would  walk,  he  attempted  to  get  on, 
and  by  some  means  fell  either  under  or  by  the  side  of  the  cars, 
and  was  crushed  to  death.  The  act  may  have  been  impru- 
dent. It  may  have  been  such  negligence  as  would  have  pre- 
vented a  recovery  in  an  action  based  upon  the  negligence  of 
the  company,  if  there  had  been  any.  But  it  does  not  seem  to 
have  contained  those  elements  which  could  be  justly  char- 
acterized as  wilful  or  wanton.  The  deceased  was  in  the  reg- 
ular prosecution  of  his  business.  He  desired  and  expected  to 
leave  on  that  train.  Finding  that  he  would  be  left  unless  he 
got  on  the  train  while  it  was  in  motion,  it  was  natural  enough 
for  him  to  make  the  attempt.  The  strong  disinclination 
which  people  have  to  being  left  would  impel  him  to  do  so. 
The  railroad  employees  were  getting  on  at  about  the  same 
time.  Imprudent  though  it  is,  it  is  a  common  practice  for 
othei-s  to  get  on  and  off  in  the  same  manner.  He  had  un- 
doubtedly seen  it  done,  if  he  had  not  done  it  himself,  many 
times,  without  injury.  I  cannot  regard  it,  therefore,  as  a  wil- 
ful and  wanton  exposure  of  himself  to  unnecessary  danger, 
within  the  meaning  of  the  policy." 

And  this  case  was  cited  and  approved  in  the  Providence 
Life  Insurance  and  Investment  Company  v.  Martin,^  where 
the  policy  provided  that  the  company  should  not  be  liable  in 
case  the  insured  received  injury  "by  his  wilfully  exposing 
himself  to  any  unnecessary  danger  or  peril,"  and  where  the 

1  32  Md.  .310. 

1225 


§  530]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXIX. 

facts  were  that  the  assured  was  a  locomotive  engineer,  in  the 
employ  of  a  railroad  company,  whose  principal  business  was 
the  transportation  of  coal,  and  whilst  backing  liis  engine  upon 
a  down  grade,  with  a  car  in  front  as  a  precaution  to  check  the 
speed,  he  directed  the  fireman  to  run  it,  and  went  upon  and 
over  the  tender  to  get  into  this  car  to  draw  the  brakes,  and  in 
doing  so  slipped  and  fell  between  the  car  and  the  tender,  and 
was  instantly  killed  by  the  tender  passing  over  his  body.  The 
speed  at  the  time  was  about  eight  miles  per  hour,  on  a  de- 
scending grade.  It  was  also  distinctly  asserted,  in  this  case, 
that  contributory  negligence  was  no  defence,  as  the  liability 
rests  upon  contract,  one  of  the  chief  objects  of  which  is  to 
protect  the  insured  against  his  own  mere  carelessness  or  neg- 
ligence.^ 

So  where  two  persons  were  trotting  horses  for  money  — 
illegal  by  statute  —  and  came  in  collision,  whereupon  one  of 

1  And  see  also  ante,  §§  301,  327-330,  408  et  seq.,  525.  To  tlie  same  point  is 
Champlln  v.  Travelers'  Passenger  Ins.  Co.,  6  Lans.  (N.  Y.)  71 ;  ante,  §  529.  In 
Pratt  V.  Travellers'  Ins.  Co.,  a  nisi  prius  case  tried  in  the  Supreme  Court  in  New 
York,  in  October,  1871,  cited  by  a  very  careful  writer  in  the  American  Law  Re- 
view, for  July,  1873,  under  a  policy  which  exempted  the  insurers  from  liability 
if  the  insured  was  guilty  of  a  violation  of  any  rule  of  any  company,  or  in  case  of 
wilful  exposure  or  want  of  due  care,  the  jury  were  charged  that  if  the  insured 
was  standing  on  the  platform  in  violation  of  the  rules  of  the  railway  company,  he 
could  not  recover  ;  if  he  was  passing  from  one  car  to  another,  it  was  for  them, 
upon  all  the  circumstances,  to  say  whether  he  used  due  care  or  not.  And  in 
another  case  cited  by  the  same  writer,  Hoffman  v.  Travelers'  Ins.  Co.,  in  the 
same  court,  but  on  a  different  circuit,  the  court  held,  as  matter  of  law,  that 
attempting  to  cross  a  railroad  track,  when  an  approaching  train  was  within  fifty 
to  one  hundred  feet,  was  a  violation  of  a  condition  to  use  all  due  diligence  for 
personal  safety.  It  was  "  as  gross  negligence,"  the  court  is  reported  to  have 
said,  "  as  if  the  man  had  hanged  himself."  The  facts  were  no  doubt  such  as  to 
have  justified  a  jury  in  finding  a  verdict  for  the  defendant ;  though  upon  the  last 
proposition  there  might  be  a  difference  of  opinion.  The  doctrine  of  the  case 
cited  in  the  next  section  seems  the  better.  In  Lowell  r.  Accident  Insurance  Co., 
3  Ins.  L.  J.  877,  the  jury  found  tliat  walking  on  a  railroad  track  on  a  dark  and 
rainy  night,  at  a  time  when  the  deceased  knew  that  trains  were  frequently  pass- 
ing both  ways,  was  not  an  "  obvious  risk  ;  "  but  the  Lord  Chief  Justice  said, 
"  Very  well,  that  is  a  verdict  for  the  plaintiff,  but  I  shall  stay  the  execution,  and 
if  the  question  is  one  of  law  for  the  judge,  I  should  decide  it  quite  tlie  other  way, 
for  I  sliould  say  the  deceased  was  running  a  risk  which  was  very  'obvious'  in- 
deed." The  verdict  was  afterwards  set  aside.  5  Ins.  L.  J.  559.  See  also 
Wright  V.  Sun  Mut.  Ins.  Co.,  29  U.  C.  (C  P.)  221. 

1226 


CH.  XXIX.]  OF   ACCIDENT   INSURANCE.  [§  531  A 

the  parties  leaped  to  the  ground,  and  while  trying  to  stop  his 
horse  was  injured,  it  was  held  that  he  could  not  recover  under  a 
policy  which  exempted  the  insurers  from  liability  for  accidents 
caused  by  "  duelling,  fighting,  or  other  breach  of  the  law."  ^ 

§  531.  Accident ;  Condition  to  be  careful ;  Interpretation.  — 
But  policies  sometimes  contain  provisions  which  look  to  a 
protection  from  liability  for  injury  by  negligence,  as,  for  in- 
stance, the  stipulation  that  the  insured  shall  be  careful  for  his 
safety.  What  amounts  to  the  violation  of  a  stipulation  in  an 
accident  policy  that  the  insured  shall  "  use  all  due  diligence 
for  his  personal  safety  and  protection,"  is  to  be  deduced  from 
all  the  facts  and  circumstances  accompanying  the  accident, 
and,  like  questions  of  negligence  and  due  care  generally,  is  to 
be  determined  by  the  jury.  The  court  will  not  undertake  to 
say,  as  matter  of  law,  whether  a  particular  act,  or  series  of 
acts,  constitutes  a  want  of  such  due  diligence.^  [The  burden 
of  proof  is  on  the  defendant  to  show  that  the  insured  did  not 
use  the  "  due  care  "  required  by  the  policy .^J  If  the  policy  ex- 
cludes liability  "while  the  insured  is,  or  in  consequence  of 
his  having  been,  under  the  influence  of  intoxicating  liquor,"  it 
is  immaterial  that  the  accident  was  not  the  consequence  of 
intoxication,  if  the  insured  was  at  the  time  of  the  accident 
under  the  influence  of  intoxicating  liquor  ;  ^  that  is,  under  such 
influence  as  to  disturb  the  quiet,  equable  exercise  of  his  intel- 
lectual functions.  The  purpose  of  such  a  provision  is  to  guard 
against  liability  in  both  contingencies.^ 

[§  531  A.  Voluntary  Exposure  to  Unnecessary  Danger.  — 
Driving  alone  at  night  across  a  network  of  railway  tracks, 
where  there  is  no  road  for  carriages,  is  "  voluntary  exposure 
to  unnecessary  danger."  ^  Where  at  night  the  insured  stepped 
off  a  railway  train  that  had  stopped  on  a  drawbridge,  and  fell 

1  Travelers'  Ins.  Co.  v.  Seaver,  19  Wall.  (U.  S.)  531. 

2  Adm'rs  of  Stone  v.  United  States  Casualty  Co,  34  N.  J.  (5  Vroom)  371; 
antp,  §  525. 

'•>  [Freeman  v.  Travelers'  Ins.  Co.,  144  Mass.  572] 
^  [Mac  Robbie  v.  Accident  Ins.  Co.,  23  Scot.  L.  R.  391.] 
5  Sliader  i-.  Railway  Passengers'  Ins.  Co.,  66  N.  Y.  441 ;  Mair  v.  Railway  Pas- 
sengers' Ins.  Co.,  37  L.  T.  356,  C.  P.  D. 

«  [Neill  V.  Travelers'  Ins.  Co.,  12  Can.  Supr.  Ct.  55.] 

1227 


§  532]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXIX. 

through  a  concealed  hole,  it  was  held  that  this  was  not  a  "  vol- 
untary exposure  to  unnecessary  danger,"  as  lie  had  no  notice 
of  the  danger,  nor  a  violation  of  the  provision  against "  walk- 
ing or  being  on  the  road-bed  or  bridge  of  any  railway,"  which 
Avas  obviously  intended  to  exclude  injuries  from  passing 
trains.^  A  recovery  cannot  be  defeated  on  the  ground  of 
voluntary  exposure  to  a  danger  contemplated  by  the  parties 
because  pertaining  to  the  business  of  the  insured.^] 

§  532.  Accident  Insurance  ;  Increase  of  Risk  ;  Change  of  Oc- 
cupation. —  A  change  of  occupation  on  the  part  of  a  person 
insured  against  injury  by  accident,  does  not  mean  a  casual 
change,  such  as  most  men  do,  or  may  resort  to,  during  the 
intervals  of  time  when  their  usual  employment  does  not  en- 
gage them,  but  rather  "  engaging  in  another  employment  as 
a  usual  business "  An  unemployed  teacher,  therefore,  does 
not  forfeit  his  right  to  recover  because  he  meets  with  an  acci- 
dent while  superintending  the  erection  of  a  building  for  him- 
self.^ Nor  does  a  person  who,  while  on  a  visit  to  a  friend  who 
was  a  farmer,  meets  with  an  accident  while  casually  assisting 
him  in  getting  in  hay,  though  farming  is  not  his  usual  occupa- 
tion.* A  statement  by  the  insured  in  his  application  as  to  his 
occupation  is  a  representation  of  the  then  existing  fact,  and 
not  a  covenant  or  warranty  that  there  shall  be  no  change  in 
the  occupation  affecting  the  risk  during  the  currency  of  the 
policy.  And  a  change  in  the  occupation,  as,  for  instance, 
from  the  occupation  of  a  switchman  to  that  of  a  brakeman, 
wliether  affecting  the  risk  or  not,  does  not  avoid  the  policy, 
unless  expressly  so  stipulated,  or  unless  liability  is  restricted 
to  accidents  occurring  in  the  course  of  the  occupation  speci- 
fied in  the  application.^  And  for  the  same  reasons  an  engi- 
neer on  a  railway  train  may  temporarily  perform  the  duty  of 
an  absent  brakeman  without  forfeiting  his  right  to  recover.^ 


1  [Burkhard  v.  Travelers'  Ins.  Co.,  102  Pa.  St.  262.J 
-  [National  Ben.  Ass.  i\  Jackson,  114  111.  533.] 

3  Aflmr's  of  Stone  v.  United  States  Casualty  Co  ,  34  N.  J.  (5  Vroom)  371. 
*  North  American  Ins.  Co.  v.  Burroughs,  69  Pa.  St.  43. 
6  The  Provident  Life  Ins.  Co.  v.  Fennel),  40  111.  180. 
6  Prov.  Life  Ins.  &  Inv.  Co.  v.  Martin,  32  Md.  310. 
1228 


CH.  XXIX.]  OF   ACCIDENT   INSURANCE.  [§  533 

§  533.  Accident ;  Increase  of  Risk  ;  Classification  of  Risk.  — ■ 
In  Stone  v.  United  States  Casualty  Company,^  where  the  pol- 
icy required  notice  of  change  of  occupation  "  to  a  more  haz- 
ardous exposure  under  the  company's  classification  than  is 
named  in  the  application,"  the  form  and  effect  of  the  follow- 
ing indorsement  upon  the  policy,  —  "  Policy-holders  insured 
under  the  preferred  class  will  not  be  entitled  to  recover  for 
injuries  received  in  any  employment,  or  by  any  exposure, 
either  more  hazardous  in  itself,  or  classified  by  the  company  as 
more  hazardous,  than  the  occupations  named  in  the  preferred 
class,"  —  came  under  consideration,  and  the  conclusion  was, 
first,  that  the  language  has  respect  to  hazardous  employments, 
and  not  to  hazardous  individual  acts ;  and,  secondly,  that  be- 
ing so  indorsed  on  the  policy,  it  constitutes  no  part  of  the  con- 
tract. "  The  injuries  excluded  from  the  compensation  of  the 
policy,"  say  the  court,  by  Beasley,  C.  J.,  "  are  described  as  those 
that  are  'received  in  any  employment,  or  by  any  exposure 
either  more  hazardous  in  itself,  or  classified  by  the  company  as 
more  hazardous.'  These  terms,  literally  rendered,  require  that 
the  assured,  to  come  within  their  effect,  must,  at  the  time  of 
the  injury,  be  in  an  employment  more  dangerous  than  his  own. 
The  language  has  respect  to  employments,  and  not  to  individ- 
ual acts.  It  is  true  that  a  certain  degree  of  ambiguity  is 
introduced  by  the  expression  '  other  exposure,'  but,  looking  at 
the  body  of  the  policy,  we  find  these  terms  used  in  the  sense 
of  the  risks  arising  from  a  business  or  occupation.  By  ad- 
hering to  the  literal  signification  of  the  terms  employed,  these 
indorsements  prefixed  to  the  several  classes  of  employments 
lose  all  force  as  independent  stipulations,  and  serve  the  simple 
purpose  of  graduating  such  employments  for  the  service  of 
that  provision  of  the  policy  which  prohibits  the  assured  from 
passing,  at  his  own  option,  from  one  business  to  another. 
Understood  in  this  view,  they  are  properly  a  part  of  the  clas- 
sification, but  if  they  are  to  be  received  as  containing  new 
terms  of  the  contract,  they  are  entirely  out  of  place.  If  the 
company  intended  to  say  to  the  assured  that  if  he  did  any  act 
which  did  not  strictly  belong  to  his  own  occupation,  but  was 

1  34  N.  J.  371. 

1229 


§  533]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXIX. 

embraced  more  properly  in  some  other  business,  and  if  there- 
by any  harm  to  him  accidentally  resulted,  that  in  such  event 
he  could  claim  nothing  under  his  policy,  it  was  easy  for  them 
to  do  so  in  plain  language.     Such  a  stipulation  would  obvi- 
ously be  one  of  a  very  important  character,  and  we  would 
expect  to  find  it  in  the  body  of  the  instrument.     A  qualifica- 
tion of  the  agreement  so  restrictive  of  the  rights  of  the  party 
insured  ought  not  to  be  admitted,  unless  the  terms  of  this 
indorsement  will  bear  no  other  rational  interpretation.    If  the 
terms  used  are  imperfect  or  ambiguous,  it  is  the  fault  of  the 
defendants;   it  is  their  contract,  and  the  construction  of  it 
must  be  strongly  against  them,  contra  j^referentes.     Nor  do  I 
think  the  liberal  interpretation  of  this  clause,  which  the  de- 
fence contends  for,  a  practical  one.     It  would  be  difficult  to 
put  it  in  practice  ;  for  who  can  say,  in  many  cases,  what  acts 
are  properly  incident  to  one  occupation,  and  which  are  not  so 
to  any  other  ?   The  subdivisions  of  employments  are  so  numer- 
ous and  minute,  that  in  actual  life  it  is  impossible  to  separate 
them  by  any  visible  and  exact  line ;  for  instance,  in  the  first 
of  these  classifications  the  shopkeeper  is  placed,  and  in  the 
second,  the  laborer.     The  employments  of  these  are  distinct ; 
but  with  respect  to  particular  acts  it  would  be  extremely  diffi- 
cult, if  not  impossible,  to  classify  them  into  those  which  are 
common  to  both  occupations,  and  into  those  which  are  peculiar 
to  each.     It  does  not  seem  to  me  proper  to  bring  into  this 
agreement  this  confusion  and  uncertainty  by  construction.    It 
certainly  is  not  necessary  for  the  reasonable  protection  of  the 
company,  for  there  are  other  restrictions  in  this  instrument 
which  are,  apparently,  sufficient  to  debar  a  party  insured  from 
doing  acts  appertaining  to  other  occupations,  which  are  of  a 
particularly  hazardous  nature.    I  refer  to  the  clauses  referring 
to  undue  exposure.     Even  the  case  put  of  an  attorney  driving 
a  steam-engine  would  probably  come  within  this  prohibition. 

"  But  there  is  still  another,  and,  as  it  seems  to  me,  a  decided 
objection  against  the  admission  of  this  indorsement,  as  consti- 
tuting in  itself  a  substantive  agreement.  That  objection  is 
this :  that  considered  in  this  light  it  cannot  be  received  as  any 
part  of  the  contract  between  these  parties.  As  I  have  stated, 
1230 


CH.  XXIX.]  OF    ACCIDENT    INSURANCE.  [§  535 

this  clause  is  a  prefix  to  the  classification  on  the  back  of  the 
policy,  and  such  prefix  is  not  referred  to  in  the  body  of  the 
instrument.  The  policy  itself  is  very  explicit  as  to  what  shall 
be  comprised  in  the  contract.  Its  language  is,  that  this  pol- 
icy '  is  issued  and  accepted  subject  to  all  the  provisions,  condi- 
tions, limitations,  and  exceptions  herein  contained  or  referred 
to,  and  upon  the  express  agreement  that  the  statements  and 
declarations  of  the  insured  in  his  application  for  this  insur- 
ance are  warranted  to  be  true  in  all  respects,  and  that  said 
application,  together  with  the  company's  classification  of  haz- 
ards indorsed  hereon,  are  referred  to,  and  made  a  part  of  this 
contract.'  This  specification  of  the  parts  going  to  make  up 
the  agreement  is  clear,  and  it  does  not  embrace  this  prefix  in 
question,  if  such  prefix  is  to  be  taken  as  a  modification  of  the 
body  of  the  policy  in  a  most  material  respect.  On  these 
various  grounds  I  incline  to  the  view  that  the  indorsement  in 
question  does  not  constitute  a  substantive  stipulation,  but  is 
merely  explanatory  of  the  stipulations  to  the  extent  already 
indicated." 

§  534.  Accident ;  Extent  of  Risk.  —  Insurance  against  in- 
jury by  accident  includes  all  accidents  not  excepted  by  the 
terms  of  the  policy.^  A  general  insurance,  however,  against 
death  by  "  violent  and  accidental  means,"  followed  by  a  pro- 
viso that  the  insurers  will  not  be  responsible  for  death  caused 
by  certain  specified  means,  or  happening  in  certain  specified 
modes,  must  be  construed  as  covering  injuries  happening  by 
violent  and  accidental  means,  and  not  by  the  causes  and  modes 
specified  in  the  excluding  proviso.  The  exclusion  of  responsi- 
bility for  death  or  injury  in  certain  specified  ways  does  not 
enlarge  the  scope  of  the  general  clause  so  as  to  include  cases 
happening  otherwise  than  by  violent  and  accidental  means.^ 

§  535.  Accident  Insurance;  Insurable  Interest;  Amount  of 
Loss.  —  Every  person  is  presumed  to  have  an  insurable  inter- 
est in  his  own  life,  and  in  his  personal  safety  and  security 

1  Prov.  Life  Ins.  Co.  v.  Fennell,  49  III.  180  ;  Prov.  Life  Ins.  Co.  v.  Martin,  32 
Md.  310. 

2  Southard  v.  The  Railway  Passengers'  Ass.  Co.,  34  Conn.  574,  per  Shipman, 
Judge  of  the  District  Court  of  the  United  States,  acting  as  arbitrator,  ante, 
§515. 

VOL.  II.  — 34  1231 


§  535]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXIX. 

from  injury .1  And  as  the  contract  is  not  strictly  one  of  in- 
demnity, here  as  in  life  insurance  the  amount  recoverable 
may  be  agreed  upon  by  the  parties,  within  such  reason- 
able limits  as  will  save  the  contract  from  being  objection- 
able as  a  wager.2  Where  a  policy  insures  for  a  stated  period 
against  two  classes  of  accidental  injuries,  namely,  those  which 
occasion  loss  of  life  within  ninety  days,  in  a  gross  sum,  and 
those  which  shall  not  prove  fatal,  in  a  certain  sum  per  week 
for  a  fixed  number  of  weeks,  the  two  provisions  are  to  be  con- 
strued together.  If  an  injury  happens,  it  is  insured  against 
under  one  class  or  the  other ;  and  if  a  recovery  cannot  be 
had  under  the  first  class  for  the  gross  sura,  then  it  may  be  had 
under  the  second  class  for  the  weekly  allowance.  If  it  were 
otherwise,  an  injury  which  should  not  prove  fatal  in  ninety 
days  would  furnish  no  ground  of  action  till  it  should  be  made 
to  appear  that  it  would  never  prove  fatal,  —  a  construction 
which  would  render  the  insurance  nugatory  in  such  cases.^ 
In  such  a  case  the  lapse  of  the  ninety  days  is  to  be  determined 
by  including  the  day  when  the  accident  happened  as  one  of 
the  ninety  days,  in  accordance  with  the  rule  that  when  time 
is  reckoned  from  an  act  done,  it  includes  the  day  when  the 
act  is  done,  but  when  it  is  reckoned  from  the  day  when  the 
act  is  done,  the  day  is  excluded.  And  a  death  happening 
within  ninety  days  from  the  time  of  the  accident,  though 
after  the  expiration  of  the  period  covered  by  the  insurance,  if 
the  accidental  cause  be  within  tliat  period,  affords  ground  for 
recovery.*  If  the  policy  stipulated  for  the  payment  of  a  fixed 
sum  in  the  case  of  death  by  accident,  and  for  a  proportionate 
sum  in  the  case  of  merely  personal  injury,  not  fatal,  the 
amount  to  be  recovered  is  not  to  be  estimated  by  the  propor- 
tion which  the  injury  bears  to  the  amount  payable  in  case  of 
death.  The  insured  may  recover  for  the  expense  and  suffer- 
ing occasioned,  but  not  for  loss  of  time  or  profits.  If  re- 
covery could  be  had  for  a  consequential  loss  of  profits,  a  person 

1  Prov.  Life  Ins.  &  Inv.  Co.  v.  Baum,  29  Ind.  236. 

2  Ante,  §  7. 

8  Perry  v.  Prov.  Life  Ins.  &  Inv.  Co.,  103  Mass.  242;  Same  v.  Same,  99  Mass. 
162. 
*  Ibid. 

1232 


CH.  XXIX.]  OF    ACCIDENT   INSURANCE.  [§  536 

whose  time  or  business  is  more  valuable  than  another's  might, 
for  the  same  injury,  receive  a  greater  remuneration.  The 
insurers  indemnify  against  the  expense  and  pain  and  loss 
immediately  connected  with  the  accident,  and  not  against  re- 
mote consequences  that  may  follow,  according  to  the  business 
or  profession  of  the  insured.^ 

§  536.  Accident ;  Notice  of  Death ;  Preliminary  Proof.  — 
The  general  rules  heretofore  stated  as  to  preliminary  proof  in 
other  branches  of  insurance  are  also  applicable  liere.^  "  Suffi- 
cient proof  of  the  injury "  does  not  include  the  mode  and 
manner  of  the  injury  or  its  cause.  Nor  will  a  statement  in  the 
preliminary  proofs  of  two  inconsistent  causes  of  the  injury, 
the  injury  itself  being  correctly  stated,  prejudice  the  right  of 
the  insured  to  recover.^  In  Gamble  v.  Accident  Assurance 
Company,*  a  stipulation  that  particulars  of  the  accident 
should  be  furnished  within  a  specified  time,  was  a  condition 
precedent  to  the  recovery,  and  a  non-compliance  therewith 
was  not  excused  by  the  intervention  of  a  death  so  sudden  that 
the  condition  could  not  be  complied  with.^  Notice  of  the 
death,  required  "  as  soon  thereafter  as  possible,"  must  be 
within  a  reasonable  time ;  and  what  is  a  reasonable  time  is  for 
the  jury,  if  any  facts  from  which  the  reasonableness  of  the 
time  is  to  be  inferred  are  in  dispute,  otherwise  for  the  court.^ 
In  Insurance  Company  v.  Morely  "  no  claim  was  to  be  made 
in  respect  of  an  injury  unless  the  same  shall  be  caused  by  out- 
ward and  visible  means,  of  which  proof  satisfactory  to  the 
company  can  be  furnished."  It  was  alleged  that  the  insured 
accidentally  fell  down  stairs,  was  severely  injured,  and  died 
from  the  effects  of  the  fall.     No  witness  saw  him  fall ;    but 

1  TlieobalJ  v.  Railway  Passengers'  Ass.  Co.,  10  Exch.  45 ;  8.  0.  26  Eng.  L.  & 
Eq.  432. 

2  Ante,  ch.  xx. 

3  North  American  Ins.  Co.  v.  Burroughs,  69  Pa.  St.  43. 

4  Irisli  Rep.  4  C.  L.  204. 
^  But  see  ante,  §  405. 

6  Prov.  Life  Ins.  &  Inv.  Co.  v.  Baum,  29  Ind.  236.  And  see  also  ante,  §  462, 
and  post,  §  539.  A  delay  of  six  days,  when  the  accident  happened  in  tlie  place 
where  the  insurers  had  a  resident  agent,  was  held  unreasonable.  Railway  Pass. 
Ass.  Co.  V.  Burwell,  44  Ind.  460. 

1233 


§  538]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXIX. 

some  days  prior  to  his  death  he  told  his  wife  and  son  that  he 
had  fallen  down  the  back  stairs,  and  hurt  himself  very  bad  by 
hitting  the  back  of  his  head.  This  evidence  was  held  admis- 
sible, and  sufficient  to  render  the  insurers  liable.^  A  condi- 
tion that  no  claims  shall  be  made  unless  "  satisfactory  proof  be 
furnished,"  that  the  death  was  caused  by  outward  and  visible 
means,  does  not  require  such  proof  before  bringing  the  action.^ 

§  537.  Accident ;  Form  and  Completion  of  Contract.  —  From 
their  very  nature,  such  contracts  are  made  with  the  ordinary 
despatch  of  a  purchase  and  sale.  A  passenger  about  to  take 
the  cars  buys  his  ticket  of  insurance  as  he  buys  his  ticket  for 
fare,  and  oftentimes  of  the  same  person.  In  each  case  the 
ticket  is  evidence  of  a  contract,  completed  and  binding  on 
botli  parties.  And  as  in  other  cases  a  parol  contract  to  insure 
or  to  issue  a  policy  is  enforceable,  the  former  at  law  and  the 
latter  in  equity,  so  here  a  promise  to  make  out  a  policy  or  to 
forward  the  requisite  ticket  may  be  enforced  by  the  appro- 
priate remedy,  —  as  where  a  party  on  his  way  to  the  cars 
meets  the  agent  of  the  company,  pays  for  an  insurance  for  one 
day,  and  without  waiting  for  his  policy  or  ticket,  which  the 
agent  promises  to  send  him,  proceeds  to  the  cars,  and  thence 
on  his  journey  without  having  received  either.  The  contract 
is,  nevertheless,  complete  and  valid.^ 

§  538.  Accidents  to  Carriages.  —  In  France  there  has  been 
for  many  years  an  insurance  company,  L'Automedon,  which 
takes  risks  on  carriages,  indemnifying  their  owners  against 
civil  liability  and  loss  by  reason  of  the  negligence  of  their 
drivers.  In  L'Automedon  c.  Isot,*  it  appeared  that  one  of  the 
defendant's  drivers  had  wilfully  driven  against  and  upset  an- 
other carriage,  whereby  the  owner  was  thrown  out  and  injured. 
The  injured  party  sued  the  defendant  and  recovered  damages, 
for  the  reimbursement  of  which  Isot,  the  defendant,  brought 
suit  against  the  insurers.  The  main  ground  of  defence  was, 
that  as  it  would  be  against  public  policy  to  insure  against  the 

1  8  Wall.  (U.  S.)  397,  Clifford  and  Nelson,  JJ.,  dissenting. 

2  Railway  Pass.  Ass.  Co.  v.  Burwell,  44  Ind.  460. 

3  Rhodes  v.  Railway  Passengers'  Ass.  Co.,  5  Lans.  (N.  Y.)  71. 
*  Dalloz,  Jur.  du  Royaume,  1844,  pt.  2,  p.  128. 

1234 


CH.  XXIX.]  OF   ACCIDENT   INSURANCE.  [§  539 

consequences  of  an  act  which  amounts  to  a  crime,  such  an 
accident  could  not  be  considered  as  within  the  scope  of  the 
policy  ;  and  such  was  the  view  taken  by  the  departmental 
court ;  but  on  appeal  to  the  Court  of  Cassation  it  was  held  that 
such  accidents,  whether  delicta  or  quasi  delicta,  were  properly 
subjects-matter  of  insurance.  The  temptation  to  perpetrate 
a  public  wrong,  said  the  court,  is  counteracted  by  the  fact  that 
nothing  can  be  recovered  by  the  insured  beyond  the  damages 
Avhich  he  is  compelled  to  pay. 

§  539.  Accident  ;  Notice  of  Injury  ;  Satisfactory  Proof.  — 
"Where  the  policy  stipulates  that  immediately  upon  the  hap- 
pening of  the  accident  which  may  result  in  death  a  surgeon 
shall  be  called,  and  notice  of  the  accident  shall  be  given 
within  a  limited  time,  a  failure  to  do  either  will  not  affect  the 
right  to  recover,  unless  it  amounts  to  negligence  ;  as  where  a 
laborer  receives  a  fall,  the  serious  nature  of  the  consequences 
of  which  is  not  at  first  revealed,  and  which  is  of  such  an 
apparently  trivial  character  as  not  then  to  interrupt  his 
work.i 

1  Decheance  et  aut.  c.  Comp.  d'Ass.  La.  Security  Generale,  Dalloz,  Jur.  du 
Royaume,  1870,  pt.  3,  p.  63 ;  ante,  §§  296,  465,  536. 

1235 


540]  INSURANCE :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XXX. 


CHAPTER   XXX. 

OF   GUARANTEE   AND   OTHER    KINDRED    INSURANCES. 

Analysis. 

§  540.  Guarantee  insurance  against  carelessness,  dishonesty,  &c.,  is  a  contract 
of  suretyship,  and  the  insurers  will  be  subrogated  to  the 
rights  of  the  insured  against  the  person  in  fault.  Services 
of  insured  to  this  end.  Warranties,  Representations,  Form. 
Only  a  percentage  of  loss  paid. 

§  541.  Advantages  of  such  insurance.     Its  union  with  life  insurance. 

§  541  a.  Diligence  of  clerk.     Condition  that  employer  shall  prosecute. 

§  542.  Statement  in  application  that  clerk's  accounts  would  be  exam- 

ined by  finance  committee  every  fortnight  not  a  guarantee, 
see  §  543. 

§  543.  Misrepresentation  as  to  the  amount  of  money  to  be  in  employee's 

hands  fatal.     Kepresentation  of  a  third  person  not  a  war- 
ranty. 

§  544.        Insurance  against  loss  in  trade  by  bankruptcy  of  purchasers. 

§  545.  "  of  the  prom])t  payment  of  a  note. 

§  546.  "  against  the  birth  of  issue. 

§  547.  "  of  rents,  titles,  and  lives  of  cattle,   and   insurance  against 

theft,  §  547. 
"  against  hail,  §§547,  547  a. 

§  547  B.  "  due  at  marriage. 

§  540.  Guarantee  Insurance.  —  What  is  termed  guarantee 
insurance,  which  seems  to  be  merely  a  mode  of  compensated 
suretyship,  has  not,  as  a  distinct  business  of  incorporated  com- 
panies, had  much  vogue  in  this  country,  although  companies 
have  been  incorporated  with  a  view  to  the  acceptance  of  such 
risks.  Nor,  indeed,  in  England,  where  efforts  have  been  made 
to  establish  it  as  a  branch  of  insurance  business,  has  it  made 
much  progress.  And  there  it  has  been  made  applicable,  for 
the  most  part,  to  the  indemnification  of  parties  against  the 
risk  from  wilful  and  culpable  negligence,  infidelity,  fraud, 
and  all  forms  of  dishonesty.  Strictly  speaking,  the  term 
"guarantee  insurance"  is  tautological,  insurance  itself  hav- 
ing for  its  purpose,  as  we  have  seen,^  to  guarantee  against  all 
forms  of  loss  or  pecuniary  injury.     Of  the  principles  which 

1  Ante,  §  2. 

1236 


CH.  XXX.]       OF   GUARANTEE    AND    OTHER   INSURANCES.  [§^'^40 

underlie  the  contract  of  suretyship  frcnerally,  we  do  not  pro- 
])Ose  to  speak.  But  as  special  forms  of  suretyship  have  been 
undertaken,  under  the  general  title  of  insurance,  we  shall 
state  such  points  in  the  history  and  development  of  these 
special  forms  as  have  come  under  the  cognizance  of  the 
courts.  The  statements  made  in  the  application  or  proposal 
may  be  warranties  or  representations,  as  in  other  kinds  of 
insurance,  and,  unless  specially  controlled  by  the  terms  of 
the  contract,  are  subject  to  the  same  construction,  and  have 
the  like  force  and  effect ;  though,  in  a  mere  contract  of  guar- 
anty, the  concealment  or  non-communication  of  material 
facts,  unless  fraudulent,  is  no  defence  to  an  action  upon  the 
contract  of  guaranty .^  And  where  the  contract  is  substan- 
tially one  of  suretyship,  the  insurers  will  doubtless,  after 
payment  of  loss,  in  accordance  with  the  rule  which  obtains 
under  the  relation  of  suretyship,  be  subrogated  to  all  the 
rights  of  the  insured  against  the  party  in  default,  and  en- 
titled to  all  the  securities  which  he  may  hold  against  hira.^ 
The  foj-m  of  the  contract  is  a  policy  describing  the  subject- 
matter  of  the  risk,  setting  forth  the  consideration,  and  pledg- 
ing the  funds  of  the  company  to  pay  in  case  the  event 
insured  against  happens,  subject  to  the  conditions  of  the  con- 
tract. It  is  in  these  special  conditions  that  the  policy  differs 
from  an  ordinary  bond  of  indemnity  with  sureties,  given  by  a 
clerk,  servant,  or  agent  to  secure  his  employers.  These  con- 
ditions refer,  as  in  other  kinds  of  insurance,  to  the  various 
circumstances  which  attend  the  contract,  as  the  payment  of 
the  premiums  originally  and  in  case  of  renewal,  the  truth  of 
the  statements  in  the  proposal  or  application,  the  limitation 
of  the  risk  assumed  by  the  insurer,  the  notice  of  loss, 
mode  of  proof,  times  of  payment,  mode  of  adjustment,  limi- 
tation of  suit,  &c.,  according  to  the  special  views  and  expe- 

1  Tlie  cases  upon  this  subject  seem  to  have  been  carefuhy  collected  by  Run- 
yon,  Life  Insurance,  p.  98  et  seq.,  and  are  reproduced  in  this  country  by  Bliss, 
in  the  chapter  on  Guarantee  Insurance,  contained  in  his  valuable  work  on 
Life  Insurance,  p.  722  et  seq.,  to  which  the  reader  interested  in  the  matter  is 
referred. 

2  North  Brit  Ins.  Co.  v.  Lloyd,  10  Exch.  52.S. 

8  Mountague  v.  Tidcombe,  2  Vern.  (Eng.)  518. 

1237 


§  541]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXX. 

riences  of  the  insurers,  and  with  snch  modifications  as  the 
peculiarity  of  the  risk  assumed  demands.  And  the  proposal 
contains  such  inquiries  and  answers  as  are  calculated  to  ena- 
ble the  insurers  to  determine  the  value  of  the  risk.  —  As  in 
marine  and  fire  insurance,  the  interest  of  the  insured  in  the 
preservation  of  the  property  is  secured  by  limiting  the  in- 
demnification to  a  portion  of  the  property  lost,  so  in  guaran- 
tee insurance  the  interest  of  the  insured  in  preventing  the 
occurrence  of  the  event  insured  against  is  secured  by  provid- 
ing that  in  case  of  loss  only  a  percentage  of  the  loss  will  be 
paid.^  And  a  not  unusual  provision,  peculiar  to  this  form  of 
insurance,  is  the  requirement  that  in  case  of  loss  the  insurers 
shall  be  entitled  to  the  services  of  the  insured,  in  whatever 
form  they  may  be  made  available,  in  bringing  the  delinquent 
to  justice. 

§  541.  Guarantee  Insurance.  —  The  advantages  of  public  Or 
incorporated  guarantee  insurance  over  private  suretyship  are 
held  out  to  be  that  it  affords  to  the  exertions  of  all  classes  in- 
creased facilities  for  obtaining  occupations  of  responsibility  and 
trust;  that  it  encourages  good  character,  by  causing  that  alone 
to  be  the  basis  of  suretyship,  apart  from  the  influence  of  family 
connections,  private  interest,  or  pecuniary  resources  ;  that  it 
relieves  private  individuals  from  the  necessity  of  becoming 
sureties,  and  from  the  consequent  liability  to  which  they  or 
their  estates  may  be  exposed  ;  and  that  it  offers  the  best  secur- 
ity to  employers,  because  free  from  the  uncertainty  and  anxiety 
which  unavoidably  attach  to  private  suretyship,  by  reason  of 
unknown  death,  insolvency,  and  the  many  casualties  to  which 
such  sureties  are  liable.  The  union  of  guarantee  with  life 
insurance  has  also  been  attempted,  upon  the  principle  that 
two  risks  rendered  dependent  on  each  other  can  be  insured 
at  a  lower  rate  than  the  same  two  risks  separately.  The  life 
insurance  becomes,  as  it  were,  a  contingent  collateral  security 
against  the  risk  undertaken  for  the  guarantee,  inasmuch  as,  if 
a  claim  be  substantiated  by  the  employer  under  the  guarantee 
policy,  the  life  policy  is  forfeited.  While  such  a  system  ap- 
pears to  be  equitable,  it  is  also  effective  in  the  protection  of 

1  Solvency  Mut.  Guar.  Co.  v.  York,  3  H.  &  N.  588. 
1238 


CH.  XXX.]       OF   GUARANTEE   AND   OTHER   INSURANCES.  [§  542 

employers,  since  the  self-interest  of  the  employed  is  involved 
in  any  act  of  delinquency.  It  is  understood  that  the  public 
authorities  in  England  have  to  a  considerable  extent  resorted 
to  this  form  of  guaranty  in  lieu  of  private  bondsmen.^ 

§  541  a.  Guarantee  Insurance  ;  Fidelity  of  Clerk  ;  Condition 
that  Employer  shall  prosecute  ;  Hiring  of  Servant.  —  On  a  guar- 
antee policy  of  a  clerk's  faithful  and  diligent  performance  of 
his  duty,  who  left  a  large  sum  of  money  in  open  bags  in 
his  room  while  he  went  to  lunch,  which  money  disappeared 
while  he  was  gone,  it  was  held  that  the  insurers  were  liable.^ 

In  Fearnley  v.  London  Guarantee  Society,^  where  the  policy 
insuring  against  embezzlement  required  the  employer  to  use 
all  due  diligence  in  prosecuting  to  conviction  the  employee 
as  a  condition  precedent  to  the  right  to  recover,  it  was  held, 
by  an  equally  divided  court,  that  the  fact  that  a  criminal 
prosecution  would  subject  the  employer  to  an  action  for  dam- 
ages did  not  excuse  him.  The  condition  precedent  was  still 
a  valid  one. 

The  allowance  of  over-drafts  without  security,  in  collusion 
with  the  parties  overdrawing,  is  a  loss  "  by  the  want  of  in- 
tegrity, honesty,  and  fidelity,  or  by  the  negligence,  default,  or 
irregularities  of  the  manager"  of  a  bank.* 

§  542.  Guarantee  Insurance  ;  Representation.  —  In  Benham 
V.  United  Guarantee  and  Life  Insurance  Company,^  the  de- 
fendants granted  to  the  plaintiff,  the  treasurer  of  a  literary 
institution,  a  policy  of  guarantee  against  loss  occasioned  by 
the  want  of  "  integrity,  honesty,  or  fidelity  "  of  the  secretary 
of  such  institution,  •'  arising  out  of  his  employment  as  such 
secretary."  The  policy  set  forth  that,  as  the  basis  for  the 
contract  of  such  guarantee,  the  plaintiff  had  lodged  at  the 
office  of  the  defendants  a  certain  statement  containing  a  dec- 
laration, signed  by  the  plaintiff,  of  the  truth  of  the  answers 


1  Bunyon,  Life  Insurance,  p.  119. 

2  Re  Citizens'  Ins.  Co.  &c.,  Q.  B.  (Quebec),  16  Can.  L.  J.  .034  (Dec.  1880). 

3  Sup.  Ct.  of  Judicature  (Ireland),  9  Ins.  L.  J.  100. 

*  Bank  of  Toronto  v.  European  Ins.  Co.,  14  L.  C.  Jur.  186,  Superior  Court  in 
review  (1870).    Appealed  to  Jud.  Com.  of  P.  C. 

6  7  Exch.  744.  - 

1239 


§  543]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXX. 

thereby  given  to  the  questions  therein  contained.  This  state- 
ment contained,  amongst  others,  the  following  questions  and 
answers :  "  First,  Is  the  applicant  at  present  in  your  employ- 
ment, and  if  so  in  what  capacity,  and  has  he  hitherto  per- 
formed the  duties  of  the  situation  faithfully,  and  to  your 
satisfaction?  —  He  is  secretary.  .  .  .  Secondly,  Is  the  appli- 
cant personally  known  to  you,  or  any  of  your  firm,  or  by  whom 
has  he  been  introduced  or  recommended  to  you  ?  —  Only  as 
above.  Thirdly,  In  what  capacity  do  you  intend  to  employ 
the  applicant  ?  and  with  reference  to  this  question  state,  as  far 
as  circumstances  will  permit :  (a)  The  nature  of  his  intended 
duties  and  responsibilities.  —  He  is  secretary  of  the  Maryle- 
bone  Literary  Institution,  of  which  I  am  treasurer.  (^>)  The 
checks  which  will  be  used  to  secure  accuracy  in  liis  accounts, 
and  when  and  how  often  they  will  be  balanced  and  closed. 
• —  Examined  by  finance  committee  every  fortnight,  (c)  The 
salary  or  emolument,  and  when  it  will  be  paid  to  him,  and 
how.  —  Thirty  })Ounds  a  year  at  present."  Upon  these  facts 
it  was  held  that  the  statement  that  the  accounts  would  be  ex- 
amined by  the  finance  committee  every  fortnight  did  not 
amount  to  a  warranty,  but  was  a  mere  representation  of  the 
intention  of  the  plaintiff ;  and  that  the  insured  might,  there- 
fore, recover  for  a  loss  arising  from  a  want  of  integrity  of  the 
secretary,  although  such  loss  was  occasioned  by  neglect  to  ex- 
amine the  accounts  in  the  manner  stated.  The  application  in 
this  case  was  by  the  secretary,  and  the  questions  proposed 
were  to  his  employer.  The  proposal  contained  a  declaration 
of  the  truth  of  the  statement  thci-ein  contained,  and  that  it 
constituted  the  basis  of  the  contract.  All  of  the  judges  agreed 
that  the  answer  as  to  the  examination  of  accounts  was  noth- 
ing more  than  a  declaration  of  the  course  intended  to  be  pur- 
sued, and,  if  bona  fide,  was  not  otherwise  to  be  objected  to. 
Martin,  B.,  also  adverted  to  the  fact  that  the  questions  were 
put  to  the  employer  as  of  some  significance. 

§  543.    Guarantee  Insurance  ;    Misrepresentation.  —  The    Na- 
tional Guardian  Life  Insurance  Society,  as  a  branch  of  their 
business,  issued  policies  called  guarantee  policies,  having  for 
their  object  the  insurance  of  employers  against  loss  by  reason 
1240 


CH.  XXX.]       OF   GUARANTEE   AND    OTHER   INSURANCES.  [§  543 

of  the  want  of  honesty  or  fidelity,  or  on  account  of  the  wilful 
or  culpable  default  or  negligence  of  their  employees.  Upon 
one  of  these  policies,  insuring  the  honesty  of  a  collector  of 
taxes,  defence  was  made  on  the  ground  of  misrepresentation  ; 
and  it  appeared  that  prior  to  issuing  the  policy  certain  ques- 
tions were  put  to  the  insured  and  to  his  employers,  and 
amongst  others  inquiry  was  made  as  to  the  largest  amount  of 
money  which  would  come  into  his  hands  at  any  one  time  and 
be  retained  by  him,  and  what  checks  were  used  to  secure  ac- 
curacy in  his  accounts.  It  was  replied  that  he  was  to  collect 
and  account  for  the  sums  collected  by  him ;  that  the  amount 
of  money  which  he  was  to  receive  and  retain  in  his  hands,  not 
longer  than  a  week,  was  from  one  hundred  to  two  hundred 
pounds  sterling  ;  that  his  accounts  would  be  checked  weekly 
by  the  surveyor  of  taxes ;  that  the  balance  each  week  would 
be  paid  over  ;  and  that  such  balances  would  be  occasionally 
tested  by  his  employers.  It  also  appeared  that  his  annual  col- 
lections amounted  to  nine  thousand  pounds  sterling,  and  he 
arrived  at  his  answer  by  dividing  that  sum  by  fifty-two,  the 
number  of  weeks  in  the  year,  whereas  in  point  of  fact  in  some 
weeks  nothing  was  collected,  and  in  other  weeks  as  high  as 
one-quarter  part  of  the  whole  sum  of  nine  thousand  pounds 
was  collected.  And  it  also  appeared  that  this  want  of  uni- 
formity in  the  weekly  collection  was  well  known  to  the  insured, 
who  was  familiar  with  the  course  of  business.  And  this  sum, 
in  the  ordinary  course  of  business,  came  into  his  possession 
during  the  first  week  of  his  service.  The  insurance  was  for 
the  benefit  of,  and  payable  in  case  of  loss  to,  the  employer, 
and  the  employee  became  a  defaulter.  Stuart,  V.  C.,^  seems  to 
have  entirely  disregarded  the  misrepresentation  as  to  the 
largest  amount  of  money  to  be  had  in  hand  at  any  one  time, 
but  to  have  given  judgment  for  the  plaintiff  on  the  ground 
that  the  answer  about  the  check  had  upon  the  employer  was 
made  by  the  overseer  of  taxes,  a  servant  of  the  commissioners, 
to  the  latter  of  whom  the  inquiry  was  addressed,  and  as  the 

1  Towle  V.  National  Guardian  Life  Ins.  Co.,  7  Jur.  n.  s.  618.  In  this  report 
may  be  found  the  form  of  the  policy,  with  the  accompanying  conditions,  which 
this  society  adopted. 

1241 


§  5-14]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXX. 

insurers  accepted  this  answer,  it  could  not  be  fairly  considered 
a  warranty  by  the  commissioners,  but  was  rather  the  repre- 
sentation of  a  third  person  of  what  was  intended.  On  appeal 
however,!  before  Lords  Justices  Knight  Bruce  and  Turner, 
while  the  latter  seemed  to  agree  with  the  Vice-Chancellor  on 
the  point  upon  which  he  made  the  case  to  turn,  both  the 
learned  judges  held  the  statement  about  the  amount  of  money 
received  a  misrepresentation,  and  as  by  the  terms  of  the  policy 
it  was  made  void  by  misrepresentation,  gave  judgment  for  the 
defendant. 

§  543  a.  Representation.  —  A  representation  that  the  per- 
son whose  fidelity,  &c.,  is  insured  "  has  never  been  in  arrears 
or  default  in  his  accounts,"  covers  arrears  and  defaults  prior 
to  the  time  when  he  entered  the  service  of  the  person  insured.^ 

So  a  promissory  representation  that  a  town  treasurer's  ac- 
counts shall  be  from  time  to  time  audited,  and  that  money 
shall  only  be  drawn  in  a  certain  way,  must  be  substantially 
complied  with,  or  no  recovery  can  be  had.^ 

§  544.  Insurance  against  Loss  in  Trade  by  Bankruptcy  of  Pur- 
chasers. —  In  Solvency  Mutual  Guarantee  Company  v.  Froane,* 
the  insurance  was  against  loss  on  the  gross  annual  returns  of 
their  business  for  two  years,  by  the  bankruptcy  of  purchasers 
of  goods,  and  unless  two  months'  notice,  prior  to  the  expira- 
tion of  the  original  contract,  be  given  by  one  of  the  parties  of 
an  intention  not  to  renew,  the  contract  was  to  be  regarded 
as  a  renewed  contract  of  the  like  nature  and  conditions.  This 
was  held  to  be  an  agreement  for  a  single  renewal,  if  there 
was  no  notice  to  the  contrary  ;  but  beyond  this  single  re- 
newal the  contract  did  not  extend.  And  to  the  same  effect 
was  the  case  of  the  same  company  against  York.^  And  in 
Towle  V.  National  Guardian  Insurance  Company,^  Sir  G.  J. 
Turner,  L.  J.,  was  of  the  opinion  that  a  policy  had  lapsed 
where  the  policy  provided  that  it  should  be  good  for  a  year, 

^  Towle  V.  National  Guardian  Life  Ins.  Co.,  7  Jur.  n.  s.  1109. 

2  Ottawa  Agr.  Ins.  Co.  v.  Canada  Guarantee  Ins.  Co.,  30  U.  C.  (C.  P.)  360. 

8  Board  of  Education  v.  Citizens'  Ins.  Co.,  30  U.  C.  (C.  P.)  132. 

*  7  H.  &  N.  5.  5  3  H.  &  N.  688. 

6  7  Jur.  N.  s.  1109. 

1242 


CH.  XXX.]       OF   GUARANTEE    AND    OTHER   INSURANCES.  [§  545 

"  and  for  every  subsequent  year  that  the  society  shall  agree 
to  renew,  and  the  insured  to  pay  "  a  specified  sum,  and  the 
society  had  given  no  notice  nor  taken  any  action  whatever 
touching  the  subsequent  year.  In  the  case  of  the  same  com- 
pany V.  Freeman,!  the  insurance  was  of  a  firm  against  loss  in 
respect  of  their  gross  annual  returns,  subject  to  the  following 
condition :  "  If  a  member  of  the  company  shall  die,  or  if  any 
member,  guaranteed  with  respect  to  his  gross  or  particular 
trade  debts,  shall  cease  to  be  such  a  trader,  his  guarantee  or 
contract  shall  become  void  on  such  death,  or  (if  such  trader) 
on  his  retiring  from  such  trade ; "  and  it  was  held  that  the 
retirement  of  one  of  two  partners  in  trade  was  an  event  by 
which  the  condition  was  violated,  and  the  guarantee  became 
void.  And  here,  as  in  other  forms  of  insurance,  if  a  party 
has  taken  out  a  policy  which  is  not  in  accordance  with  the 
terms  of  the  agreement,  the  court  will  reform  the  policy, 
upon  a  proper  bill,  so  as  to  make  it  conform  to  the  original 
agreement,  but  will  not  allow  the  non-conformity  to  be 
pleaded  in  bar  to  an  action.^ 

§  545.  Insurance  of  the  Prompt  Payment  of  a  Promissory  Note. 
—  In  the  Supreme  Court  of  Maryland,^  a  case  arose  upon  a 
policy  of  insurance  upon  a  promissory  note,  guaranteeing  its 
prompt  payment  at  maturity.  By  the  statute,  the  insurance 
company  was  authorized  to  make  insurances  "  against  all  loss 
or  damage  from  any  cause,  hazard,  or  liability  whatsoever  on 
and  relating  to  factories,  &c.,  cJioses  in  action,  and  personal 
property  of  every  description.  "  The  form  of  this  policy  was 
an  agreement  under  seal,  in  consideration  of  the  premium 
paid  and  securities  deposited,  to  guarantee  to  the  bearer  the 
payment  of  the  amount  of  the  note  on  the  day  it  should  fall 
due,  on  presentation  of  the  policy  at  the  oilice  of  the  com- 
pany. It  was  held,  upon  the  peculiar  facts  of  the  case,  that 
the  policy  was  valid  and  was  negotiable,  and  therefore  avail- 
able in  the  hands  of  a  third  person.  It  appears  that  the  note 
was  surrendered  to  the  insurance  company  at  the  time  the 

1  7  H.  &  N.  17. 

2  Solvency  Ins.  Co.  v.  Freeman,  7  H.  &  N.  17.     See  post,  §  566  et  seq. 

3  Ellicott  V.  United  States  Ins.  Co.,  8  Gill  &  Johns.  (Md.)  166. 

1243 


§  547]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXX. 

policy  was  taken  out.  The  form  of  the  contract  was  declared 
to  be  immaterial.  The  purpose  of  the  obligors  being  to  protect 
the  holder  of  the  notes  against  the  hazard  of  loss,  any  form  of 
words  effecting  that  purpose  the  law  will  adopt  and  enforce. 

§  546.  Insurance  against  the  Birth  of  Issue.  —  Insurance 
against  the  birth  of  issue  has  also  been  practised  to  some  ex- 
tent in  England.  But  it  has  not,  so  far  as  we  are  aware, 
been  introduced  into  this  country ;  and  indeed  in  England 
but  few  companies  have  the  authority  to  embark  therein. 
"  The  risk,"  says  Bunyon,^  "  may  be  either  coupled  or  not 
with  some  contingency  dependent  upon  the  duration  of 
human  life,  such  as  the  attainment  of  a  particular  age  by 
the  issue.  The  more  common  case  is  that  in  which  a  tenant 
for  life,  under  a  settlement,  is  entitled  to  the  reversion  in  fee- 
simple,  subject  to  an  estate  tail  in  "  his  own  issue  (if  any)  by 
the  particular  marriage,  and  is  desirous  of  mortgaging  the 
estate  without  burdening  his  life-interest  with  the  premiums 
on  insurances  of  his  life.  .  .  .  The  chances  of  having  issue, 
as  depending  upon  age,  health,  and  other  circumstances  of 
more  or  less  importance,  are  the  elements  upon  which  the 
value  of  the  risk  is  bascd.^ 

§  547.  Insurance  of  Rents,  Titles,  against  Theft,  Hailstones,  and 
upon  the  Lives  of  Cattle.  —  Other  forms  of  guarantee  insurance 
are,  insurance  of  rents,  wdiich  has  for  its  object  the  prompt 
payment  of  rent  to  landlords  or  others  interested  in  the  prof- 
its outcoming  from  real  estate,  or  to  insure  to  them  a  regular 
income  by  undertaking  the  management  of  the  property,  — 
to  the  mortgagee  his  interest,  and  to  the  mortgagor  his  sur- 
plus rent ;  insurance  of  what  are  termed  holding  titles  to  real 
property,  or  interests  thereon,  in  contradistinction  to  market- 
able titles,  whereby  the  former  are  rendered  salable,  and 
property  otherwise  immovable  for  lack  of  a  good  legal  title 
becomes  marketable ;  insurance  against  theft,  which  needs  no 
explanation  ;  insurance  against  the  ravages  of  hailstones ; 
cattle  insurance,  or  insurance  against  the  loss  of  cattle  by 

1  Life  Insurance,  98. 

■^  See  Bunyon,  uhi  supra,  for  some  speculations  and  discussions  bearing  upon 
this  point. 

1244 


CH.  XXX.]       OP   GUARANTEE   AND    OTHER   INSURANCES.         [§  547  a 

disease,  —  all  of  which  have  been  practised  to  some  extent 
in  England,  and  the  last  two  especially  to  a  very  considerable 
extent  on  the  continent,  particularly  in  Germany,  France, 
and  Switzerland.  But  no  adjudications  by  the  courts  of 
England  of  contested  points  arising  under  these  several 
forms,  have  yet,  so  far  as  we  are  aware,  been  published, 
though  on  the  continent,  especially  in  France,  there  has  been 
considerable  litigation.  These  are  not,  however,  deemed  of 
such  pi-esent  interest  in  this  country  as  to  w^arrant  their  in- 
troduction here.  In  this  country  the  lives  of  horses  are  in- 
sured to  some  extent.  In  Hartford  Live  Stock  Insurance 
Company  v.  Mathews,  a  question  arose  as  to  the  truth  of  the 
representation  that  the  horse  whose  life  was  insured  was 
sound,  and  of  a  certain  value,  when  in  fact  he  was  not  sound, 
and  was  of  much  less  value.  The  insurers  had  paid  the  loss, 
and  successfully  sued  to  recover  back  the  money  paid,  as  ob- 
tained through  deceit  and  false  swearing  as  to  value  at  the 
time  of  the  loss.^  In  American  Horse  Insurance  Company  v. 
Patterson,^  wiiich  was  also  an  insurance  upon  the  life  of  a 
horse,  the  only  question  in  dispute  was  whether  the  horse 
was  alive  when  the  policy  took  effect. 

§  547  a.  Guarantee  Insurance  ;  Hail.  —  Where  the  policy 
insuring  against  damage  by  hail  provided  that  the  damage 
should  be  determined  by  appraisers  appointed  by  the  com- 
pany, and  in  case  the  appraisement  was  less  than  a  twenty- 
fifth  of  the  value  no  claim  should  be  made  on  the  company, 
—  the  insured  to  bear  the  expense  of  the  appraisement, — 
and  also  that  on  demand  of  the  agent  the  costs  of  the 
assessment  should  be  deposited  by  the  insured  before  the 
assessment  is  accomplished,  it  was  held  that  the  deposit 
might  be  demanded  before  making  the  appraisement,  without 
regard  to  the  amount  of  the  damage  which  might  prove  to  be 
actually  done,  and  no  recovery  could  be  had  if  the  demand 
for  such  deposit  had  not  been  complied  with,  and  that  the  loss 
amounting  to  one  twenty-fifth,  and  other  conditions  not  pre- 
venting, a  recovery  could  be  had.'^ 

1  Ante,  §  477.  ^  ^nte,  §  44. 

3  Mutual  Hail  Ins.  Co.  v.  Wilde,  8  Neb.  427. 

1245 


§  547  B]        INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.         CH.  XXX. 

[§  547  B,  Marriage  Insiurance.  —  A  contract  of  marriage 
insurance  which  agrees  to  pay  more  on  the  event  of  marriage 
in  proportion  to  the  term  of  membership  before  marriage  is 
void  as  having  a  tendency  to  induce  the  indefinite  postpone- 
ment of  marriage.^] 

1  [White  V.  Equitable  Mut.  Ben.  Union,  76  Ala.  251.] 

1246 


CH.  XXXI.]  OF  MUTUAL   INSURANCE. 


CHAPTER  XXXI. 

OF   MUTUAL   INSURANCE. 

Analysis. 

§  548.  Each  person  insured  becomes  a  stockholder,  and  is  at  once  insured 

and  insurer. 
The  whole  premium  may  be  paid  in  advance,  and  no  after 

liability  attach. 
Charter  lien. 
§  549.  The  capital  consists  of  cash,  premium  and  deposit  notes,  §§  549  a, 

549  6. 
and  the  liability  of  members  to  a  fixed  amount  beyond  these. 
§  550.  Mutual  and  stock  business  done  by  same  company. 

§  550  a.  Benevolent  associations  treated  as  life  insurance  companies. 

§  551.  Mutual  life  insurance  guarantee  fund. 

§  552.  Membership.     How  far  members  bound  by  the  by-laws.     Appli- 

cants not   bound  by  them  until  the  contract  is  com- 
plete, and  contra. 
Acts  of  officers.     Safety  fund.     Diversion  of  funds  from 

purpose  of  charter. 
False  representations  in  procuring  membership.     Estoppel 
to  deny  membership.     A  minor  may  be  a  member. 
§§  553,  554.        Forfeiture  of  policy  as  a  defence  on  note. 
§  555.  Surrender  and  cancellation  of  policy.    See  also  §  556.    Insolvency 

of  maker  of  premium  note. 
§  557.  Assessments. 

Right  to  assess  strictly  construed.     The  assessment  must 
conform  to  the  charter,  and  the  agreement  must  be 
by  the  proper  officers. 
§  558.  Slight  errors  do  not  invalidate  assessments. 

§  559.  What  they  may  include.     Insolvency.     Set-off. 

How  the  amount  for  which  the  assessment  is  to  be 
made  is  estimated,  and  must  not  be  larger  than 
necessary  to  meet  existing  charges,  or  intention- 
ally omit  stockholders.  But  an  assessment  may 
be  made  to  cover  losses  by  bad  investments,  or 
prior  assessment  illegal  in  form,  and  mere  ex- 
cessiveness  if  not  gross  will  not  be  fatal. 
§  560.  Classification  of  risks  and  funds. 

§  560  A.  Extent  of  liability  to  pay.     See  also  §  561. 

Fraud  inducing  member  to  join  is  a  defence,  §  560  A. 

But  neglect  to  read  the  policy,  which  turns  out  to 

be  different  from  what  the  insured  wanted,  is 

no  defence.     The  holder  is  presumed  to  know 

the  contents  of  the  policy  he  accepts. 

VOL.  n.  —  S5  1247 


§  548]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXXI. 

Assessments,  continued.  • 

§  560  B.  Forfeiture  or  suspension  by  non-payment.     (Liability  in  spite  of  ; 

see  §  560  A.) 
Not  if  assessment  is  invalid; 

or  assured's  share  of  company  profits  will  satisfy  the  assess- 
ment on  him; 
or  the  policy  is  revived,    or  there  is  an  excuse  for  non- 
payment which  the  compan}^  ought  to  recognize. 
Evidence  of  forfeiture.     Company's  books  the  best. 
§  561.  Sometimes  the  whole  amount  of  the  deposit  note  becomes 

due  upon  a  single  default. 
§  561  A.  "Waiver. 

by  course  of  dealing. 

any  subsequent  recognition  of  policy  as  valid. 

sending  a  second  notice  after  the  expiration  of  the  time  for 

payment, 
subsequent  levy  or   collection   of  an   assessment,   unless 
qualified. 
§  562.  Notice  of  assessment.     Mail.     By-law. 

Charter  provision.     Publication.     Date. 
Time  allowed  for  payment  after. 
§  563.  Contract  with  parties  out  of  the  State. 

Lien.     See  also  §  560  A. 
§  563  A.  It  is  the  duty  of  the  company  to  make  an  assessment  within  a 

reasonable  time,  and  [)ay  a  loss,  and  if  it  does  not,  suit  may 
be  brought,  Qit\\ev  Jot  mandamus  to  compel  an  assessment, 
or  for  the  amount  of  an  assessment  levied,  or,  where  none 
has  been   levied,   for  the  maximum  amount  of  the  policy, 
leaving  the  company  to  prove  if  it  can  that  a  proper  assess- 
ment would  not  produce  so  much.     This  is  the  best  doctrine, 
though  there  are  contra  authorities  both  as  to  the  form  of  suit 
and  the  burden  of  proof. 
A  by-law  may  diminish  the  class  assessable,  or  may  require  resort 
to  a  superior  body  of  the  society  before  suit,  but  cannot  cut 
off  final  resort  to  the  courts. 
Numbering  of  certificates  jjrima  facie  evidence  of  membership. 
Lack  of  certificate  fatal  to  suit. 
§  564.  Liability  of  directors  for  neglecting  to  assess. 

§  548.  Mutuality  ;  Membership  ;  Capital  ;  Lien.  —  We  have 
already  had  occasion  to  refer  to  some  of  the  distinctions  be- 
tween mutual  and  stock  insurance,  especially  with  reference 
to  their  respective  powers  to  enter  into  contracts,  and  to 
waive  the  provisions  of  their  charters  and  by-laws.^  Some 
further  peculiarities  of  mutual  insurance  will  be  made  the 
subject  of  this  chapter.  The  principle  which  lies  at  the 
foundation  of  mutual  insurance,  and  gives  it  its  name,  is 
mutuality  ;  in  other  words,  the  intervention  of   each  person 

1  See  ante,  §§  62,  146  et  seq. 

1248 


CH.  XXXI.]  OF   MUTUAL   INSURANCE.  [§  548 

insured  in  the  management  of  the  affairs  of  the  company,  and 
the  participation  of  each  member  in  the  profits  and  losses  of 
the  business,  in  proportion  to  his  interest.  Each  person  in- 
sured becomes  a  member  of  the  body  corporate,  clothed  with 
the  rights  and  subject  to  the  liabilities  of  a  stockholder.^  He 
is  at  once  insurer  and  insured.  In  New  York  companies 
have  been  chartered  to  do  business  "  on  the  mutual  plan," 
with  authority  to  give  the  insured  an  option  whether  to  pay 
the  whole  premium  in  advance  in  cash,  without  further 
liability  to  assessments,  or  to  pay  part  in  cash  and  part  in  an 
assessable  premium  note.  And  it  was  contended  that  this 
option  was  inconsistent  with  the  principles  of  mutuality. 
But  the  court  held  otherwise.  The  money  they  held  to  be 
in  lieu  of  the  note,  and  subject  to  the  same  appropriation, 
with  the  difference  that  it  mu'st  be  first  applied,  and  no  part 
of  it  can  be  withdrawn  at  the  expiration  of  the  policy, 
although  it  may  not  have  been  all  expended.  The  pi'inci- 
ple  of  mutuality  was  said  to  consist  not  in  the  fact  that 
each  member  is  an  insurer  as  well  as  the  insured,  but  in 
the  fact  that  he  contributes  to  the  common  fund,  —  this 
contribution  being  sufficient  to  constitute  membership,  and 
may  as  well  be  represented  by  cash  as  by  a  note.^  And 
an  ordinary  note  may  in  such  case  be  accepted  as  a  substi- 
tute for  the  cash  payment.^  The  fact  that  there  is  no  fur- 
ther liability  on  the  part  of  the  member,  if  the  possible 
extent  of  his  liability  is  met  by  payment  of  cash  in  ad- 
vance, does  not  militate  against  the  principle  of  mutuality.* 

1  [A  contract  by  which  one  party  promises  to  make  a  payment  of  indemnitj'^ 
or  towards  it,  upon  the  loss  or  destruction  of  sometiiing  in  wliich  tlie  other  lias  an 
interest  is  a  contract  of  insurance,  and  it  makes  no  difference  that  tho  promisor 
is  a  corporation  and  the  promisee  becomes  a  member  of  it,  and  the  sums 
promised  are  to  be  paid  by  assessments.     State  v.  Insurance  Co.,  30  Kans.  585.] 

2  Mygatt  V.  N.  Y.  Prot.  Ins.  Co.,  21  N.  Y.  52  ;  Ohio  Mut.  Ins.  Co.  v.  Marietta 
Woollen  Co.,  3  Ohio  St.  n.  s.  348.  [That  a  policy  is  for  cash  and  on  short  time 
does  not  make  it  a  stock  policy.  State  v.  Manufacturers'  Mut.  Fire  Ins,  Co.,  91 
Mo.  811.] 

3  Carey  v.  Nagle,  2  Abb.  (U.  S.)  15(5. 

*  Union  Ins.  Co.  v.  Hoge,  21  How.  (U.  S.)  35.'  The  four  cases  last  cited, 
and  especially  the  first  of  them,  are  referred  to  as  containing  a  very  elaborate 
discussion  of  the  principles  which  underlie  mutual  insurance.  But  see  contra, 
Hart  V.  Achilles,  28  Barb.  (N.  Y.)  577. 

1249 


§  549]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,   ETC.       [CH.  XXXI. 

And  the  premium  notes  so  held  are  liable  for  losses  under 
cash  policies.^ 

The  lien  given  by  charter  upon  property  insured  is  not 
valid  against  a  hona  fide  purchaser. ^ 

§  549.  Mutual  Insurance  ;  Capital.  —  Although  the  members 
of  a  mutual  company  are  not  usually  denominated  stock- 
liolders,  and  are  not  stockholders  in  the  usual  sense  of  the 
word,  yet  they  are  in  point  of  fact  stockholders,  and  in  many 
of  the  policies  are  recited  to  have  taken  a  portion  of  the  capi- 
tal stock.  This  stock  is  usually  taken  by  paying  in  a  certain 
amount  of  cash  premium,  and  the  balance  in  what  are  denomi- 
nated premium  notes  ;  that  is,  notes  given  for  premiums,  to 
form  the  basis  of  assessments  for  losses  and  expenses,  and 
constituting  the  capital  or  funds  of  the  company.  The  capi- 
tal stock  of  a  mutual  insurance  company  usually  consists  in 
its  cash  assets,  its  premium  and  deposit  notes,  assessable  to 
pay  losses,  which  are  usually  denominated  absolute  funds,  and 
the  liability  to  a  fixed  amount,  by  statute  or  charter,  over  and 
beyond  these,  to  be  resorted  to  after  the  first  arc  exhausted, 
and  usually  denominated  conditional  funds.  Sometimes  notes 
given  to  the  company  in  advance  for  premiums,  called  stock 
or  advance  notes,  and  expressly  made  payable  by  insurance 
from  time  to  time,  as  the  makers  of  the  note  may  require, 
constitute  a  portion  of  the  capital  stock.  And  between  these 
latter  notes  and  the  ordinary  deposit  notes,  made  payable 
from  time  to  time,  as  called  for  by  assessments  for  losses,  the 
distinction  is  to  be  observed  that  whereas  the  former  are 
payable  absolutely  and  at  all  events,  without  regard  to  the 
question  of  loss,^  and  are  therefore  subject  to  the  Statute  of 
Limitations,*  and  are  negotiable,^  the  latter  are  only  payable 
at  such  times  and  in  such  portions  as  may  be  necessary  to 

1  Wliite  V.  Havens,  20  How.  Pr.  177  ;  Ohio  Mut.  Ins.  Co.  v.  Marietta  Wool- 
len Co.,  supra. 

~  Kentucky  v.  Insurance  Co.,  7  Bush  (Ky.),  23;  McCulloch  v.  Indiana  Mut., 
&c.  Ins.  Co.,  8  BLickf.  (Ind.)  50. 

3  Dana  v.  Munro,  38  Barb.  (N.  Y.)  528 ;  Brown  v.  Crooke,  4  Comst.  (N.  Y.) 
51  ;  Maine  Mut.  Ins.  Co.  v.  Scranton,  49  Me.  448. 

*  Savage  v.  Medbury,  19  N.  Y.  32. 

&  Brookman  v.  Metcalf,  32  N.  Y.  591. 

1250 


CH.  XXXI.]  OF   MUTUAL   INSURANCE.  [§  549  a 

meet  losses  and  expenses,  are  not  ncg-otiablc,  because  payable 
only  upon  a  contingency  which  may  never  happen,  and  the 
general  Statute  of  Limitations  docs  not  run  in  favor  of  the 
note  as  a  whole,  but  only  u])on  so  much  as  may  be  called  iov, 
and  from  the  time  of  the  call.^  And  a  premium  note,  absolute 
on  its  face,  cannot  be  treated  by  the  company  or  its  receiver, 
or  by  any  one  except  a  hona  fide  holder,  as  a  stock  or  capital 
note,  so  that  the  whole  may  be  collected  without  regard  to 
losses  or  assessments.^  A  note  given  in  advance  for  premiums 
to  be  earned,  and  by  the  terms  of  the  charter  not  to  be  held 
liable  for  any  amount  beyond  the  premiums  earned,  is  a  pre- 
mium note,  and  not  a  subscription  or  capital  stock  note,  and 
is  collectible  only  so  far  as  premiums  have  been  earned.-^ 
Whether  a  note  is  a  premium  or  stock  note  is  a  question  of 
evidence,  with  a  presumption  that  it  is  a  stock  note  if  given 
before  the  organization  of  the  company.*  And  a  note,  in  form 
a  premium  note,  may  be  shown  to  have  been  given  as  a  sub- 
scription or  stock  note,  and  used  as  such,  with  the  consent  of 
the  maker,  in  organizing  the  company  ;  in  which  case  the  whole 
amount  may  be  collected  without  assessment.^ 

§  549  a.  Mutual  Insurance  ;  Absolute  Funds.  —  In  some  forms 
of  mutual  insurance  the  charter  provides  substantially  that  when 
a  person  becomes  a  member  he  shall,  in  addition  to  the  payment 
of  the  premium,  deposit  his  note  for  a  like  amount,  as  a  part  of 
the  capital  stock  of  the  company,  to  be  assessed  and  collected 
by  the  directors  in  sucli  sums  and  at  such  times  as  they  shall 
deem  expedient ;  that  all  premiums  and  deposits  thus  made 
shall  be  denominated  the  absolute  funds,  to  be  applied  to  the 
payment  of  expenses,  borrowed  money,  and  losses  ;  and  if 
these  funds  should  prove  insufficient,  then  the  member  is  to  be 
liable  to  be  called  upon  to  twice  the  amount  of  the  premium 

1  Savage  v.  Medbury,  ul  supra  ;  Howland  v.  Edmonds,  24  N.  Y.  307,  reversing 
Bell  V.  Yates,  33  Barb.  (N.  Y.)  627,  628,  contm  ;  Hope  Ins.  Co.  v.  Weed,  28  Conn. 
51;  Hope,  &c.  Ins.  Co.  v.  Perkins,  2  Abb.  (N.  Y.)  App.  Cas.  383 ;  Howland  o. 
Cuykendell,  40  Barb.  (N.  Y.)  320;  Sinkler  v.  Indiana  Turnp.  Co.,  3  Pa.  14'J. 

2  Bell  V.  Shibley,  33  Barb.  (N.  Y.)  610 ;  Melntire  r.  Preston,  5  Gilni.  (111.)  48. 

3  Elwell  V.  Crocker,  4  Bosw.  (N.  Y.  Superior  Ct.)  22. 

4  Jackson  v.  Van  Slyke,  52  N.  Y.  645. 

5  Sands  v.  St.  Jolin,  36  Barb.  (N.  Y.)  G28. 

1251 


§  549  5]         INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XXXI. 

and  deposit.  In  such  case  the  deposit  note  is  collectible  at 
the  discretion  of  the  directors,  without  assessment,  and  the 
proceeds  may  be  applied  to  the  payment  of  losses  accrued  be- 
fore the  member  became  insured.^ 

§  549  h.  Mutual  Fire  Insurance  ;  Security  Notes  ;  Insolvency. 
—  In  other  forms  of  mutual  insurance  the  companies  are 
authorized,  for  the  better  security  of  dealers,  to  receive  notes 
for  premiums  in  advance  from  persons  intending  to  take  out 
policies,  and  to  negotiate  such  notes  for  the  purpose  of  paying 
claims  or  otherwise  in  the  course  of  its  business ;  and  on  such 
portions  of  said  notes  as  may  exceed  the  amount  of  premiums 
paid  by  the  respective  makers,  and  on  new  notes  taken  in  ad- 
vance from  time  to  time,  annually  to  allow  a  compensation  of 
a  certain  per  cent  for  their  use.  These  are  termed  security 
notes,  and  are  in  addition  to  the  notes  given  for  premiums  in 
advance  in  the  usual  course  of  business,  and  to  be  resorted 
to  only  in  case  of  the  insufficiency  of  the  latter  to  meet  the 
claims  against  the  company.  Under  such  a  proviso  the  notes 
are  negotiable  by  the  president  without  a  vote  of  the  direc- 
tors, under  his  general  authority  to  transact  the  business  of 
the  company,  and  may  be  transferred  to  a  member  of  the 
company  in  payment  of  a  claim  for  loss,^  or  for  other  purposes, 
even  before  a  loss  or  before  any  insurance  has  been  effected.^ 
And  a  transfer  by  act  of  law  without  indorsement  is  effectual ;  * 
but  a  promise  by  the  president  before  its  maturity,  or  at  that 
time,  to  give  such  a  note  up,  is  one  which  he  has  no  authority 
to  make.^  Nor  is  a  surrender  by  the  directors  without  con- 
sideration, binding  upon  the  receiver.^  And  neither  the  in- 
solvency of  the  company,  nor  the  fact  that  the  note  is  overdue, 
is  a  defence,  if  from  an  insufficiency  of  other  funds  it  becomes 
necessary  to  resort  to  this  further  security.  Whether  negoti- 
ated before  or  after  maturity,  they  are  recoverable  to  their 
full  amount,  less  the  premiums  on  policies  taken  out  by  the 

1  Nashua  Fire  Ins.  Co.  v.  Moore,  55  N.  H.  48. 

2  Aspinwall  v.  Meyer,  2  Ranclf.(N.  Y.  Superior  Ct.)  180. 

8  Brouwer  v.  Appleby,  1  Sandf.  (N.  Y.  Superior  Ct.)  158. 
4  Brouwer  t^.  Hill,  1  Sandf.  (N.  Y.  Superior  Ct.)  629. 
6  Ibid. 
6  Ibid. 

1252 


CH.  XXXI.]  OF   MUTUAL   INSURANCE,  [§  550  a 

makers,  and  the  interest  due  at  the  time  of  insolvency  by  the 
company.!  ^|j  renewal  notes,  given  for  any  outstanding  bal- 
ance of  the  original  note,  stand  upon  the  same  footing,  and 
are  payable  notwithstanding  the  company  after  failure  refuse 
an  application  for  insurance.^  But  if  the  renewal  note  be  for 
the  same  amount  as  the  original  note,  without  deduction  of 
premiums,  which  may  have  been  debited  duiing  its  currency, 
these  cannot  afterwards  be  deducted  in  a  suit  by  the  receiver 
to  collect  the  note.  The  renewal  of  the  note  to  the  full 
amount  is  to  be  regarded  as  an  election  to  have  the  benefit  of 
the  continued  subscription  to  that  amount,  with  the  advan- 
tage of  the  five  per  cent  compensation,  and  the  extended  credit 
for  premiums  which  they  might  incur.^  If  these  notes  are 
taken  subsequent  to  the  organization  of  the  company,  it  is  a 
question  of  fact  whether  they  are  given  for  premiums  in  ad- 
vance in  the  usual  course  of  business,  or  as  security  notes.^ 

§  550.  Mutual  and  Stock  Companies.  —  In  some  instances 
the  stock  and  mutual  plans  of  insurance  are  authorized  by  the 
charter  and  practised  by  the  same  insurance  company.  When 
this  is  the  case,  the  insured,  in  the  absence  of  any  statement 
in  the  contract  in  which  category  he  is  included,  will  be 
deemed  to  be  insured  under  the  stock  or  mutual  plan,  accord- 
ing to  the  circumstances  or  nature  of  the  particular  contract.^ 
The  premium  notes  in  such  case  represent  the  capital  stock, 
and  may  be  resorted  to  by  all  the  cash  policy-holders  for  their 
indemnity.^ 

§  550  a.  Benevolent  Associations. — There  are  certain  or- 
ganizations prevalent  in  this  country  and  elsewhere,  under  tlie 
name  of  relief,  benefit,  or  benevolent  societies,  or  some  simi- 

1  Hone  V.  Allen,  1  Sandf.  (N.  Y.  Superior  Ct.)  171, n.  ;  Merchants'  Mut.  Ins. 
Co.  V.  Leeds,  id.  183;  Deraismes  v.  Merchants'  Mut.  Ins.  Co.,  1  Comst.  (N.  Y.) 
371. 

2  Hone  V.  Folger,  1  Sandf.  (N.  Y.  Superior  Ct.)  177. 

3  Hone  V.  Ballin,  1  Sandf.  (N.  Y.  Superior  Ct.)  181. 

*  Merchants'  Mut.  Ins.  Co.  v.  Rey,  1  Sandf.  (N.  Y.  Superior  Ct.)  184;  Brouwer 
V.  Hill,  1  Sandf.  (N.  Y.  Superior  Ct.)  629. 

5  Illinois  Fire  Ins.  Co.  v.  Stanton,  67  111,  354. 

6  Hays  V.  Lycoming,  &c.  Ins.  Co.,  98  Pa.  St.  184;  lO  Ins.  L.  J.  507;  Schimpf 
r.  Lehigh,  &c.  Ins.  Co.,  86  Pa.  St.  373. 

1253 


§  551]  INSURANCE :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXXI. 

lar  name,  which  generally  have  for  their  object  aid  to  their 
members,  or  to  their  widows  and  children  after  the  decease  of 
their  respective  members,  and  in  some  cases  having  both  ob- 
jects. These  associations,  though  not  speculative,  and  not 
based  upon  capital  paid  in  as  an  investment,  have  neverthe- 
less a  general  purpose  of  mutual  protection,  resorting  to 
assessments  for  the  procurement  of  the  funds  to  discharge  the 
mutual  obligations  of  members,  and  are  governed  by  by-laws 
which  limit  and  define  these  obligations.  Their  certificates 
of  membership  often  resemble,  both  in  form  and  substance, 
ordinary  policies  of  life  insurance  ;  and  the  courts  have  with 
great  uniformity  treated  them  as  substantially  life  insurance 
companies,  applying  to  them,  and  to  the  virtual  relatives 
of  the  members,  the  rules  and  principles  applicable  to  the 
contract  of  life  insurance.^ 

§  551.  Mutual  Life  Insurance  ;  Guarantee  Fund.  —  Under  its 
inherent  powers,  as  incidental  to  its  general  power  to  issue 
policies  of  insurance,  a  mutual  life  insurance  company  may, 
by  an  agreement  amongst  its  members,  establish  a  guarantee 
fund,  consisting  of  the  notes  of  the  several  members,  upon 
which  they  may  receive  a  commission  of  a  percentage  per 
annum,  so  long  as  the  notes  are  held  as  a  part  of  such  fund. 
And  in  case  of  insolvency  of  the  company,  these  notes  may  be 
assessed  to  pay  losses  to  their  full  amount,  the  makers  stand- 

1  Commonwealth  v.  Wetherhee,  105  Mass.  149 ;  Kentucky  Masonic  Ins.  Co. 
V.  Miller,  13  Bush  (Ky.),  489;  Shunck  v.  Gegenseitiger,  &c.  Fund,  44  Wis.  370; 
Dietrich  v.  Madison  Relief  Ass.,  45  id.  79  ;  Masons'  Benevolent  Soc.  v.  Win- 
throp,  85  III.  537  ;  State  v.  Merchants'  Exch.  Benev.  Soc.  (Mo.),  10  Ins.  L.  J. 
59;  Swift  V.  Railway,  &c.  Conductors'  Mut.  Aid,  &c.  Ass.  (111.),  id.  53 ;  An- 
cient Order  of  Mutual  Workmen  v.  Moore  (Ky.),  9  id.  539;  Protection  Life 
Ins.  Co.,  In  re,  C.  Ct.  (111.),  id.  145.  In  this  case  the  policies  issued  by  tiie  com- 
pany provided  that  payment  of  death-losses  should  be  made  by  assessment  pro 
rata  upon  the  policy-holders,  and  further  provided  the  manner  of  making  such 
assessment  by  the  company,  and  that  the  assessment  was  to  be  made  upon  those 
holding  policies  at  the  time  of  the  assessment ;  and  it  was  held  that  an  assess- 
ment under  these  policies  does  not  make  the  policy-liolders  debtors  to  the  com- 
pany so  as  to  authorize  it  to  bring  suit  in  case  of  neglect  or  refusal  to  pay,  nor 
can  the  assignee  in  bankruptcy  of  such  company  maintain  sucli  suit.  Tiie 
amount  to  be  assessed  is  not  an  asset  of  the  company,  and,  when  collected, 
does  not  belong  to  the  company  or  its  general  creditors,  but  to  the  special  class 
of  creditors,  the  beneficiaries,  who  could  alone  maintain  this  suit. 

1251 


CH.  XXXI.]  OF   MUTUAL   INSURANCE.  [§  552 

ing  in  the  position  of  general  creditors  as  to  their  claims  for 
commission  against  the  company. ^  If  such  a  right  be  given 
bv  charter,  the  notes  of  persons  not  members  cannot  be  sub- 
stituted under  this  chartered  privilege.^  "^ 
§  552.  Mutual  Insurance  ;  Membership.  —  By  the  insured  in 
a  mutual  insurance  policy  is  meant  the  person  who  owns  the 
property,  applies  for  the  insurance,  pays  the  premium,  and 
signs  the  deposit  note,  and  not  another  person  to  whom  the 
money  may  be  made  payable  in  case  of  loss.^  When  a  party 
takes  out  a  policy,  and  the  contract  is  complete,  he  becomes  a 
member,  and  is  bound  by  its  rules  and  the  provisions  of  the 
charter,  which  he  is  presumed  to  know.*     The  records  of  the 

1  Hope  Mut.  Life  Ins.  Co.  v.  Weed,  28  Conn.  51 ;  Hope  Mut.  Life  Ins.  Co.  v. 
Perkins,  38  N.  Y.  404,  affirming  s.  c.  4  Robt.  18. 

2  Mut.  Ben.  Life  Ins.  Co.  v.  Davis,  12  N.  Y.  (2  Ker.)  569. 

"  Sanford  c.  Mechanics'  Mut.  Fire  Ins.  Co.,  12  Cush.  (Mass.)  541. 

4  Mitchell  V.  Lycoming  Mut.  Ins.  Co.,  51  Pa.  St.  402;  Coles  v.  Iowa  State 
Mut.  Ins.  Co.,  18  Iowa,  426.  Until  the  contract  is  complete,  a  mutual  company- 
has  no  other  or  better  position  with  reference  to  the  insured  than  a  stock  com- 
pany. Eilenberger  v.  Protection  Ins.  Co.,  89  Pa.  464.  One  previously  insured 
in  a  mutual  company  is,  however,  presumed  to  know  its  by-laws  and  business 
routine.  Fuller  v.  Madison,  &c.  Ins.  Co.,  36  Wis.  599.  As  to  business  routine, 
contra,  Walsh  v.  ^tna  Life  Ins.  Co.,  30  Iowa,  133.  [The  by-laws  of  the  com- 
pany' are  part  of  the  contract,  and  all  members  must  take  notice  of  them.  Su- 
preme Lodge,  K.  of  P.  V.  Knight,  117  Ind.  489;  Splawn  v.  Chew,  60  Tex.  532; 
Treadway  v.  Hamilton  Mut.  Ins.  Co.,  29  Conn.  68  at  69  ;  Simeral  y.  Dubuque  Mut. 
Fire  Ins.  Co.,  18  Iowa,  319  at  322  (at  least  where  the  policy  refers  to  tliem). 
Sometimes  a  by-law  provides  that  any  policy  issued  on  property  mortgaged  to 
one-half  its  value  shall  be  void,  and  that  mortgaged  property  shall  not  be  insured 
so  that  the  insurance  and  mortgage  together  shall  exceed  three-fourths  of  its 
value.  In  such  case  the  company  is  not  bound  to  ascertain  the  value  of  the 
property,  the  assured  is  bound  to  know  the  by-law  and  the  value,  and  takes  the 
risk  on  himself  when  he  signs  the  application.  Such  action  amounts  to  a  war- 
ranty that  the  by-law  is  not  violated.  Van  Buren  v.  St.  Joseph  Co.  Village  Fire 
Ins.  Co.,  28  Mich.  398.  It  was  held  m  New  Jersey  that  a  member  of  a  mutual 
company  is  presumed  to  know  the  by-laws,  and  a  representation  by  the  treas- 
urer that  they  were  all  in  the  policy  under  the  head  of  "  conditions  of  insurance" 
does  not  estop  the  company  from  setting  up  a  by-law  not  m  the  policy.  Miller 
V.  Hillsborough  Mut.  Fire  Ins.  Co.,  42  N.  J.  Eq.  459.  But  on  appeal  the  court 
decided  that  although  the  constitution  and  by-laws  were  made  a  part  of  the 
policy  by  words  in  the  body  of  it,  yet  the  annexation  to  the  policy  of  a  number 
of  by-laws  called  "conditions  of  insurance"  justified  the  inference  tiiat  no 
other  by-law  could  affect  the  policy,  and  as  there  was  no  actual  knowledge  of 
the  by-law  relied  on  by  the  company,  the  decree  was  reversed.  44  N.  J.  Eq.  224, 

1255 


§  552]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXXI. 

company  are  then  his  records,  and  evidence  for  or  against 
him ;  ^  and  the  doings  of  the  officers  within  the  scope  of  their 
authority  are  binding  upon  him.^  But  he  is  not  a  member  till 
the  negotiations  are  complete,  and  is  not  presumed  to  know 
anything  of  the  rules  and  by-laws  pending  the  negotiations.^ 
After  he  becomes  a  member  he  cannot  deny  its  existence,  or 
avail  himself  collaterally  of  an  irregularity  in  the  proceedings 
by  which  it  became  a  corporation,  or  acquired  its  powers;* 
nor  can  he  deny  collaterally  the  acceptance  of  an  amendment 
to  the  charter,  after  he  has  given  a  note  in  accordance  with 
the  provisions  of  such  amendment ;  ^  nor  can  he  set  up  a 
want  of  insurable  interest  as  a  defence  against  assessments,^ 
as  under  the  principle  of  mutuality  these  deposit  notes  upon 
which  assessments  are  made  constitute  a  fund  which  he  has 
no  right  to  withdraw,  it  having  been  established  for  the  benefit 
of  others  as  well  as  of  himself.  He  is  not,  however,  bound 
by  a  by-law  or  other  act  of  the  company  affecting  his  con- 
tract or  relation  to  the  company,  passed  without  his  consent,'^ 

227.  A  mutual  company  cannot  by  a  subsequent  by-law  affect  the  rights  of  a 
member  :  Northwestern  Ben.  &  Mut.  Aid  Ass.  r.  Wanner,  24  Brad.  361  ;  unless 
of  course  there  were  an  express  agreement  that  subsequent  by-laws  should 
enter  the  contract.] 

1  Diehl  V.  Adams  County  Mut.  Ins.  Co,  58  Pa.  St.  443. 

2  Hackney  v.  Alleghany  County  Mut.  Ins.  Co.,  4  Pa.  St.  185.  [If,  however, 
an  officer  violates  his  duty,  as  by  wilfully  refusing  to  make  the  required  certifi- 
cate that  a  member  is  sick,  the  latter  may  bring  suit.  Order  of  the  Iron  Hall 
V.  Stein,  19  Ins.  L.  J.  20  (Ind.)  1889.] 

3  Columbia  Ins.  Co.  v.  Cooper,  50  Pa.  St.  331.  And  see  also  Cumberland 
County  Mut.  Prot.  Co.  v.  Schell,  29  Pa.  St.  31.  These  cases  must  be  considered 
as  rejecting  the  contrary  doctrine  asserted  by  Gibson,  C.  J.,  in  Susquelianna  Ins. 
Co.  V.  Perrine,  7  W.  &  S.  (Pa.)  848. 

4  Sands  v.  Hill,  42  Barb.  (N.  Y.)  651  ;  Traders'  Mut.  Fire  Ins.  Co.  v.  Stone, 
9  Allen  (Mass.),  483  ;  Appleton  Mut.  Ins.  Co.  v.  Jesser,  5  id.  446  ;  Citizens'  Mut. 
Ins.  Co.  V.  Sortwell,  8  id.  217  ;  Currie  v.  Mut.  Ass.  Soc  ,  4  H.  &  M.  ( Va.)  315  ; 
Cooper  V.  Shaver,  41  Barb.  (N.  Y.)  151  ;  Nashua  Fire  Ins.  Co.  v.  Moore,  55  N.  H. 
48;  Prov.  Fire  &  Mar.  Ins.  Co.  v.  Murphy,  8  R.  I.  171;  Brouwer  v.  Appleby, 
1  Sandf.  (N.  Y.)  158;  Judale  v.  American  Ins.  Co.,  4  Ind.  333;  Yard  v.  Pacific, 
&c.  Ins.  Co.,  2  Stockt.  (N.  J.  Ch.)  480. 

5  Fell  V.  McHenry,  42  Pa.  St.  41 ;  Hope  Mut.,  &c.  Ins.  Co.  v.  Beckmann,  47 
Mo.  93. 

6  New  England  Mut.  Fire  Ins.  Co.  v.  Belknap,  9  Cush.  (Mass.)  140.  See  also 
post,  §  590. 

'  New  England  Mut.  Fire  Ins.  Co.  v.  Butler,  34  Me.  451 ;  Hamilton  Mut.  Ins. 

1256 


CH.  XXXI.]  OF   MUTUAL   INSURANCE.  [§  553 

especially  if  in  contravention  of  the  charter.^  And  if  he  be 
induced  to  become  a  member  by  fraudulent  representations  of 
the  insurers  or  their  agents,  the  fraud  vitiates  the  contract, 
and  relieves  the  insured  from  auy  obligations  towards  the 
insm'er  under  it.^  [A  member  of  a  society  organized  for  the 
benefit  of  wives,  orphans,  heirs,  and  devisees  of  deceased 
members  cannot  derive  profit  from  the  society,  and  an  agree- 
ment to  pay  a  member  a  certain  sum  at  seventy  years  of  age 
is  void.^  It  is  the  duty  of  a  mutual  society  to  protect  the 
members  and  the  funds  in  its  hands  from  all  invalid  claims, 
and  it  is  error  to  exclude  evidence  of  false  representations  in 
procuring  membership.*  Where  the  safety  fund  is  by  the 
terms  of  the  contract  to  be  applied  for  the  benefit  of  members 
of  five  years '  standing,  claimants  for  death  losses  have  as  such 
no  rights  in  the  fund.^  A  company  which  after  knowledge 
of  a  breach  continues  to  make  calls,  and  votes  to  reinstate 
the  member,  though  not  in  all  respects  proceeding  in  con- 
formity with  the  rules  of  the  institution,  is  nevertheless  es- 
topped from  denying  that  the  deceased  was  a  member  in  good 
standing.^  A  minor  may  be  received  as  a  member  of  a 
mutual  benefit  association.  Payment  of  assessments  is  not 
compulsory  on  any  one.  If  they  are  paid  by  the  infant  he  is 
entitled  to  the  corresponding  benefits.  If  they  are  not  paid, 
his  membership  ceases  just  as  in  the  case  of  an  adult."] 

§  553.  Forfeiture  of  Policy  no  Defence  against  Liability  on 
Note.  —  When  membership  is  once  established,  its  liabilities 

Co.  V.  Hobart,  2  Gray  (Mass.),  543;  Insurance  Co.  v  Connor,  17  Pa.  St.  136; 
Bradfield  v.  Union,  &c.  Ins.  Co.  (C.  C.  P.  Pa.),  10  Ins.  L.  J.  551  ;  Wallace  v.  In- 
surance Co.,  4  La.  289 ;  Rosenberger  v.  Insurance  Co.,  6  Norris  (Pa.),  267  ;  Van 
Slyke  V.  Trempealeau,  &c.  Ins.  Co.,  48  Wis.  683. 

1  Great  Falls  Mut.  Fire  Ins.  Co.  v.  Harvey,  45  N.  H.  292. 

2  Jones  V.  Dana,  24  Barb.  (N.  Y.)  895;  Devendorf  v.  Beardsley,  23  id.  656; 
Fogg  V.  Griffin,  2  Allen  (Mass.),  1  ;  Brown  v.  Donnell,  47  Me.  421 ;  Sterling  v. 
Mer.  Mut.  Ins.  Co.,  32  Pa.  St.  75 ;  Salmon  v.  Richardson,  30  Conn.  3tiO ;  ante, 
§  133. 

3  [Canton  Masonic  Mut.  Ben.  Soc.  v.  Rockliold,  26  Brad.  141.] 
*  [Mayer  v.  Equitable  Life  Ass.,  42  Hun,  237.] 

5  [Burdon  v.  Mass.  Safety  Fund  Ass.,  147  Mass.  360,  366.] 

6  [Hoffman  v.  Supr.  Council  of  Araer.  Leg.  of  Honor,  35  Fed.  Rep.  252  (Va.) 
1888.] 

T  [Chicago  Mut.  Life  Indem.  Ass.  v.  Hunt,  127  111.  257.] 

1257 


§  558]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.       [CH.  XXXI. 

continue,  although  the  member  does  some  act  which,  by  the 
terms  of  the  contract,  avoids  the  policy,  and  although  the 
company  declares  the  policy  void,  so  that  the  right  of  the  in- 
sured to  indemnity  in  case  of  loss  no  longer  exists.  And  this 
liability  extends  to  all  losses  while  the  policy  is  in  force  and 
the  insured  is  a  member,^  even  after  a  total  loss  upon  the 
policy  by  which  he  becomes  a  member.^ 

Acts  of  policy-holders,  which  might  entitle  the  corporation 
to  defend  against  claims  for  losses,  do  not  necessarily  release 
such  parties  from  liability  to  assessment  as  members.  They 
cannot  take  advantage  of  want  of  insurable  interest,  whether 
it  existed  originally,  or  was  occasioned  by  destruction  or  re- 
moval of  the  buildings  insured,  or  by  alienation  ;  nor  of  mis- 
description of  the  property  insured,  or  its  mode  of  occupation  ; 
nor  of  a  loss  of  the  right  to  recover  upon  the  policy  by  rea- 
son of  other  insurance  not  assented  to.  Such  parties  are 
members  of  the  corporation,  notwithstanding  such  ground  of 
defence  to  a  suit  for  recovery  of  a  loss.  They  cannot,  by  their 
own  act,  negligence,  or  fraud,  lay  the  foundations  of  their 
exemption  from  liability.  The  assent  of  the  other  party  to 
the  contract  is  necessary  to  the  release  ;  or  at  least  some  such 
recognition  of  the  act,  negligence,  or  fraud  as  amounts  to  an 
assertion  by  the  insurers  of  their  election  to  treat  the  rela- 
tionship by  contract  as  at  an  end.^ 

But  members  only  are  liable  to  assessment.  Parties  who 
have  neither  taken  their  policy,  nor  signed  any  application 
or  deposit  note,  nor  paid  the  premium,  are  not  members,  and 
cannot  properly  be  included  in  the  assessment.  Assignees 
of  policies,  even  with  consent  of  the  company,  who  have  not 
made  themselves  members  by  signing  any  agreement  to  be- 
come so,  or  to  pay  what  may  become  due  upon  the  policy 
or  upon  the  deposit  note,  are  not  liable  to  assessment.*     And 

1  Iowa  State  Mut.  Ins.  Co.  v.  Prossee,  11  Iowa,  115  ;  Commonwealth  v.  Union 
Mut.  Fire  Ins.  Co.,  112  Mass.  116. 

2  Swamscot  Machine  Co.  i\  Partridge,  5  Post.  (N.  H.)  369. 

3  Post  §  554  ;  Boot  &  Shoe,  &c.  Ins.  Co.  v.  Melrose,  117  Mass.  1«9;  Cumings 
V.  Sawyer,  117  Mass.  30;  Columbia  Ins.  Co.  v.  Bnckley,  83  Pa.  29-3,  298. 

*  Commonwealth  r.  Union  Mut.  Ins.  Co.,  vhi  supra  ;  Philbrook  r.  New  Eng- 
land Mut.  Ins.  Co.,  37  Me.  137  ;  Gardiner  v.  Piscataquis  Mut.  Fire  Ins.  Co.,  38 

1258 


CH.  XXXI.]  OF   MUTUAL   INSURANCE.  [§  553 

where  the  policy  is  assigned  by  consent  of  the  insurers,  and 
the  assignee  thereby  becomes  a  new  member,  he  is  not  liable 
for  an  outstanding  unpaid  premium  note  given  by  the  assignor, 
unless  so  stipulated.^ 

And  if  the  policy  by  its  terms  stipulates  that  in  case  of 
forfeiture  by  the  act  of  the  insured  he  shall  not  be  re- 
leased from  the  obligations  of  the  deposit  or  premimn  note 
until  he  has  complied  with  the  conditions  of  the  policy  and 
charter,  requiring  the  payment  of  his  proportion  of  all  losses 
and  expenses  that  may  have  accrued  prior  to  the  surrender 
of  the  policy  or  alienation  of  the  property,  the  insured  will 
still  remain  liable  upon  his  deposit  note  for  losses  occurring 
after,  as  well  as  before,  the  alienation  or  act  working  the  for- 
feiture, until  all  assessments  are  paid  and  the  policy  surren- 
dered. And  this  is  so  notwithstanding  the  policy  provides 
that  the  person  becoming  a  member  shall  continue  a  member 
so  long  as  he  is  insured  and  no  longer.^  But  an  assessment 
after  forfeiture  of  the  policy,  made  with  knowledge  thereof, 
actual  or  constructive,  and  for  losses  occurring  afterwards,  is 
a  waiver  of  the  forfeiture,  and  gives  to  the  insured  the  right 
to  indemnity  for  loss  under  the  policy.^     It  is  otherwise,  how- 

Me.  439  ;  Boynton  v.  Clinton  Ins.  Co.,  16  Barb.  (N.  Y.)  254  ;  New  Hampshire, 
&c.  Ins.  Co.  V.  Hunt,  30  N.  H.  219  ;  Cumings  v.  Hildretli,  117  Mass.  309. 

1  Storms  V.  Canada  Farmers'  Mut.  Ins.  Co.,  22  U.  C.  (C.  P.)  75. 

2  Hyatt  V.  Wait,  37  Barb.  (N.  Y.)  29;  Neely  v.  Ononrlaga  County  Mut.  Ins. 
Co.,  7  Hill  (N.  Y.),  49  ;  Atlantic  Ins.  Co.  v.  Goodall,  85  N.  H.  328.  But  see  contra, 
Wilson  ;;.  Trumbull  County  Mut.  Ins.  Co.,  19  Pa.  St.  372  ;  Indiana,  &c.  Ins.  Co. 
V.  Conner,  5  Port.  (Ind.)  170,  overruling  Indiana,  &c.  Ins.  Co.  v.  Coquillard,  2 
Carter  (Ind.),  645  ;  Bersch  v.  Sinnissippi  Ins.  Co.,  28  Ind.  64.  But  the  obvious 
distinction  between  mutual  and  stock  insurance  seems  not  to  have  been  duly 
considered  in  these  cases.  In  fiict,  it  gives  greater  rights  to  one  insured  in  a 
mutual  company  than  to  one  insured  in  a  stock  company.  The  latter  cannot 
recover  back  a  premium  after  forfeiture  by  a  voluntary  alienation.  Nor  can 
the  former.  The  deposit  note  is  but  the  premium  paid  ;  and  if  he  can  avoid 
his  liability  thereon,  he  practically  thereby  recovers  back  his  premium.  But 
this  he  has  placed  at  the  disposition  of  others,  and  he  cannot  at  his  own  pleas- 
ure, and  without  their  consent,  withdraw  it.  He  may  forfeit  his  rights,  but  lie 
cannot  avoid  his  obligations  to  others  without  their  consent.  See  Crawford 
County  Mut.  Ins.  Co.  v.  Cochran,  88  Pa.  St.  230,  which  seems  inconsistent  witli 
Wilson's  case. 

3  Sands  v.  Hill,  42  Barb.  (N.  Y.)  651  ;  Insurance  Co.  v.  Slockbower,  26  Pa. 
St.  199;  Tuttle  v.  Robinson,  33  N.  H.  104;  Viall  v.  Genesee,  &c.  Ins.  Co.,  19 

1259 


§  554]  INSURANCE  :    FIEE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXXI. 

ever,  if  the  assessment  is  made  for  a  loss  occurring  before  the 
forfeiture,  or  be  made  without  knowledge  of  the  forfeiture.^ 
And  an  assessment  for  losses  occurring  after  forfeiture,  made 
by  the  company  with  knowledge  of  the  forfeiture,  cannot  be 
enforced.^ 

§  554.  Forfeiture  ;  Premium  Note.  —  A  successful  defence  to 
an  action  on  the  policy  for  a  loss,  on  the  ground  that  the 
policy  became  void  because  the  insured  procured  other  insur- 
ance without  notice,  is  in  legal  effect  an  adjudication  between 
the  parties  that  the  policy  was  void  from  and  after  the  day 
when  the  additional  insurance  was  procured  ;  and  from  the 
moment  that  the  insurers  thus  elect  to  avoid  the  policy,  the 
premium  note  also  becomes  void,  and  without  consideration 
in  respect  to  all  future  losses.^  A  vote,  however,  to  suspend 
the  operation  of  the  policy,  without  authority  of  charter  or 
by-law,  or  the  assent  of  the  insured,  is  of  no  force  or  effect.^ 
In  Rhode  Island,  where  a  mortgagor  insured  under  a  policy, 
void  if  the  interest  of  the  insured  should  be  conveyed  with- 
out the  consent  of  the  insurers,  made  an  assignment  of 
his  interest  without  the  knowledge  of  the  insurers  or  the 
mortgagee,  and  afterwards,  but  without  knowledge  of  the 
alienation,  the  insurers  made  an  assessment  and  collected 
it  from  the  insured,  in  an  action  to  recover  the  loss,  with 
a  count  for  money  had  and  received,  it  was  held  that 
though  the  plaintiff  could  not  recover  for  the  loss  by 
reason  of  the  alienation,  and  although  the  collection  of  an 
assessment  without  knowledge  of  the  forfeiture  was  no 
waiver,  yet  the  insured   might   recover  back  on  his  money 


Barb.  (N.  Y.)  440;  ante,  §  505;  Farmers',  &c.  Ins.  Co.  r.  Bowen,  40  Mich.  147. 
But  see  contra,  Philbrook  v.  New  England  Mut.  Ins.  Co.,  37  Me.  137  ;  Neely  v. 
Onondago,  &c.  Ins.  Co.,  sup?-a. 

1  Allen  V.  Vermont  Mut.  Fire  Ins.  Co.,  12  Vt.  306;  Finley  v.  Lycoming 
County  Mut.  Ins.  Co.,  30  Pa.  St.  311  ;  Smith  v.  Saratoga,  &c.  Ins.  Co.,  3  Hill 
(N.  Y.),  500,  508;  Lyons  v.  Globe,  &c.  Ins.  Co.,  28  U.  C.  (C.  P.)  62. 

2  Tuckerman  v.  Bigler,  46  Barb.  (N.  Y.)  375-  Smith  v.  Saratoga  County  Mut. 
Ins.  Co.,  3  Hill  (N.  Y.),  500 ;  Wilson  v.  Trumbull  County  Mut.  Fire  Ins.  Cc  ,  19 
Pa.  St.  372. 

3  Tuckerman  v.  Bigler,  46  Barb.  (N.  Y.)  375. 

*  New  England  Mut.  Fire  Ins.  Co.  v.  Butler,  34  Me.  451. 
1260 


CH.  XXXI.]  OF   MUTUAL   INSURANCE.  [§  555 

count  what  he  had  paid  on  the  assessment,  as  money  paid 
by  mistake.^ 

§  555.    Void  Policy  ;  Surrender  and  Cancellation  ;  Insolvency. 

—  If  the  contract  of  insurance  be  invalid,  as  unauthorized  by 
law,  or  as  prohibited  unless  under  certain  preliminary  condi- 
tions precedent,  the  premium  note  is  also  invalid  ab  initio.^ 
So  if  the  policy  be  delivered  but  is  ineffectual  because  never 
countersigned,  the  premium  note  is  also  invalid.^  And  it  has 
been  held  that  the  surrender  and  cancellation  of  the  policy 
and  premium  note  dissolves  the  membership,  carries  with  it 
the  note,  and  releases  the  insured  from  further  claims,  whether 
on  account  of  past  or  future  losses,  as  amounting  to  an  adjust- 
ment of  mutual  claims.^  So  the  insolvency  of  the  maker  of 
the  premium  note,  and  his  discharge  from  his  dcl)ts,  relieves 
the  company  from  any  obligation  towards  him,  and  the  receipt 
of  interest  upon  the  premium  note  after  the  filing  of  the  peti- 
tion in  bankruptcy,  without  actual  knowledge,  will  not  revive 
the  policy.^     Other  authorities  hold  that  in  such  cases  the 

1  Hazard  v.  Franklin  Fire  Ins.  Co.,  7  R.  I.  429.  In  Indiana,  it  is  said,  obiter, 
that  where  a  pohcy  becomes  void  by  a  sale  and  conveyance  by  the  insured,  he 
is  no  longer  liable  to  an  assessment  upon  his  premium  note  :  Boland  v.  Whitman, 
33  Ind.  64 ;  though  in  a  previous  case,  Indiana  Mut.  Ins.  Co.  ;>.  Conner,  5  Ind. 
170,  the  note  was  held  to  be  collectible  in  proportion  to  the  time  the  policy  was 
in  force.  And  the  liability  is  discharged  whether  the  policy  be  actually  sur- 
rendered or  not,  tlie  insured  having  paid  all  assessments  and  dues  up  to  the  time 
of  forfeiture.  The  insurance  is  the  consideration  upon  which  the  note  rests,  and 
that  failmg,  the  note  fails  :  Ibid. ;  overruling  McCullough  v.  Indiana  Mut.  Fire 
Ins.  Co.,  8  Blackf.  (Ind.)  50,  and  Indiana  Mut.  Fire  Ins.  Co.  v.  Coquillard,  2  Ind. 
645,  holding  that  an  actual  surrender  of  tlie  policy  is  necessary. 

2  Haverhill  Ins.  Co.  v.  Prescott,  42  N.  H.  547  ;  Ingrams  v.  Mut.  Ass.  Soc,  1 
Rob.  (Va.)  661. 

3  Lynn  v.  Burgoyne,  13  B.  Mon.  (Ky.)  400. 

*  Wadsworth  v.  Davis,  13  Ohio  St.  123;  Hyde  v.  Lynde,  4  Comst.  (N.  Y.) 
387  ;  Campbell  o.  Adams,  38  Barb.  (N.  Y.)  1.32  ;  York  County  Mut.  Fire  Ins.  Co. 
V.  Turner,  53  Me.  225.  It  was  so  held  in  New  York,  though  the  premium  note 
was  retained,  assessments  paid  thereon,  and  the  policy  reassigned  as  collateral, 

—  the  conveyance  of  the  property,  assignment,  and  reassignment  of  the  policy 
having  been  assented  to  by  the  insurers.  Miner  v.  Judson,  2  Laiis.  (N.  Y.) 
300. 

5  Reynolds  v.  Mut.  Fire  Ins.  Co.,  34  Md.  280.  It  was  said  by  Bradley,  C.  J., 
in  Frost  v.  Saratoga  Mut.  Fire  Ins.  Co.,  5  Denio,  154,  that  if  the  policy  is  void 
for  false  warranty,  the  premium  note  is  void  for  want  of  consideration.  But  this 
was  not  a  point  necessary  to  be  decided  in  the  case. 

1261 


§  555]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.       [CH.  XXXI. 

policy  is  merely  voidable  and  not  void,  and  the  premium  note 
is  therefore  valid,  at  least  till  the  insurers  assert  their  right  to 
claim  a  forfeiture.^  But  it  is  elsewhere  held  that  neither  the 
surrender  and  cancellation,  nor  the  expiration  of  the  policy, 
nor  the  insolvency  of  the  company,  releases  the  holder  of  a 
policy  from  his  liability  to  assessment  for  losses  which  occur 
during  his  membership.^  The  true  doctrine  doubtless  is,  that 
if  the  surrender  of  the  policy  and  of  the  premium  note  are  in 
pursuance  of  an  adjustment  which  the  company  has  a  right  to 
make,  there  is  no  longer  membership  or  liability.^  An  unexe- 
cuted agreement  to  cancel  is  no  defence.^  Neither  does  tlie 
destruction  of  the  property  and  payment  of  the  loss  dissolre 
the  relations  of  the  insured  to  the  company.  He  is  still  in- 
sured and  liable  on  his  deposit  note  during  the  currency  of 
the  policy ;  and  during  that  period  the  company  has  a  lien 
upon  the  insured  premises.^  Upon  a  vote  of  the  directors, 
authorized  by  the  by-laws,  that  by  reason  of  non-payment  of 
an  assessment  the  policy  shall  be  suspended  till  payment,  the 
liability  of  the  insured  to  assessments  for  losses  occurring 
during  the  suspension  continues,  though  his  right  to  indem- 
nity meantime  is  in  abeyance.^  So,  without  a  vote  of  the 
directors,  if  the  charter  provides  that  neglect  to  pay  an  assess- 
ment shall  operate  as  a  suspension  of  the  liability.''  If  a  by- 
law provide  that  upon  alienation  the  insured  may  surrender 
his  policy,  and  receive  a  sum  not  exceeding  his  deposit  money, 

1  Huntley  v.  Verrj,  38  Barb.  (N.  Y.)  569,  571 ;  Atlantic  Ins.  Co.  v.  Gooilall, 
35  N.  H.  328.  And  see  ante,  §  "282.  But  see  contra,  Gardiner  v.  Piscataquis  Mut. 
Fire  Ins.  Co.,  38  Me.  4.S9  ;  Jackson  v.  Mass.  Mut.  Fire  Ins.  Co.,  23  Pick.  (Mass  ) 
418  ;  Wilson  v.  Trumbull  County  Mut.  Fire  Ins.  Co.,  19  Pa.  St.  372  ;  ante,  §  553. 

2  Commonwealth  v.  Union  Mut.  Fire  Ins.  Co.,  112  Mass.  116;  St.  Louis  Mut. 
Fire  Ins.  Co.  v.  Boeckler,  19  Mo.  135 ;  Sterling  v.  Mer.  Mut.  Ins.  Co.,  32  Pa  St. 
75;  Alliance  Mutual  Ins.  Co.  v.  Swift,  10  Cush.  (Mass.)  433;  post,  §  556. 

3  Acker,  Receiver,  v.  Hite  (Pa.),  10  Ins.  L.  J.  20;  Sands,  Receiver,  v.  Hill,  55 
N.  Y.  18  ;  Columbia  Ins.  Co.  v.  Buckley,  83  Pa.  293;  New  Hampshire,  &c.  Ins. 
Co.  V.  Rand,  24  N.  H.  428. 

*  Columbia  Ins.  Co.  v.  Stone,  3  Allen  (Mass.),  385. 

s  Bangs  v.  Scidmore,  24  Barb.  (N.  Y.)  29 ;  affirmed,  21  N.  Y.  136  ;  New  Hamp- 
shire Mut.  Fire  Ins.  Co.  v.  Rand,  4  Fost.  (N.  H.)  428. 

6  Coles  V  Iowa  State  Mut.  Ins.  Co.,  18  Iowa,  425 ;  Blanchard  v.  Atlantic  Mut. 
Fire  Ins.  Co.,  33  N.  H.  9. 

1  Nash  V.  Union  Mut.  Ins.  Co.,  43  Me.  343. 
1262 


CH.  XXXI.]  OF   MUTUAL   INSURANCE.  [§  55G 

the  surrender  is  optional  with  the  insured,  and  the  payment 
compulsory  against  the  insurers,  to  the  amount  not  legally 
appropriated,  or  liable  to  be  on  account  of  causes  already 
accrued  at  the  time  of  the  surrender,  which,  as  delay  works 
only  to  the  prejudice  of  the  insured,  he  may  make  at  any  time 
after  the  alienation. ^ 

§  556.  Life  Insurance  ;  Premium  Note  ;  Liability  after  Lapse  of 
Policy.  —  The  charter  of  a  life  insurance  company  provided 
that  all  who  insured  with  the  company  should  be  deemed 
members  while  they  continued  so  insured  ;  also,  that  the  com- 
pany might  take  the  notes  of  the  members,  either  in  whole  or 
part  payment  of  premium  ;  also,  that  if  losses  were  sustained 
by  the  company  in  excess  of  the  funds  on  hand,  the  directors 
might  assess  the  deficiency  ratably  upon  such  members,  the 
assessment  not  to  exceed  the  sum  due  on  the  notes,  of  which 
sixty  days'  notice  was  to  be  given  ;  and  if  the  amount  assessed 
was  not  paid  within  that  time,  the  party  in  default  was  to 
cease  to  be  a  member  of  the  company,  and  forfeit  all  preced- 
ing payments.  It  was  also  provided  that  if  the  premium  in 
any  case  should  exceed  fifty  dollars,  one-fourth  of  the  amount 
should  be  paid  in  cash,  and  the  balance  might  be  paid  by  a 
secured  note  subject  to  assessment. 

J.  effected  insurance  with  the  company,  paid  one-quarter  of 
the  first  year's  premium  in  cash,  and  gave  his  note  for  the 
balance.  At  tlie  expiration  of  the  first  year  he  paid  one- 
quarter  in  cash  towards  the  second  year's  premium,  and  gave 
his  note  for  three-quarters  of  the  total  premium  for  the  first 
and  second  years,  and  took  up  his  former  note.  The  insured, 
at  the  end  of  the  second  year,  gave  up  his  policy,  withdrew 
from  the  company,  and  ceased  to  be  a  member  thereof.  In 
an  action  on  the  last  note,  after  the  policy  had  lapsed,  it  was 
held  that,  in  the  absence  of  proof  of  any  assessments  to  make 
up  deficiencies  as  provided  in  the  charter,  the  company  was 
not  entitled  to  recover,  the  note  being  regarded  as  a  mere 
security  for  the  payment  of  losses,  upon  assessments  made  for 
that  purpose.^ 

1  Sullivan  v.  Mass.  Mut.  Fire  Ins.  Co.,  2  Mass.  318. 

2  Mut.  Ben.  Life  Ins.  Co.  v.  Jarvis,  22  Conn.  133.     There  was  a  dissenting 
VOL.  II.  —  36  1263 


§  557]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XXXI. 

§  557.  Right  to  assess  strictly  construed.  —  All  assessment 
can  only  be  valid  when  laid  under  the  conditions  stated  in  the 

opinion  by  Ellsworth,  J.  The  whole  case  is  so  instructive  that  we  give  it  more 
fully  in  this  note.  The  action  was  upon  the  following  promissory  note  and 
guaranty  :  — 

MiDDLETOWN,  Octohef  7, 1848. 

I  promise  to  pay  the  Mutual  Benefit  Life  Insurance  Company,  or  to  the 
order  of  their  treasurer,  three  hundred  and  sixty-seven  j5_o^  dollars,  for  value 
received,  without  defalcation  or  discount,  with  interest,  at  six  per  cent,  payable 
in  twelve  months  after  date,  or  sooner,  if  required  to  meet  assessments  hy  the 
company.  Geo.  O.  Jarvis. 

For  value  received,  I  guarantee  the  payment  of  the  above  note,  and  stand 
security  therefor  till  paid.  William  Jarvis. 

MiDDLETOWN,  Octobcr  7,  1848. 
Received  on  the  within  note,  as  principal,  twenty-seven  j%  dollars.      No- 
vember 29,  1848. 

Hinman,  J.,  for  the  majority  of  the  court :  "  The  plaintifi's  charter  makes 
them  in  fact,  as  well  as  in  name,  a  mutual  benefit  life  insurance  company.  This 
is  the  fundamental  principle  of  their  organization.  It  is  implied  in  their  name, 
and  is  more  fully  expressed  in  the  body  of  the  charter,  which  gives  them  power 
to  insure  the  respective  lives  of  their  members,  and  denies  them  the  power  to 
insure  any  others,  by  providing  that  all  persons  who  shall  at  any  time  insure  in 
or  with  said  association,  shall,  while  they  continue  so  insured,  be  deemed  and 
taken  as  members  of  the  corporation  ;  and  provides  for  an  equal  assessment  upon 
all  the  members,  in  proportion  to  each  member's  insurance,  to  pay  for  losses 
which  the  company  may  not  have  funds  on  hand  to  discharge. 

"  The  sixth  section  of  the  charter  authorizes  the  company  to  take  the  notes 
or  obligations  of  their  members  for  the  amount,  either  in  part  or  in  whole,  of 
the  premiums  of  insurance,  in  proportion  to  the  amount  insured  ;  and  then  in  the 
ninth  section  it  is  provided,  that  if  it  shall  so  happen  that  there  shall  be  just 
claims  on  the  corporation  for  losses  sustained,  to  a  greater  amount  than  they 
havp  funds  on  hand  to  discharge,  the  directors  in  such  case  shall  proceed  to 
assess  such  deficiency,  in  a  ratable  proportion,  on  the  members  of  the  associa- 
tion, or  their  lawful  representatives,  according  to  the  amount  of  each  member's 
insurance,  'provided  that  such  assessment  shall  not  exceed  the  amount  of  the  jwte  or 
obligation  given  by  each  member.'  The  section  further  provides,  that  if,  on  due 
notice  of  his  assessment,  a  member  shall  neglect  to  pay  the  same  within  sixty 
days,  he  shall  forfeit  all  claim  to  his  policy,  shall  be  no  longer  a  member  of  the 
association,  and  shall  also  be  liable  to  the  amount  of  such  assessment  in  an  action 
of  debt.  The  only  provision  in  the  charter  relative  to  the  payment  of  losses  is 
contained  in  this  ninth  section ;  and  as  the  funds  of  the  company  are  all  derived 
from  the  payment  of  premiums  by  the  members,  on  their  respective  policies,  and 
as  the  members  are  in  no  event  liable  to  be  assessed  to  any  greater  amount  than 
their  respective  notes  or  obligations,  it  is  clear  that  the  notes  or  obligations 
referred  to  in  the  ninth  section  of  the  charter  as  liable  to  this  assessment  must 
1264 


CH.  XXXI.]  OF    MUTUAL   INSURANCE.  [§  557 

charter.  A  general  vote  of  the  directors  to  assess  to  a  certain 
amount  to  pay  the  indebtedness  of  the  company  is  no  valid 

be  the  notes  or  obligations  which  the  company  are  authorized  to  take  of  its 
members  for  the  amount,  either  in  part  or  in  whole,  of  their  respective  premiums 
of  insurance ;  or,  as  they  are  called  in  the  rules  and  regulations  of  the  company, 
they  are  the  premium  notes  of  the  members.  The  finding  shows  that  the  note 
in  snit  was  one  of  these  premium  notes ;  and  as  the  company  has  met  with  no 
losses  which  make  it  necessary  for  them  to  collect  it,  and  has  made  no  assess- 
ment to  meet  any  loss,  the  question  arises  whether  the  defendant  is  liable  upon 
his  note,  except  for  the  purpose  of  meeting  a  loss,  and  then  only  to  the  extent  of 
an  assessment  regularly  made  accordmg  to  the  provisions  of  the  ninth  section 
of  the  plaintiff's  charter.  The  note  is  absolute  and  unconditional  in  its  terms, 
and  as  the  time  it  had  to  run  has  expired,  it  appears  to  be  due.  If  this  was  all 
there  was  in  the  case,  undoubtedly  the  plaintiffs  could  recover.  It  might  have 
been  given  for  money,  or  it  might  have  been  given  lor  the  premium,  or  the  por- 
tion of  it  that  was,  by  the  agreement  of  the  parties,  to  be  paid  in  cash,  irrespec- 
tive of  any  call  for  losses;  and  if  such  was  the  case  it  ought  to  be  paid.  The 
finding,  however,  shows  that  such  is  not  the  case,  and,  on  the  contrary,  that  the 
umlerstanding  upon  which  this  note  was  given  was,  that  it  was  not  to  be  paid 
unless  required  to  meet  losses.  It  was  given  for  a  portion  of  the  premium  which, 
by  the  regulations  of  the  company,  it  was  the  intention  should  be  met  by  the 
profits  of  the  business,  unless  required  to  meet  losses.  In  the  prospectus  con- 
taining the  rules  and  regulations  of  the  company,  which  was  examined  by  the 
defendant  for  the  purpose  of  determining  whether  he  would  become  a  member 
of  the  company,  and  was  delivered  to  him  for  that  purpose  by  the  company's 
agent,  we  find  one  of  the  first  regulations  to  be  that  the  premium,  if  over  fifty 
dollars,  can  be  paid,  one-fourth  in  cash  and  three-fourths  in  a  secured  note  at 
twelve  months,  bearing  six  per  cent  interest,  and  subject  to  assessment,  if 
required  ;  or  it  may  be  paid  weekly,  monthly,  or  quarterly.  It  was  under  this 
regulation  that  the  note  in  suit  was  given.  It  was  in  part  a  renewal  of  an  origi- 
nal note  given  for  seventy-five  per  cent  of  a  previous  year's  premium,  and  in 
part  for  the  same  percentage  on  the  then  accruing  year's  premium.  Under  the 
head  of  '  mode  bf  payments,'  we  find  this  rule  repeated  in  these  words  :  '  If  the 
annual  premium  is  over  fiftj'  dollars,  he  can  pay  one-fourth  in  cash  and  three- 
fourths  in  a  secured  note  at  twelve  months,  bearing  interest  at  six  per  cent,  wiiich 
note  is  subject  to  assessment,  if  required  by  the  directors,  and  of  which  sixty 
days'  notice  will  be  given.  At  the  end  of  the  year,  if  the  party  so  desires  he 
may  renew  the  balance  of  the  old  note  not  then  called  for,  by  paying  the'interest 
and  adding  it  to  the  next  year's  premium  note,  and  paying  his  twenty-five  per 
cent  in  cash  as  at  first.'  Again,  the  company  anticipated  that  the  members 
would  receive  back  a  large  percentage  of  the  amount  paid,  in  annual  dividends 
of  profits,  to  be  declared  upon  the  amount  of  premium ;  and  in  order  to  equalize 
the  benefits  to  all  their  members,  they  provide  that  scr-'ip,  bearing  six  per  cent 
nitcrest,  shall  be  issued  to  those  who  pay  their  premiums  in  full,  wliich  interest 
is  to  be  paid  annually;  while  those  who  give  and  renew  their  notes  are  not  to 
receive  scrip,  but  their  proportion  of  profits  is  carried  to  their  credit,  and  draws 
interest,  being  retained  by  the  company  as  additional  security   for  tiie  notes. 

1265 


§  557]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXXI. 

assessment.      It   must   appear  that   such   a  state    of   affairs 
existed  when  the  vote  was  passed  as  to  authorize  the  vote 

Again,  the  company  say  that  by  tlie  system  of  payments  adopted  by  them,  it  is 
easy  for  all  who  are  not  paupers  to  protect  their  families  from  want ;  they  are 
not  required  to  pay  from  year  to  year  in  cash  a  portion  of  the  premium,  which  is 
to  remain  in  the  hands  of  the  company  as  profits,  but  the  profits,  after  a  few 
years,  can  be  used  by  them  to  aid  in  the  payment  of  their  annual  premium.     It 
is  not  necessary  to  allude  further  to  the  charter,  and  the  rules   and  regulations 
of  the  plaintiffs'  company.     Undoubtedly  there  are  other  parts  of   these  docu. 
nients  which  have  a  bearing  upon  the  question  under  consideration.    Indeed,  the 
whole  tenor  of  them  in  connection  with  the  circumstances  under  which  the  note 
in  question  was  executed,  goes  to  show  that  the  only  object  of  the   note  was  to 
secure  the  company  against  losses  which  might  be  sustained  while  the  msured 
remained  a  member  of  the  association.     The  charter  authorizes  the  company  to 
take  premium  notes.     It  provides  how  the  losses  of  the  company  shall  be  as- 
sessed upon  these  notes.     These  two  provisions  are  followed  up  in  the  regula- 
tions of  the  company,  which  provide  that  the  parties  may  renew  at  the  end  of 
the  year  the  balance  of  the  old  notes  not  called  for  or  required  by  the  directors. 
If  it  be  asked  what  power  the  directors  had  to  call  for  assessments,  the  answer  is 
in   the  charter,  '  to  meet  losses.'     Indeed,  in  the  argument  of  the  case,  counsel 
seemed  to  admit  that  in  regard  to  all  who  continued  members  of  the  company, 
and  chose  to  renew  their  notes  from  year  to  year,  they  had  a  right  to  do  so.     It 
was  the  expectation  of  the  company  that  the  twenty-five  per  cent  of  the   pre- 
mium, which  was  required  to  be  paid  in  cash,  would  be  sufficient   to  meet   the 
ordinary  expenses  and  pay  the  ordinary  losses ;  and  the  seventy-five  per  cent 
would  never  be  required  to  be  paid,  except  perhaps  a  small  balance  which  might 
be  due  at  the  death  of  the  insured,  after  deducting  the  proportion  of  profits  that 
might  be  earned  by  the  company,  and  the  balance  was  then  only  to  be  deducted 
from  the  amount  of  the  policy.     In  this  way  those  who  paid  their  premiums  in 
full,  by  receiving  dividends  of  profits  annually,  would  in  the  end  be  made  equal 
with  those  who  only  paid  twenty-five  per  cent  of  their  premiums  in  cash  ;  and 
the  company  prominently  held  this  out  as  an  inducement  to  persons  of  limited 
means  to  insure  their  lives  in  this  association  ;  and  it  is  this  principle   alone 
which  enables  them  to  say  in  their  prospectus  that  it  is  easy  for  all  who  are  not 
paupers  to  protect  their  families  from  want,  by  insuring  their  lives  with  them  ; 
and  this  makes  between  all  the  members  that  mutuality  in  regard  to  profits  and 
losses  which  was  contemplated  by  the  charter  and  the  organization  of  the  com- 
pany.    But  if  the  company  can  collect  just    such   notes  as   it  pleases,  without 
first  making  an  equal  assessment  upon  all,  it  is  clear  that  there  is  an  end  to  any- 
thing like  mutuality.     It  is  not  pretended  that  they  do  collect  the  great  mass  of 
their  premium  notes;  but  the  broad  ground  is  taken  that  they  can  collect,  or 
omit  to  collect,  any  or  all,  as  the  company  pleases,  thus  destroying  all  mutuality, 
and  leaving  the  members  who  have  taken  their  policies  upon  the  faith  that  they 
could  renew  their  notes  from  time  to  time,  unless  required  to  meet  losses  to  be 
assessed  upon  all  alike,  at  the  mercy  of  the  persons  who  may  be  oflScers  of  the 
company  for  the  time  being.     It  is  insisted,  however,  that  the  provisions  of 
the  ninth  section  of  the  plaintiff's  charter  relate  only  to  the  members  of  the 
1266 


CH.  XXXI.]  OF   MUTUAL   INSURANCE.  [§  557 

itself,  as  that  losses  and  expenses  had  actually  been  incurred 
beyond  the  available   assets   in   hand,  which   could    not   be 


association,  and  have  no  application  to  tlie  defendant  after  he  ceased  to 
be  a  member.  But  the  defendant  was  a  member  when  he  gave  the  note, 
and  it  was  the  act  of  giving  it,  and  paying  that  jmrtion  of  tiie  prcniiutn  wliicii 
is  required  to  be  paid  in  cash,  tliat  continued  to  liim  his  right  as  such  member; 
and  we  look  in  vain  to  tlie  cliarter  or  regulations  for  any  different  rule  or  dis- 
tinction between  the  notes  of  the  members  and  tliose  who  iiave  ceased  to  be 
members.  Tlie  premium  notes  all  stand  upon  the  same  footing  ;  and  the  char- 
acter which  tlie  charter  and  the  regulations  of  the  association  impressed  upon 
them  at  their  inception  must  remain,  unless  there  is  something  in  the  same  doc- 
uments to  alter  it.  The  difficulty  under  which  the  plaintiff's  counsel  labor 
arises  from  their  looking  at  the  absolute  terms  in  which  the  note  itself  is  ex- 
pressed. But  if  we  take  it  in  connection  with  the  charter,  and  consider  tliat  it 
was  not  an  ordinary  note,  and  was  never  delivered  as  such,  but  was  delivered 
as  a  premium  note,  under  the  cliarter  and  the  regulations  of  the  company,  we 
at  once  attacli  to  it  all  the  conditions  which  are  expressed  in  the  charter  and 
regulations.  By  these  conditions  it  appears  that  it  was  never  an  absolute 
promise  to  pay,  but  was  a  mere  security  for  losses,  and  merely  subject  to 
assessments  for  losses,  and  for  nothing  else  ;  as  a  conditional  security  for  losses, 
there  was  a  consideration  for  it,  and  to  collect  it  for  other  purposes  would  operate 
as  a  fraud  upon  the  maker.  Again,  it  is  said  that  the  consideration  of  the  note 
was  the  premium  of  insurance  on  the  defendant's  life  for  the  year  it  had  to  run, 
and  that  the  defendant  liad  the  benefit  of  the  insurance  for  that  year,  and  in 
justice  ought  to  pay  for  the  risk.  If  this  was  so  in  fact,  we  do  not  see  that  it 
would  make  him  liable  in  any  other  way  than  is  prescribed  in  the  charter ;  but 
enough  has  been  said  to  show  that  this  is  not  so.  By  giving  the  note,  he  came 
under  an  obligation  to  pay  such  assessment  for  losses,  not  exceeding  its  amount, 
as  might  be  regularly  made  by  the  directors  :  none  such  has  been  made,  and  so 
there  is  no  obligation  to  pay  ;  nor  is  tliis  unjust  in  regard  to  the  other  members 
of  the  association.  By  looking  at  the  tables  in  the  prospectus,  it  will  be  seen 
that  the  real  risk  which  the  company  ran,  for  the  year  previous  to  the 
time  the  note  fell  due,  was  but  a  trifle  over  the  twenty-five  per  cent  of 
tlie  premium  which  was  paid  in  cash.  If  he  had  insured  for  a  single  year, 
the  premium  would  have  been  at  the  rate  of  about  two  per  cent  on  a  hundred 
dollars,  whereas,  by  insuring  for  lite,  they  charged  him  nearly  five  per  cent 
annually.  The  additional  charge  undoubtedly  arises  from  averaging  the  risk 
among  all  the  years  that  such  a  life  is  estimated  to  last.  Still  it  is  no  less  true 
that  he  paid  the  compan}-  in  cash  very  nearly  the  full  value  of  the  risk  the  com- 
pany ran  before  his  policy  became  void  by  his  withdrawal;  and  it  is  this  fact 
which  enables  the  company  safely  to  issue  life  policies  upon  the  payment  of  so 
small  a  proportion  of  the  premium  in  cash.  If  the  members  withdraw  from  the 
association,  they  have  paid  in  cash  the  full  or  about  tlie  lull  value  of  the  risk  which 
the  company  had  run  before  the  withdrawal ;  and  if  they  do  not  withdraw  when 
the  policy  is  paid,  the  company  deduct  the  balance  of  the  premium  notes  not 
previously  paid  by  a  credit  of  profits  from  the  sum  insured  in  the  policy.  Upon 
this  system,  the  company,  if  it  has  correctly  calculated  the  proportion  of  the 

12G7 


§  557]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.       [CH.  XXXI, 

met  but  by  an  assessment.  The  liability  of  a  member  of  a 
mutual  insurance  company  on  his   premium  note,  left  as  a 

premium  which  it  will  require  to  be  paid  in  cash,  is  always  safe.  Indeed,  it  is 
for  its  advantage,  after  the  life  policies  have  run  a  few  years,  that  the  members 
should  avoid  their  policies  by  withdrawal,  and  obviously  becomes  more  and 
more  so  by  the  lapse  of  time.  Indeed,  so  obvious  is  this,  that  the  regulations 
say  that  the  assured  can,  after  a  term  of  years,  surrender  the  policy  and  receive 
its  equivalent  in  value  ;  and  this  seems  to  us  a  sufBcient  answer  to  the  sugges- 
tion  tliat  it  was  a  fraud  upon  the  company  to  take  the  benefit  of  the  policy  for 
the  year  before  the  withdrawal,  and  not  pay  the  premium  cliarged." 

Ellswortli,  J.,  dissented  :  "My  reflections  upon  this  case  have  brought  me  to 
a  different  conclusion  from  that  expressed  by  my  brethren.  Mr.  Jarvis,  the 
defendant,  applied  to  the  plaintiffs  for  an  insurance  upon  his  life  for  .$5000,  from 
the  7th  of  October,  1847.  From  Carlisle's  tables  (which  were  used  by  the  com- 
pany to  ascertain  the  proper  annual  premium  to  be  paid  by  the  defendant)  it 
appears,  and  it  was  agreed,  it  should  be  the  sum  of  .§245 ;  one-quarter  of  this 
the  defendant  paid  at  the  time,  and  gave  his  note  for  the  remaining  three-quar- 
ters, payable  at  the  end  of  the  year,  '  witliout  default  or  discount,'  with  inter- 
est. If,  at  the  end  of  the  year,  he  chose  to  continue  a  member  of  tlie  company 
by  further  insuring,  he  could  at  his  request  renew  the  insurance  for  another 
year,  by  paying  twenty-five  per  cent  of  the  premium  for  another  year,  and  giv- 
ing a  new  note  for  the  amount  of  the  former  note  and  interest  and  the  three- 
quarters  of  another  $245,  tiie  premium  for  the  second  year ;  so  that  the  note 
now  in  suit  consists  of  premium  and  interest  for  two  years'  insurance.  This 
premium  note  fell  due  on  the  7th  of  October,  1849,  that  being  the  date  up  to 
which  he  had  been  insured,  and  after  which  he  did  not  ask  for  further  insur- 
ance. It  will  thus  be  seen  that  the  company  had  insured  the  defendant's  life 
for  two  years,  at  the  stipulated  premium  ;  and  how  the  defendant  is  to  get  rid 
of  the  payment  of  this  earned  money,  by  his  own  act  simjily,  I  have  not  been 
able  to  discover.  The  money,  being  earned,  can  be  recovered  on  the  common 
counts  as  well  as  on  the  special  count. 

"  By  the  terms  of  the  charter,  in  the  sixth  section  the  company  declare  '  that 
it  shall  and  may  be  lawful  for  the  officers  of  said  corporation  to  take  the 
notes  or  obligations  of  the  members  for  the  amount,  either  in  part  or  in  whole, 
of  the  premium  of  insurance,  in  proportion  to  the  amount  insured.'  In  pursu- 
ance of  this  provision  the  directors  passed  a  by-law,  that,  in  all  cases  where  the 
premium  was  over  fifty  dollars,  the  insured  might  pa}'  twenty-five  per  cent 
down,  and  give  his  note  for  the  balance,  to  be  paid  at  the  end  of  the  year,  with 
interest,  this  being  the  termination  of  the  risk  ;  and  if  possible  to  make  this 
obligation  more  clear  and  strong,  it  was  to  be  paid  witliout  defalcation  or  dis- 
count, and  might  in  the  mean  time  he  called  for,  should  the  company  need  it  to 
pay  losses.  It  would  seem,  therefore,  that  the  note  in  question  was  under- 
standingly  given  as  an  equivalent  for  the  risk  taken  by  the  plaintiffs  for  the  de- 
fendant's life  for  the  space  of  two  years.  So,  from  the  note  itself,  it  seems  the 
promise  is  absolute  and  positiue.  The  money  is  to  be  paid  in  twelve  months  after 
date,  and  sooner,  if  required  to  meet  assessments. 

"It  is  said,  however,  that  the  note  is  not  absolute,  and  is  not  to  be  paid,  as 

1268 


CH.  XXXI.]  OF   MUTUAL   INSURANCE.  [§  557 

deposit  as  the  basis  of  an  assessment  should  occasion  arise, 
is  not  an  absolute  liability  to  pay  the  whole  amount  of  his 

is  written,  without  defalcation,  but  is  to  be  paid  only  upon  future  assessments. 
Here,  I  tliink,  is  the  great  mistake  of  tiie  defendant's  counsel.  Tiie  defendant, 
by  separating  himself  from  the  company,  has  deprived  himself  of  the  privi- 
lege conten)phited  by  this  provision  of  the  bylaw,  so  that  the  hy-Iaw  is  not  at 
all  applicable  to  the  case  of  the  defendant.  The  provision  is  intended  for  his 
benefit  while  he  remains  a  member;  but  he  has  forfeited  that  privilege  by  his 
separation.  When  lie  ceased  to  be  a  member  he  ceased  to  be  a  subject  of  as- 
sessment, both  by  the  charter  and  the  by-laws  ;  for  none  but  members  can  be  assessed. 
Were  it  indeed  practicable  to  assess  those  who  had  been  members,  for  what 
losses  could  this  be  done  1  those  that  accrued  during  membersliip,  or  those 
which  may  accrue  at  any  future  period,  upon  policies  issued  during  the  time 
of  membership  ? 

"  It  must  be  conceded  that  if  the  defendant  is  not  liable  in  the  present  suit 
lie  is  not  liable  at  all,  and  yet  he  has  been  insured  for  tiie  agreed  premium  of 
1490,  by  paying  only  $122.50.  In  the  same  by-law,  to  which  the  defendant  re- 
fers for  his  deliverance  from  this  note,  we  find  what  I  am  confident  is  the  only 
provision  applicable  to  this  case.  It  is  this :  '  At  the  end  of  the  year,  if  the 
party  so  desire,  he  may  renew  the  balance  of  the  old  note,  not  then  called  for, 
by  paying  the  interest,  adding  the  ne.xt  year's  premium,  and  paying  twenty- 
five  per  cent  in  cash,  as  at  first.'  This  the  defendant  has  not  desired  to  do  ; 
but,  on  the  other  hand,  has  absolutely  refused  and  neglected  to  do  anything, 
and  yet  insists  he  ought  not  to  pay.  He  claims  that  he  cannot  be  assessed,  be- 
cause he  is  not  a  member,  and  that  he  cannot  be  compelled  to  pay  without  as- 
sessments. Thus  he  would  avoid  the  payment  of  a  note  as  fairly  earned  and 
due  as  any  that  was  ever  presented  in  a  court  of  justice.  I  am  for  iiolding 
the  defendant  to  his  agreement.  If  he  will  not  renew  his  note,  nor  pay  the 
stipulated  twent\'-five  per  cent,  nor  find  satisfactory  security,  he  ought  to  pay 
the  note  as  it  is  written ;  upon  his  own  sliowing,  the  assessment  provision  has 
nothing  to  do  with  the  question.  And  furtlier,  the  note,  under  no  circumstances, 
is  to  be  assessed.  By  the  ninth  section  of  the  cliarter,  in  a  ratable  proportion 
tlie  members  of  the  association  (not  the  notes  of  the  members)  may  be  assessed. 
The  notes  are  held  to  be  due  and  payable  as  written  ;  and,  as  I  contend,  are 
absolutely  payable  wlien  and  because  the  members  have  enjoyed  their  insur- 
ance, and  cannot  alter  their  obligations  by  withdrawing  from  the  company. 

"  It  must  be  further  remembered  that  these  notes,  given  for  earned  premi- 
ums, constitute  the  fund  of  the  company  to  which  the  public  look  for  the  pay- 
ment of  losses  ;  but  they  now  discover  that  these  notes  mean  nothing  and 
secure  nothing.  The  consequence,  too,  is  that  a  person  may  remain  a  member 
of  the  company  and  be  insured  for  any  time,  twenty  or  fifty  years,  until  his 
premium  note  shall  amount  to  thousands  of  dollars,  and  then  retire  from  the 
company,  repudiate  his  note,  and,  if  dishonest  enough,  pursue  the  same  course 
with  another  company. 

"I  would  inquire,  what  is  the  difference  between  the  person  who  pays  in 
cash,  when  the  annual  premium  is  less  than  fifty  dollars,  and  one  who  pays 
partly  in  cash  and  partly  in  a  promissory  note  where  the  premium  is  more  1 

1269 


§  557]  INSURANCE  :    FIRE.    LIFE,    ACCIDENT,    ETC,       [CH.  XXXI. 

note,  but  it  is  conditional,  and  depends  upon  the  contingency 
of  the  happening  of  losses  and  expenses  to  which  he  shall  be 
liable  to  contribute,  which  have  been  duly  ascertained  by  the 
directors,  and  which  make  necessary  a  resort  to  an  assessment 
thereon.  It  is  a  credit  given  for  a  |)art  of  the  consideration 
of  the  contract.  The  promise  of  the  insured  is  to  pay  upon 
such  conditions ;  and  the  existence  of  these  conditions  must 
be  established  affirmatively  before  a  call  for  the  payment  of 
the  note  or  any  part  thereof  can  be  enforced.^  The  receiver 
of  an  insolvent  company  stands  upon  no  better  footing.^ 
Though  the  premium  note  be  absolute  on  its  face,  yet,  being 
given  to  pay  losses,  it  is  only  assessable  in  case  of  loss.^    And 

Upon  the  hypothesis  of  the  defendant,  the  latter  may  pay  one-quarter  of  his 
premium  and  be  as  fully  insured  as  if  he  had  paid  the  whole.  This  is  a  gross 
absurdity;  and  I  cannot  feel  that  it  is  at  all  in  accordance  with  the  understand- 
ing of  the  parties,  or  the  public,  or  with  any  principles  of  justice  or  law  with 
which  I  am  acquainted.  From  the  first  breaking  of  this  case  I  have  been  at  a 
loss  to  learn  what  could  be  urged  by  the  defendant  in  favor  of  this  defence. 

"  Something  has  been  said  about  the  want  of  mutuality  and  of  consideration, 
but  no  question  of  this  kind  can  arise;  for  the  defendant's  life  was  insured  for 
two  years  at  the  price  agreed,  and  that  surely  is  mutuality  and  consideration 
enough.  And  I  insist  that  the  defence  is  nothing  but  a  barefaced  attempt  to 
avoid  the  payment  of  a  clear  note  of  hand.  The  defendant  was  fairly  and 
fully  insured;  and  had  he  died  within  the  two  years,  his  representatives  would 
have  been  entitled  to  the  five  thousand  dollars.  And  yet  he  asserts  tliat,  though 
he  was  so  insured,  he  will  not  fulfil  the  contract  as  he  made  it.  He  will 
neither  renew  nor  pay  his  note,  nor  remain  in  a  condition  to  be  assessed ;  and 
in  this  defence  he  has  succeeded,  as  I  think,  by  the  prostration  of  the  plainest 
principles  of  equity  and  justice." 

1  Pacific  Mut.  Ins.  Co.  v.  Guse,  49  Mo.  329 ;  Long  Pond  Ins.  Co.  v.  Hougii- 
ton,  6  Gray  (Mass.),  77;  Commonwealth  v.  Dorchester  Mut.  Fire  Ins.  Co.,  112 
Mass.  142 ;  Nashua  Fire  Ins.  Co.  v.  Moore,  55  N.  H.  48 ;  Atlantic  Ins.  Co.  v. 
Fitzpatrick,  2  Gray  (Mass.),  279;  Thomas  v.  Whallon,  31  Barb.  (N.  Y.)  172; 
Bangs  V.  Gray,  15  id.  264;  American  Ins.  Co.  v.  Schmidt,  19  Iowa,  502;  Savage 
V.  Medbury,  19  N.  Y.  32 ;  Bangs  v.  Duckinfield,  18  id.  592 ;  Stow  v.  Wadley,  8 
Johns.  (N.  Y.)  124;  Bangs  v.  Gray,  2  Ker.  (N.  Y.)  477  ;  Herkimer  County  Mut. 
Ins.  Co.  V.  Fuller,  14  Barb.  (N.  Y.)  373;  Devendorf  v.  Beardsley,  2-3  id.  656; 
Appleton  Mut.  Fire  Ins.  Co.  v.  Jesser,  5  Allen  (Mass.),  446  ;  Ohio  Mut.  Ins.  Co. 
V.  Marietta  Woollen  Co.,  3  Ohio  St.  348  ;  Atlantic  Mut.  Fire  Ins.  Co.  v.  Young, 
88  N.  H.  4-51. 

2  .lackson  v.  Eoberts,  31  N.  Y.  304;  Emoree  v.  Shideler,  36  Ind.  423. 

3  Insurance  Co.  v.  Jarvis,  22  Conn.  133.  It  is  said  in  Kelly  v.  Troy  Fire  Ins. 
Co.,  3  Wis.  229,  2-54,  that  an  assessment  may  be  made  in  anticipation  of  losses,  as 
otherwise  great  delay  would  be  experienced  in  adjusting  and  pnjMng  them.  But 
the  objection  urged  in  that  case,  that  if  assessments  are  made  upon  the  pre- 

1270 


CH.  XXXI.]  OF   MUTUAL   INSUBANCE.  [§  557 

the  assessment  must  be  made  in  strict  accordance  with  the 
authority  given.  Even  a  more  equitable  mode  than  that 
provided  by  the  charter  cannot  be  adopted.^  Wliere  the 
charter  authorizes  the  directors  to  make  an  assessment,  it 
can  be  made  by  them  only  ;  and  if  they  vote  to  assess  to  a 
certain  amount,  and  thereupon  refer  the  matter  to  a  commit- 
tee to  make  the  assessment,  who  —  a  minority  of  the  di- 
rectors —  assess  a  different  and  less  sum,  the  assessment  is 
invalid ;  so  held  in  an  action  on  a  note  to  recover  such  an 
assessment.2  And  a  by-law  which  authorizes  an  assessment 
to  a  larger  amount  than  is  permitted  by  the  charter  is  invalid  ; 
and  an  agreement  signed  by  the  secretary,  without  the  au- 
thority of  the  directors,  not  to  assess.^  So  is  an  assessment  to 
pay  losses  and  expenses,  the  charter  authorizing  an  assessment 
only  to  pay  losses.*  So  a  vote  to  make  an  assessment,  leaving 
the  per  cent  or  amount  in  blank,  is  invalid  ;  ^  and  so  is  a  vote 
to  assess,  passed  by  a  board  of  directors,  illegally  elected ;  *^ 
although  an  assessment  was  held  valid  made  by  directors,  out 
of  whom  a  president  was  to  be  chosen,  though  the  president 
was  chosen  before  the  directors  were."  And  assessments  can 
only  be  laid  by  the  corporation  or  a  receiver,  clothed  with 
such  of  its  powers  as  may  be  necessary  for  winding  up  its 
affairs,  under  the  direction  of  the  court.  An  assignee  of  tlie 
corporation  not  in  bankruptcy  has  no  such  power.^  And  it  is 
of  importance  to  observe  that  in  some  cases  these  different 
classes  of  assessments  may  be  provided  for  with  penalties  for 

luium  notes  before  losses  have  occurred,  the  right  to  withdraw,  upon  paynoent 
of  tlie  share  of  losses  assessable  while  the  policy  was  in  force,  cannot  be 
availed  of,  because  money  to  pay  assessments  will  be  taken  when  no  loss  has 
occurred,  may  perhaps  be  entitled  to  more  favor  than  was  allowed  in  tiiat 
case. 

1  Slater  Mut.  Ins.  Co.  i'.   Barstow,  8  R.  I.  343. 

2  Monmouth  Mut.  Fire  Ins.  Co.  v.  Lovell,  59  Me.  564 ;  Farmers'  Ins.  Co.  v. 
Chase,  56  N.  H.  341. 

3  Nat.  Mut.  Fire  Ins.  Co.  v.  Yeomans,  8  R.  I.  25. 
*  Bersch  v.  Sinnissippi  Ins.  Co.,  28  Ind.  64. 

5  St.  Lawrence  Mut.  Ins.  Co.  v.  Paige,  1  Hilton  (N.  Y.),  430. 

6  People's  Mut.  Ins.  Co.  v.  "Westcott,  14  Gray  (Mass.),  440. 

7  Currie  v.  Mut.  Ass.  Co.,  4  H.  &  M.  (Va.)  315,  318. 

8  Hurlburt  v.  Carter,  21  Barb.  (N.  Y.)  221. 

1271 


§  559]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XXXI. 

non-payment  in  one  case,  but  not  in  the  other. ^  [The  rule  of 
assessment  agreed  on  with  the  members  of  a  mutual  company 
must  be  folio wed.^] 

§  558.  Slight  Errors  do  not  invalidate  Assessments.  —  Slight 
and  unintentional  errors,  however,  iu  estimating  the  amount 
which  it  may  be  necessary  to  assess,  or  in  making  up  the  lists 
of  those  liable  to  assessment,  will  not  vitiate  the  assessment, 
the  assessment  being  substantially  correct,  made  in  good  faith, 
and  upon  correct  principles.  Nor  will  assessments  be  inval- 
idated by  delay,  not  unreasonable,  in  making  them  ;  nor  by 
variance  at  different  times  between  the  proportions  of  the  cash 
premium  to  the  amount  of  the  deposit  note,  as  against  mem- 
bers suffering  no  injury  thereby.^  Nor  can  an  assessment  be 
resisted  on  the  ground  that  claims  for  losses  found  due,  allowed 
by  the  directors,  might  have  been  successfully  resisted  on 
technical  grounds.*  Nor  need  assessments  be  made  literally 
"  forthwith  "  after  every  loss,  nor  separately  for  each  loss. 
Some  reasonable  and  practicable  rule  approximating  to  it  is 
sufficient,^  and  the  whole  amount  of  the  note  may  be  assessed, 
though  the  insured  have  no  interest  in  a  part  of  the  property 
covered  by  the  policy.  And  if  losses  occur  at  one  and  the 
same  time,  sufficient  to  absorb  all  the  company's  resources 
from  premium  notes,  whether  the  notes  be  classified  or  not, 
one  assessment,  or  call  for  the  whole,  will  be  valid.^  And  loss 
by  a  subsequent  fire  cannot  be  paid,  or  any  part  of  it,  since  the 
entire  fund  is  absorbed  by  the  first  fire.'^ 

§  559.  "What  Assessments  may  include  ;  Insolvency  ;  Set-off. 
—  The  intentional  omission  of  members  who  are  liable  to  any 
considerable  amount  will  vitiate  the  whole  assessment."     But 

1  Rix  V.  Mut.  Ins.  Co.,  20  N.  H.  198. 

2  [Susquelianna  Mut.  Fire  Ins.  Co.  v.  Gackenbach,  115  Pa.  St.  492.] 
8  Marblehead  Mut.  Ins.  Co.  v.  Underwood,  3  Gray  (Mass.),  210. 

<  Sands  v.  Hill,  42  Barb.  (N.  Y.)  651. 

s  New  England  Mut.  Ins.  Co.  v.  Belknap,  9  Cush.  (Mass.)  140;  Sliaughnessy 
V.  Rensselaer  Ins.  Co.,  21  Barb.  (N.  Y.)  605. 

6  Rhinehart  v.  Alleghany  County  Mut.  Ins.  Co.,  1  Pa.  Si.  .359  ;  Common- 
wealth V.  Mechanics'  Mut.  Ins.  Co.,  Sup.  Jud.  Ct.  Mass.,  March,  1873 ;  Sands 
V.  Sanders,  28  N.  Y.  416. 

•   Coston  V.  Alleghany  County  Mut.  Ins.  Co.,  1  Barr  (Pa.),  419. 

8  Marblehead  Mut.  Fire  Ins.  Co.  v.  Hayward,  3  Gray  (Mass.),  208;  Herkimer 

1272 


CH.  XXXI. ]  OF   MUTUAL   INSURANCE.  [§  559 

the  omission  of  a  few  adjusted  and  cancelled  policies,  so  small 
in  amount  as  not  materially  to  increase  the  assessment  on  llie 
remainder,  will  not  have  this  ei'lect.^  But  in  determining 
whether  there  are  earned  premiums  available  to  })ay  losses, 
uncollectible  and  worthless  claims  may  be  disregarded.^  In 
fixing  the  amount  to  be  assessed,  interest  on  borrowed  money, 
probable  failures  in  the  collection,  a  reasonable  sum  for  the 
expense  of  collection,  and  a  reasonable  allowance  by  way  of 
discount  for  prompt  payment,  may  be  taken  into  account.^ 
So  may  return  premiums  due  on  surrendered  and  cancelled 
policies.*  The  amount  of  such  overlay  must  be  reasonable.'^ 
Twenty-four  per  cent  was  held  to  be  reasonable  in  People's 
Equitable  Mutual  Fire  Insurance  Company,  Petitioners  ;  ^  but 
double  the  amount  was  held  to  be  unreasonable  and  excessive, 
in  the  absence  of  special  circumstances  shown  to  justify  it,  in 
the  case  of  the  same  company  against  Babbitt.''  Ninety-five 
per  cent  "  to  meet  estimated  bad  debts,  interest,  expenses,  and 
costs  of  collection  "  was  held  illegal,  where  the  charter  provided 

County  Mut.  Ins.  Co.  v.  Fuller,  14  Barb.  (N.  Y.)  373;  People's  Eq.  Mut.  Ins.  Co. 
V.  Arthur,  7  Gray  (Mass.),  267. 

1  Fayette  Mut.  Fire  Ins.  Co.  v.  Fuller,  8  Allen  (Mass.),  27. 

2  Maine  Mut.  Mar.  Ins.  Co.  v.  Neal,  50  Me.  301. 

3  Jones  V.  Sisson,  6  Gray  (Mass.),  288;  Bangs  v.  Gray,  2  Ker.  (N.  Y.)  477; 
reversing  s.  c.  15  Barb.  (N.  Y.)  264. 

*  Fayette  Mut.  Fire  Ins.  Co.  v.  Fuller,  8  Allen  (Mass.),  27. 

^  [An  assessment  should  not  be  larger  than  necessary  to  meet  existing  claims 
and  reasonable  expenses,  and  if  unreasonably  excessive  it  is  void.  People's 
Eq.  Mut.,  &c.  V.  Babbitt,  7  Allen,  235  at  238.  The  court  cannot  say  how- 
ever that  an  assessment  by  a  receiver  of  100  per  cent  in  excess  of  liabilities  is  not 
warranted,  and  made  in  good  faith,  without  evidence  that  it  is  unreasonable  and 
excessive.  Wardle  v.  Townsend,  75  Mich.  385.  In  this  case  it  appeared  tli;it 
the  receiver  thought  that  the  assessment  of  $50,000  would  not  bring  in  more  tlian 
$2.5,000,  and  he  thought  to  save  the  expenses  of  a  second  assessment  by  going 
high  enough  at  first  to  cover  his  needs.  And  mere  excess  in  the  assess- 
ment will  not  prevent  the  company  from  recovering  it  unless  the  excess  is  so 
great  as  to  satisfy  the  jury  of  fraud  or  gross  mistake.  Susquehanna  Mut.  Fire 
Ins.  Co.  V.  Gackenbach,  115  Pa.  St.  492.] 

«  9  Allen  (Mass.),  319. 

■^  7  Allen  (Mass.),  2-35.  This  case  was,  however,  overruled  in  Commonwealth 
V.  Dorchester,  &c.  Ins.  Co.,  112  Mass.  146,  where  the  discretion  of  the  directors 
empowered  to  make  the  assessment  was  held  to  be  decisive  and  final,  the  provi- 
sions being  to  pay  such  sums  as  they  should  assess.  The  case  seems,  however, 
to  have  been  followed  in  Uosenberger  v.  Washington  Ins.  Co.,  87  Pa.  St.  207. 

1273 


§  559]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXXI. 

for  "  losses  and  other  expenses."  ^  Involuntary  payments 
made  under  a  prior  illegal  assessment  may  be  treated  as  a 
portion  of  the  just  claims  upon  which  to  make  the  new  assess- 
ment, and  in  the  collection  of  the  latter  each  member  is  to  be 
credited  with  the  amount  of  his  payment  under  the  illegal  as- 
sessment.2  In  Indiana,  however,  it  appears  that  the  statute 
pi'ohibits  any  overlay  to  cover  expenses.^  Where  the  assess- 
ments are  to  pay  losses,  and  the  premium  on  deposit  notes  is 
made  payable  by  instalments  as  shall  from  time  to  time,  agree- 
ably to  the  by-laws,  be  required  by  the  directors,  the  directors 
having  ascertained  that  the  company  is  liable  for  a  loss,  and 
that  the  company  have  not  sufficient  available  funds  to  pay 
the  loss,  are  first  to  ascertain  who  were  members  at  the  time  of 
the  loss,  and  to  assess  upon  each  such  proportion  thereof  as 
his  individual  liability  bears  to  the  aggregate  liability  of  all 
the  members.  The  length  of  time  which  may  have  elapsed 
since  membership  began  is  not  to  be  taken  into  account.*  And 
although  assessments  cannot  be  made  for  losses  occurring 
prior  to  membership,  unless  the  parties  so  agree,^  the  inclusion 
of  such  losses  will  not  invalidate  the  assessment  as  to  those 
who  were  members  when  the  losses  occurred.''  Where  the 
policies  ran  for  one,  three,  and  five  years  respectively,  the 
premiums  for  three  years  being  at  twice  the  rate  for  one,  and 
those  for  five  years  at  three  times  the  rate  for  one,  and  in 
computing  the  amount  to  be  assessed  for  each  month's  losses 
a  basis  was  found  by  taking  the  whole  of  the  premium  for 
each  yearly  policy,  one-third  of  that  for  each  three  years' 
policy,  and  one-fifth  of  that  for  each  five  years'  policy,  the 
court  tliought  there  was  no  such  inequality  as  to  require  the 
assessment  to  be  set  aside.''  So  where,  after  a  former  assess- 
ment has  been  adjudged  illegal,  it  is  found  that  two  years  be- 

1  York,  &c.  Ins.  Co.  v.  Bowden,  57  Me.  280,  287. 

2  People's  Eq.  Mut.  Fire  Ins.  Co.,  9  Allen  (Mass.),  319, 

3  Sinnissippi  Ins.  Co.  v.  Taft,  26  Ind.  240. 

4  Herkimer  County  Mut.  Ins.  Co.  v.  Fuller,  14  Barb.  (N.  Y.)  373. 

5  Commonwealth  v.  Mechanics'  Mut.  Ins.  Co.,  112  Mass.  192;  Planters'  Ins. 
Co.  V.  Comfort,  50  Miss.  662. 

6  Long  Pond  Mut.  Fire  Ins.  Co.  r.  Houghton,  6  Gray  (Mass.),  77. 

7  Citizens'  Mut.  Fire  Ins.  Co.  v.  Sortwell,  10  Allen  (Mass.),  110. 

1274 


CH.  XXXI.]  OF    MUTUAL   INSURANCE.  [§  559 

fore  a  large  debt  was  due  from  the  company,  and  that  many 
of  the  members  who  paid  the  iUegal  assessment  have  become, 
by  lapse  of  time,  exempt  from*  a  new  assessment,  so  that,  if 
the  debt  should  be  assessed  on  policies  which  were  in  existence 
when  the  several  items  of  debt  accrued  and  are  still  liable  to 
assessment,  there  would  not  be  premium  notes  sufficient  in 
amount  to  pay  all,  the  whole  debt  may  be  taken  as  a  unit,  and 
assessed  upon  all  the  policies  which  were  then  outstanding,  in 
proportion  to  the  time  of  their  existence  and  the  amount  of 
their  premiums.  And  in  making  such  assessment  for  just 
claims  which  have  accrued  within  two  years,  the  aggregate  of 
the  whole  net  expense,  and  of  the  sums  received  in  payment 
of  the  illegal  assessment  during  each  year,  may  be  divided  by 
twelve  to  ascertain  the  average  amount  to  be  raised  for  each 
month  during  that  year ;  to  wliich  may  be  added  the  losses  in 
each  month.  And  the  sum  thus  ascertained  may  be  taken  to 
be  the  sum  to  be  raised  for  each  month,  in  proportion  to  the 
amount  of  the  premiums  paid  therefor  applicable  to  that 
month. 1  But  the  assessment  must  not  include  the  amount  of 
a  previous  assessment  for  losses  which  have  been  paid  ;  "^  nor 
a  deficiency  arising  from  uncollected  assessments  not  made 
during  the  existence  of  a  policy.^  In  Planters'  Insurance 
Company  v.  Comfort,*  it  was  held  that  the  assessment  would 
not  be  valid  if  it  included  a  sum  sufficient  to  pay  prior  assess- 
ments during  the  currency  of  the  policy,  which  the  directors 
had  negligently  suffered  to  remain  uncollected.  But  their 
negligence  is  his  negligence.  Their  bad  management  is  his 
bad  management,  which  he  cannot  set  u{)  in  his  own  defence.^ 
And  a  new  assessment,  calling  for  the  whole  amount  due  on  a 
note,  is  valid,  although  there  is  a  prior  assessment  calling  for 
a  part  which  is  still  uncollected.^     If  the  prior  assessment  be 

1  People's  Eq.  Mut.  Fire  Ins.  Co.,  Petrs.,  9  Allen  (Mass.),  319. 

2  Cooper  V.  Shaver,  41  Barb.  (N.  Y.)  151. 

3  Farmers'  Mut.  Ins.  Co.  v.  Chase,  56  N.  H.  341. 

4  50  Miss.  662. 

5  West  Branch  Ins.  Co.  v.  Smith,  C.  C.  P.  (Pa.),  5  Ins.  L.  J.  319. 

6  Sands  v.  Sweet,  44  Barb.  (N.  Y.)  108,  overruling  Campbell  r.  Atlams,  38 
Barb.  (N.  Y.)  132,  to  the  contrary.  See  also  Jackson  v.  Van  Slyke,  44  id.  116 
note. 

1275 


§  559]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXXI. 

illegal,  it  may  be  disregarded,  and  if  paid  in  part,  the  amount 
paid  may  be  included  amongst  the  liabilities. ^  The  liability 
to  assessment  is  fixed  at  any  time  only  by  the  amount  of  losses 
for  which  the  company  is  at  that  time  I'esponsiblc,  and  it  is 
not  apportionable  according  to  the  ratio  of  time  of  the  expired 
and  the  unexpired  term  of  the  policy,  provided  the  amount  of 
the  losses  is  sufficient  to  absorb  the  whole.^  When  this  is  the 
case,  the  assessment  cannot  be  reduced,  or  any  part  of  it  with- 
held to  provide  future  indemnity  for  members  who  have  not 
already  suffered  loss.  Where  the  whole  proceeds  of  the  con- 
ditional as  well  as  the  absolute  funds  —  that  is,  cash,  premium 
notes,  and  statute  liability  to  assessment  —  are  pledged  to  sat- 
isfy and  make  good  the  losses  that  have  occurred,  each  one  in 
turn,  who  suffers  loss,  is  entitled  to  the  full  benefit  of  this 
pledge,  according  to  the  state  of  those  funds  when  his  loss  oc- 
curs. This  forbids  any  reduction  of  the  fund  when  the  whole 
is  required  to  cover  losses,  either  by  apportionment,  set-off,  or 
otherwise.  The  directors  of  the  company  are  not  bound  to 
provide  for  reinsurance  either  by  reserving  a  fund  therefor,  or 
by  an  allowance  to  policy-holders  whose  policies  are  cancelled  ; 
and  they  have  no  right  to  do  so  to  the  prejudice  of  the  superior 
claims  of  those  who  have  suffered  losses  upon  their  policies. 

And  if  in  case  of  insufficiency,  "  a  just  average  "  is  to  be 
made  in  such  proportion  as  the  loss  sustained  by  each  party 
"  bears  to  the  whole  amount  of  losses  then  remaining  un- 
paid," this  rule,  established  by  the  contract  of  the  corporation 
with  all  its  members  alike,  does  not  permit  a  set-off,  even  as 
between  the  company  and  those  who  have  claims  for  losses, 
upon  which  they  are  entitled  to  a  distributive  share  of  the 
proceeds  of  the  assessment. 

Accrued  profits,  although  credited  to  the  several  policies 
according  to  the  share  of  each  therein,  remain  as  absolute 
funds  of  the  corporation  pledged  to  the  payment  of  losses, 
until  by  expiration  or  cancellation  of  the  policy  its  holder  be- 
comes entitled  to  withdraw  the  balance,  after  charging  for 
losses  as  the  "  dividend  due  to  his  policy."     The  members 

1  People's  Mut.  Fire  Ins.  Co.  v.  Allen,  10  Gray,  297,  301. 
-  Commonwealth  v.  Union  Mut.  Ins.  Co.,  112  Mass.  116. 

1276 


CH.  XXXI.]  OF    MUTUAL   INSURANCE.  [§  560 

are  entitled  to  a  dividend  only  of  such  profits  as  remain  or 
are  shown  upon  a  valuation  of  their  policies  at  the  termina- 
tion of  their  membership. 

If  the  payment  of  expenses  arid  losses  and  return  premiums 
are  only  provided  for,  the  insured  is  not  entitled  to  withhold, 
or  to  have  withlield  for  him,  for  his  own  future  indemnity, 
any  part  of  the  fund  ;  and,  therefore,  the  loss  of  the  unex- 
pired term  of  his  policy,  whether  by  cancellation  or  by  insol- 
vency of  the  company,  can  give  him  no  claim  against  the 
corporation,  either  as  a  debt  or  by  way  of  damages  for  non- 
fulfilment  of  its  contract  with  himself.^  In  case  of  insolvency 
there  can  be  no  assessment  for  the  payment  of  interest,  or  for 
the  payment  of  the  value  of  unexpired  policies,  or  unearned 
premiums.^  And  if  the  assessment  is  to  be  in  proportion  to 
premiums  and  deposits,  no  distinction  of  age  in  the  policies 
can  be  made,^  nor  can  any  set-off  be  allowed  on  account  of 
any  supposed  value  of  the  policy.* 

§  560.  Assessment ;  Classification  of  Risks  and  Funds.  —  If 
the  charter  clothes  the  directors  with  the  power  of  classifying 
policies  under  certain  stated  risks,  and  under  this  provision 
a  policy  is  placed  in  one  of  the  classes,  it  will  be  valid  al- 
though in  contravention  of  a  by-law  of  the  corporation.  The 
directors  may  waive  the  latter.^  When  a  classification  of 
risks  is  authorized  by  the  charter,  and  the  funds  of  one  class 
are  set  apart  to  pay  the  losses  in  that  class,  the  losses  in  both 
classes  are  payable  by  the  company,  and  the  assessment  is  in 
form  by  the  company,  and  not  by  the  particular  class.  The 
whole  company  acts  for  each  particular  class.^  But,  though 
the  assessment  be  made  by  tlie  company,  the  funds  raised  on 
notes  in  one  department  only  must  first  be  appropriated  to 
pay  the  losses  of  that  department. ^  The  directors  cannot, 
however,  classify  risks  and  make  different  rates  of  assessment 

1  Commonwealth  v.  Union  Mat.  Ins.  Co.,  112  Mass.  116. 

2  Commonwealth  v.  Massachusetts  Mut.  Ins.  Co.,  112  Mass.  116. 

3  Commonwealth  v.  Mechanics',  &c.  Ins.  Co.,  1x2  Mass.  192. 
*  North  Carolina,  &c.  Ins.  Co.  v.  Powell,  71  N.  C.  389. 

6  Union,  &c.  Ins.  Co.  v.  Keyser,  32  N.  H.  313. 

6  Kelly  V.  Troy  Fire  Ins.  Co.,  3  Wis.  229,  254. 

7  Allen  V.  Winne,  15  Wis.  113. 

1277 


§  560  A]       INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXXT. 

without  the  authority  of  the  charter,  or  a  vote  of  the  mem- 
bers.i  Nor  can  the  assessment  be  by  classes,  when  author- 
ized, unless  the  amounts  insured  in  the  respective  classes 
have  reached  the  required  amount.^  And  when  assessment  is 
by  classes,  and  the  means  of  one  class  are  insufficient  to  pay 
the  losses  of  that  class,  resort  may  be  had  to  the  other  class, 
if  anything  remains  after  paying  the  losses  of  that  class. ^  If 
a  certain  class  of  funds  is  to  be  resorted  to  in  the  first  instance 
for  payment,  these  must  be  exhausted  before  others  can  be 
availed  of  by  assessment.'^  But  if  there  is  no  such  distinction, 
all  are  to  be  assessed  alike.^  And  if  the  funds  raised  are  to 
be  appropriated  for  the  payment  of  certain  claims  in  succes- 
sive order,  the  first  must  be  paid  in  toto  before  anything  can 
be  appropriated  for  the  payment  in  the  next  succeeding  class, 
as  for  return  of  premiums,  for  instance.^ 

[§  560  A.  Extent  of  Liability  to  pay  Assessments.  —  Where 
a  policy  is  to  be  suspended  during  default  of  payment  of  an- 
nual interest  the  member  may  nevertheless  remain  liable  for 
losses.  If  such  is  the  agreement  there  is  no  reason  why  it 
should  not  be  enforced.'''  Where  A.  takes  out  a  policy  in  a 
mutual  company,  giving  his  note  for  a  certain  sum  payable 
in  such  amounts  and  at  such  times  as  the  directors  under  the 
charter  and  by-laws  may  determine,  and  a  by-law  provided  that 
in  case  of  loss  the  company  should  retain  the  premium  note  and 
such  part  of  the  funds  called  for  by  the  loss,  not  exceeding  the 
amount  still  unpaid  on  the  premium  note,  as  would  be  suffi- 

1  Thomas  v.  Achilles,  16  Barb.  (N.  Y.)  401  ;  Currie  v.  Mut.  Ass.  Soc.,4  H.  & 
M.  (Va.)  315;  People's  Eq.  Mut.  Ins.  Co.  v.  Arthur,  7  Gray  (Mass.),  267. 

2  Augusta  Mut.  Ins.  Co.  v.  French,  -39  Me.  522. 

8  White  V.  Ross,  15  Abb.  Pr.  (N.  Y.)  66.  In  Massachusetts,  by  statute,  where 
the  affairs  of  an  insurance  company  have  been  placed  in  the  hands  of  a  re- 
ceiver, an  assessment  may  be  made  by  him,  which,  being  ratified  by  the  court, 
on  a  bill  in  equity,  concludes  all  parties  in  interest ;  and,  upon  decree  of  con- 
firmation, executions  may  issue  for  the  respective  amounts  against  those  upon 
whom  they  are  assessed.  Hamilton  Mut.  Ins.  Co.  v.  Parker,  11  Allen  (Mass.), 
574. 

*  Long  Pond  Ins.  Co.  v.  Houghton,  6  Gray,  77. 

6  Fayette  Mut.  Fire  Ins.  Co.  v.  Fuller,  8  Allen  (Mass.),  27. 

«  Commonwealth  v.  Union  Mut.  Ins.  Co.,  112  Mass.  116 ;  Commonwealth  v. 
Mass.  Mut.  Fire  Ins.  Co.,  id. 

7  [Webb  V.  Mut.  Fire  Ins.  Co.,  63  Md.  213.] 

1278 


CH.  XXXI.]  OF   MUTUAL   INSURANCE.  [§  560  A 

cient  to  secure  the  payment  of  assessments  by  the  assured  dur- 
ing the  continuance  of  his  policy  after  said  loss,  it  was  held 
that  the  company  had  a  lien  for  assessments,  subsequent  to 
the  loss  up  to  the  expiration  of  the  policy,  on  the  money  paid 
into  court  upon  a  judgment  on  the  policy  for  the  payment  of 
the  loss  by  the  company .^  Where  the  insured  is  to  be  liable 
for  assessments  during  the  term  of  his  policy  and  this  pro- 
vides for  its  surrender  in  case  the  property  is  sold,  the  liability 
for  assessments  continues  during  the  term  although  the  build- 
ings are  destroyed  and  the  land  sold,  if  no  surrender  is  madc.^ 
A  by-law  may  lawfully  make  policies  liable  for  assessments 
though  issued  subsequently  to  the  loss  for  which  the  assess- 
ment is  made.^  But  an  action  cannot  be  brought  to  recover 
quotas  and  requisitions  accruing  after  the  policy  has  become 
void  by  other  insurance.^  And  an  insurance  company  cannot 
maintain  an  action  for  premiums,  assessments,  &c.,  on  policies 
which  have  never  left  their  hands  or  been  signed  by  the  as- 
sured, when  all  that  the  latter  has  done  is  to  make  written 
application  for  the  same,  refusing  on  seeing  them  to  take 
them.^  The  liability  of  members  to  pay  their  portion  of 
losses  and  liabilities  under  the  organic  law  of  the  company 
cannot  be  varied  by  agreement  between  the  company  and  a 
member.^  Where  a  member  may  by  the  organic  law  with- 
draw and  cancel  his  policy  on  payment  o(  his  proportion  of 
losses  and  assessments  then  existing,  subsequent  assessments 
to  cover  subsequent  losses  from  failure  to  collect  or  other 
cause  cannot  aft'ect  himJ  A  member  of  a  mutual  company 
is  liable  on  an  assessment  to  cover  a  loss  occurring  during  his 
membership,  although  the  assessment  be  not  levied  until  nine 
years  after  his  policy  expired,  and  the  company  has  six  years 

^  [Appeal  of  Susquehanna  Ins.  Co.,  105  Pa.  St.  615.] 

2  [Thropp  V.  Insurance  Co.,  125  Pa.  St.  427.] 

3  [Susquehanna  Mut.  Fire  Ins.  Co.  v.  Stauffcr,  125  Pa.  St.  416.     See  Thropp 
V.  Insurance  Co.,  id.  427.] 

*  [Mut.  Ass.  Soc.  V.  Holt,  29  Grat.  612  at  625.] 

6  [Real  Estate  Mut.  Fire  Ins.  Co   v.  Roessle,  1  Gray  (Mass  ),  336  at  337.] 
6  [Russell  V.  Berry,  57  Mich.  287.] 

''  [Union  Mut.  Fire  Ins.  Co.  v.  Spaulding,  61  Mich.  77 ;  Tolford  v.  Church,  66 
Mich.  431.] 

VOL.  II.  — 37  1279 


§  560  B]       INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XXXI. 

after  levy  of  the  assessment  in  which  to  sue  for  it.^  The  in- 
sured may  defend  a  suit  for  assessments  on  the  ground  of 
fraudulent  representations  inducing  him  to  contract  with  the 
company .2  But  where  one  signs  an  application  without  read- 
ing it  and  receives  a  policy  in  accordance  with  it,  which  he  re- 
tains a  long  time  without  reading,  he  cannot  then  claim  that 
by  a  mutual  mistake  the  application  and  policy  were  not  of  the 
variety  he  wanted.  Parol  evidence  of  representations  made  by 
the  agent  prior  to  the  contract  are  inadmissible  to  enable  the 
insured  to  escape  the  liabilities  imposed  on  him  by  the  policy, 
nor  will  returning  the  policy  to  the  agent  relieve  the  assured 
from  assessments.  One  cannot  accept  and  retain  the  pro- 
tection of  a  policy  and  then  repudiate  its  liabilities.^  The 
holder  of  a  policy  who  has  a  chance  to  look  at  it  before  he 
accepts  it  is  held  to  have  notice  of  its  contents,  in  the  absence 
of  fraud,  and  he  cannot  allege  ignorance  to  excuse  non-com- 
pliance with  conditions.^  Neither  will  a  plea  avail  that  the 
term  broken  was  cunningly  hidden  away  among  a  mass  of 
fine  print  so  as  to  be  illegible  and  unintelligible,  where  it  ap- 
pears that,  although  fine,  the  print  was  legible.  When  the 
assured  accepts  a  policy  without  dissent  the  law  presumes 
that  he  knows  and  assents  to  its  contents.^] 

[§  560  B.  Forfeiture  by  Non-Payment  of  Assessment  will 
occur  if  such  is  the  agreement,  just  as  in  the  case  of  the  non- 
payment of  any  other  premium.  Sometimes  default  only 
suspends  the  policy ,6  and  a  failure  to  pay  an  assessment  fall- 
ing due  after  loss  is  not  fatal,"  unless  so  agreed,^  as  where 
the  policy  continues  alive  after  a  loss  and  will  cover  other  and 
subsequent  losses.  A  member  does  not  forfeit  by  neglecting 
to  pay  an  assessment  not  made  in  accordance  with  the  pro- 
visions of  the  constitution  of  the  order,  although  it  was  in 

1  [Smith  V.  Bell,  107  Pa.  St.  352.] 

2  [Lycoming  Fire  Ins.  Co.  v.  Wright,  55  Vt.  526.] 

8  [Susquehanna  Mut.  Fire  Ins.  Co.  v.  Swank,  102  Pa.  St.  17.] 
*  [Morrison  v.  Insurance  Co.,  69  Tex.  353] 

5  [Monitor  Ins.  Co.  v.  Buffum,  115  Mass.  343  at  345.] 

6  [Lycoming  Fire  Ins.  Co.  i'.  Rought,  97  Pa.  St.  415.] 

7  [Seyk  V.  Millers'  Nat.  Ins.  Co.,  74  Wis.  67.] 

8  [See  §  560  A.] 
1280 


CH.  XXXI.]  OF   MUTUAL   INSURANCE.  [§  560  B 

accord  with  a  custom  of  the  order  with  which  the  member  was 
not  shown  to  be  acquainted. ^  An  assessment  unsigned  and  in- 
complete^ or  made  by  the  wrong  persons^  will  not  be  sufficient 
to  base  a  forfeiture.  If  the  company  has  gained  profits  for  its 
members,  the  share  of  a  delinquent  must  be  applied  in  satisfac- 
tion of  what  is  due  from  him,  for  example,  interest  on  prem- 
ium notes,  to  prevent  a  forfeiture.*  In  a  mutual  company  every 
member  is  interested  in  profits  and  involved  in  losses.  The 
essence  of  mutuality  is,  that  those  who  contribute  to  produce 
assets  are  interested  in  proportion  to  their  contribution.^  And 
the  insured  is  entitled  to  know  the  amount  of  interest  due  after 
deducting  liis  share  of  the  profits,  before  a  forfeiture  for  non- 
payment of  interest  can  be  claimed.^  Where  the  by-laws  pro- 
vide that  a  policy  suspended  by  non-payment  of  assessment  may 
be  revived  by  payment  of  all  dues  within  three  months  after 
the  forfeiture,  such  payment  is  all  that  is  necessary,  and  the 
usage  of  the  society  cannot  attach  other  requisites  to  the  con- 
tract against  the  rights  of  a  member.'  Where  a  by-law  gives 
the  board  of  directors  power  to  reinstate  a  member  on  his  pre- 
senting a  sufficient  excuse  for  failure  to  pay  an  assessment 
promptly,  and  making  up  the  same,  and  the  board  impropei'ly 
refuses  to  so  reinstate  a  member  on  a  proper  excuse,  because 
he  is  in  ill  health  (and  he  dies  soon  after),  equity  will  deter- 
mine the  adequacy  of  the  reason  so  offered,  and  in  a  proper 
case  compel  the  company  to  pay  the  insurance.^  Whether  in- 
ability by  reason  of  a  sudden  calamity  is  a  "  valid  reason"  for 
not  paying  an  assessment  on  time  is  for  the  jury.^  The  com- 
pany's books  are  the  best  evidence  of  an  assessment  and  of 
forfeiture.     The  testimony  of  officers  is  secondary  evidence.^"] 

1  [Underwood  v.  Iowa  Legion  of  Honor,  66  Iowa,  134.] 

2  [Baker  v.  Citizens'  Mut.  Fire  Ins.  Co.,  51  Mich.  243.] 
8  [Bates  V.  Detroit  Mut.  Ben.  Ass.,  51  Midi.  587.] 

*  [Nortliwestern  Mut.  Life  Ins.  Co.  v.  Fort's  Adm.  82  Ky.  277.] 
6  [Carton  v.  Soutliern  Mut.  Ins.  Co.,  72  Ga.  371-373.] 

6  [Eddy  I'.  Plioenix  Mut.  Life  Ins.  Co.,  18  Ins.  L.  J.  804  (N.  H.),  March,  1889.] 
T  [Manson  v.  Grand  Lodp^e,  30  Minn.  509.] 

*  [Van  Houten  v.  Pine,  38  N.  J.  Eq.  72.     (The  money  had  been  given  to  a 
director  to  pay  the  assessment,  but  he  forgot  it.)] 

^  [Dennis  v.  Mass.  Ben.  Ass.,  47  Hun,  338.] 
w  [Dial  V.  Valley  Mut.  Life  Ass.,  29  S.  C.  5G0.] 

1281 


§  561  A]       INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH    XXXI. 

S  561.  Premium  Notes,  when  recoverable  to  the  Full  Amount 
without  Assessment.  —  In  some  cases  it  is  provided  by  the 
charter  or  by-laws  that,  in  case  of  neglect  to  pay  an  assess- 
ment for  a  specified  time,  the  whole  amount  of  the  deposit 
note  may  be  sued  for  and  recovered.  If,  in  such  case,  an  as- 
sessment has  been  paid,  the  whole  amount  recoverable  is  the 
face  of  the  note  less  the  paid  assessments,^  but  without  inter- 
est, as  the  right  to  recover  the  whole  amount  is  in  the  nature 
of  a  penalty,  which  carries  no  interest.^  And  the  failure  to 
pay  such  an  assessment  excludes  the  insured  from  his  right 
to  indemnity  in  case  of  loss,^  unless  the  by-laws  treat  the  note 
"  as  payment  in  advance  "  of  the  assessment,*  in  which  case 
the  right  will  remain  intact,  although  the  charter  provides 
that  if  he  neglect  to  pay  an  assessment  he  shall  cease  to  have 
his  property  insured  until  he  pays. 

[§  561  A.  What  is  a  "Waiver  of  Forfeiture  for  Non-payment. 
Where  a  course  of  dealing  has  induced  a  member  to  sup- 
pose that  assessments  will  be  received  after  the  time  limited 
the  company  is  estopped  to  insist  upon  a  forfeiture.^  But  the 
insured  cannot  take  advantage  of  such  a  course  of  dealing  when 
it  was  not  known  to  him,  or  known  only  by  a  few  instances 
in  his  own  case.^  Forfeiture  or  suspension  for  non-payment  of 
assessments  may  be  waived  by  any  act  recognizing  the  policy 
as  still  existing.^  The  failure  to  pay  within  the  proper  time 
after  the  first  notice  is  waived  by  sending  a  second  notice  af- 
ter the  expiration  of  such  time.^  If  a  company  makes  an  as- 
sessment on  a  member  after  a  former  assessment  is  overdue  and 
unpaid,  it  waives  the  forfeiture  for  such  non-payment.^  Col- 
lecting any  assessment  waives  the  non-payment  of  prior  assess- 
ments.i*^     The  levy  and  acceptance  of  an  assessment  without 

1  Bangs  V.  Bailey,  37  Barb.  (N.  Y.)  630. 

2  Ibid.  ;  Bangs  v.  Mcintosh,  23  Barb.  (N.  Y.)  591. 

3  Beadle  v.  Chenango  County  Mut.  Ins.  Co.,  3  Hill  (N.  Y.),  161. 
*  King  V.  Mut.  Ins.  Co.,  20  N.  H.  198. 

s  [Nat.  Mut.  Ben.  Ass.  v.  Jones,  84  Ky.  110.] 

6  [Bosworth  V.  Western  Mut.  Aid  Soc,  75  Iowa,  582.] 

7  [Olmstead  v.  Farmers'  Mut.  Fire  Ins.  Co.,  50  Mich.  204.] 

8  [Shay  r.  National  Ben.  Soc,  54  Hun,  109.] 

9  [Stylow  V.  Wis.  Odd  Fellows  Mut.  Life  Ins.  Co.,  69  Wis.  224.] 

10  [Rowswell  -;.  Equitable  Aid  Union,  13  Fed.  Rep.  840  (N.  Y.),  1882.] 

1282 


CH.  XXXI.]  OP   MUTUAL   INSURANCE.  [§  561  A 

condition  after  the  conditional  acceptance  of  a  prior  overdue 
payment,  is  a  waiver  of  the  right  to  avoid  the  certificate  for 
delay  of  payment.  "  An  unconditional  acceptance  upon  as- 
sessment waives  all  former  known  grounds  of  forfeiture."  ^ 
If  a  branch  of  a  benevolent  institution  advances  to  the  parent 
body  an  assessment  due  from  a  member,  this  waives  the  sus- 
pension of  such  member  provided  for  in  the  by-laws, and  his  fam- 
ily is  entitled  to  the  usual  benefit  although  the  secretary  may 
have  marked  the  member  "  suspended."  ^  But  where  pay- 
ments were  overdue,  and  the  secretary  wrote  the  assured  that 
if  they  were  made  immediately  the  default  would  not  be  in- 
sisted on,  and  twenty-four  days  after  when  the  assured  was 
sick  the  money  was  sent,  and  receipts  were  returned  by  the 
company,  which  provided  in  ]»rint  that  they  should  be  valid 
only  in  case  the  insured  were  alive  and  well  at  their  date,  and 
the  words  "no  default"  were  written  across  the  face  of  each 
receipt,  it  was  held  that  there  was  no  waiver.  The  written 
words  must  be  construed  in  connection  with  the  print,  and 
meant  that  there  was  no  default  if  the  insured  were  alive  and 
well,  which  he  was  not.^  A  certificate  of  membership  in  a 
beneficiary  association  provided  that  failure  to  comply  with 
the  rules  of  the  association  as  to  payment  should  render  it 
void,  and  a  rule  of  the  association  provided  that  if  an  assess- 
ment was  not  received  within  thirty  days  after  mailing  the  no- 
tice the  party's  contract  with  the  association  should  be  void, 
but  he  might  renew  his  connection  as  at  first  joining,  or  for  valid 
reasons  might  be  reinstated  on  paying  arrearages.  C.  was 
habitually  unpunctual,  and  many  times  the  company  received 
assessments  after  they  were  due,  makijig  C.  each  time  sign  a 
certificate  that  he  was  in  good  health.  At  last  C.  failed  to 
pay  an  assessment  within  the  thirty  days  and  died  before  pay- 
ing it.  It  was  held  that  the  facts  showed  no  waiver  of  the 
rule  of  forfeiture  by  the  company.*] 

1  [Rice  V.  N.  E.  Mut.  Aid  Soc,  146  Mass.  248,252;  Rindge  v.  N.  E.  Mut.  Aid 
Soc,  146  Mass.  286.] 

2  [Schen  v.  Grand  Lodge,  &c.  Ind.  Forresters,  17  Fed.  Rep.  214  (Oliio),  1883.] 

3  [Servoss  v.  Western  Mut.  Aid  Soc,  67  Iowa,  86.] 
*  [Grossman  v.  Mass.  Ben.  Ass.,  143  Mass.  435.] 

1283 


§  562]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXXI. 

§  562.  Notice  of  Assessment.  —  The  insured  is  entitled  to 
notice  of  an  assessment  before  suit  is  brought.^  But  the 
courts  will  be  liberal  in  construing  what  amounts  to  proof  and 
notice.^  If  the  assessment  be  properly  laid  but  improperly 
notified,  no  forfeiture  is  incurred  by  failure  to  pay  it.^  But  if 
the  notice  be  properly  sent,  by  mail  for  instance,  its  miscar- 
riage, or  failure  to  reach  its  destination,  or  the  absence  of  the 
insured,  will  not  excuse  non-payment  within  the  prescribed 
time.*  Unless  some  special  mode  or  form  of  notice  of  the 
assessment  be  required  by  the  charter  or  by-laws,  personal 
service  will  be  sufficient  publication.^  Nor  need  the  notice 
specify  the  amount  due  on  each  note.^  The  rate  per  cent  will 
be  sufficient,  or  any  notice  which  will  enable  the  insured  to 
determine  by  calculation  the  amount  which  he  will  be  called 
on  to  pay,  and  not  incumbered  by  matter  which  misleads.''' 
And  notice  required  to  be  by  mail  or  otherwise  is  sufficient,  if 
deposited  in  the  post-office  directed  to  the  place  of  residence 
indicated  in  the  policy.^  And  the  "  date  of  the  notice  "  from 
which  is  reckoned  the  time  within  which  the  assessment 
must  be  paid  will  be  not  the  date  written  in  the  notice,  or  the 
day  on  which  it  is  sent,  but  the  date  of  its  arrival  at  the  post- 

1  Columbia  Ins.  Co.  v.  Buckley,  83  Pa  St.  293. 

2  Williams  ;;.  German,  &c.  Ins.  Co.,  G8  111.  387  ;  Hollister  v.  Quincy  Mut.  Ins. 
Co.,  118  Mass.  478. 

3  Frey  r.  Mutual  Fire  Ins.  Co..  &c.,  4-3  U.  C.  (Q.  B.)  102. 
*  Greeley  v.  Iowa  St.  Ins.  Co.,  50  Iowa,  86. 

^  Jones  V.  Sisson,  6  Gray  (Mass.),  288;  York  County  Mut.  Fire  Ins.  Co.  v. 
Knight,  48  Me.  75. 

6  Atlantic  Mut.  Fire  Ins.  Co.  v.  Sanders,  36  N.  H.  252. 

"'  Bangs  ;;.  Duckingfield,  18  N.  Y.  592. 

^  [In  general  it  is  true  that  the  company  fulfils  its  duty  b}'  mailing  notice  of 
the  assessment,  and  if  it  fails  to  reach  the  assured  by  miscarriage  or  by  his  ab- 
sence, non-pay nient  of  the  assessment  within  the  required  time  is  not  excused. 
Weakly  v.  Northwestern  Ben.  &  Mut.  Aid  Ass.,  19  Brad.  .327.  And  the  holder  of 
an  accident  certificate  is  bound  by  a  by-law  of  the  company  providing  that  no- 
tice of  an  assessment  put  in  the  mail  addressed  to  the  last  given  address  of 
the  member  shall  be  legal  notice,  whether  in  fact  received  or  not.  Union  Mut. 
Ace.  Ass.  V.  Miller,  26  Brad.  280.  But  if  the  charter  provides  that  the  mem- 
bers shall  be  notified  of  assessments,  mailing  is  not  enough,  the  notice  must  be 
actuall}'  received :  Castner  ».  Farmers'  Mut.  Fire  Ins.  Co.,  50  Mich.  273  ;  and  it 
must  be  notice  of  the  assessment,  not  of  forfeiture.  Bates  v.  Detroit  IMut.  Ben. 
Ass.,  51  Mich.  587.] 

1284 


CH.  XXXI.]  OP   MUTUAL   INSURANCE.  [§  562 

office  to  which  it  is  sent.^     A  change  of  residence  not  made 
known  to  the  company  is  without  effect  upon  them.'-^     If  by 
the  terms  of   the  by-laws  notice  of   an  assessment  is  to  be 
given,  an  action  for  recovery  of    the  assessment  cannot   be 
maintained  by  the  company  or  its  receiver  without  first  giv- 
ing the  notice.^     [Wlien  tlie  charter  requires  that  notice  of 
assessments  shall  be  published  and  advertised,  publication  in  a 
newspaper  is  what  is  mcant.^]     If  publication  of  notice  for 
three  weeks  be  required,  and  after  assessment  is  made  the  com- 
pany goes  into  the  hands  of  the  receiver,  there  being  no  com- 
pany to  give  the  required  notice,  actual  notice  by  the  receiver, 
before  action  brought,  will  suffice.^     The  notice  should  not  be 
given  till  the  assessment  is  made.^     Notice  of  an  intention  to 
assess  is  not  necessary,  unless  required  by  the  by-laws  or  char- 
ter.    Assessments  at  the  regular  meeting  of  the  directors  are 
presumably  a  part  of  the  business  of  the  company,  and  no 
notice  is  required.     And  as  this  is  a  part  of  the  duty  of  the 
directors,  made  so  by  statute,  a  by-law  authorizing  the  direc- 
tors to  lay  an  assessment  at  a  meeting  called  for  that  purpose, 
neither  restricts  nor  enlarges  the  power  of  the  directors.''    The 
notice,  when  required,  should  be  given  to  the  member  of  the 
company  insured,  although  there  has  been  an  assignment  of 
the  policy  with  the  consent  of  the  company ;  ^  unless  by  the 
giving  a  new  premium  note,  or  assuming  the  liability  on  the 
original,  the  assignee  becomes  a  member;  in  which  case  he 
should  be  notified,  and  not  the  original  insured.^     [Unless  no- 
tice of  assessment  is  sent  reasonably  soon  after  its  date,  the 
time  allowed  for  payment  will  not  run  from  such  date.^^     If 
assessments  are  to  be  paid  within  thirty  days  after  notice,  in 

1  Protection  Life  Ins.  Co.  v.  Palmer,  81  III.  88. 

2  Lothrop  v.  Greenfield  Stock  &  Mut.  Fire  Ins.  Co.,  2  Allen  (Mass.),  82. 

3  Williams  v.  Babcock,  2.5  Barb.  (X.  Y.)  109. 

*  [Pennsylvania  Training  Scliool  v.  Independent  Ins.  Co.,  127  Pa.  St.  559.] 
^  Cooper  u.  Shaver,  41  Barb.  (N.  Y.)  151. 
6  Bangs  V.  Mcintosh,  23  Barb.  (N.  Y.)  591. 

^  Bay  State  Mut.   Fire  Ins.  Co.  v.  Sawyer,  12  Cush.  64 ;  Fayette   Mut.  Fire 
Ins.  Co.  V.  Fuller,  8  Allen  (Mass.),  27. 

^  Brannin  v.  Mercer  County  Mut.  Ins.  Co..  4  Dutch.  (N.  J.)  92. 
^  Bowditch  Mut.  Fire  Ins.  Co.  v.  Winslow,  3  Gray  (Mass.),  415. 
1°  [Stanley  v.  Northwestern  Life  Ass.,  36  Fed.  Rep.  75  (Ky.),  1887.] 

1285 


§  563]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.       [CH.  XXXI. 

the  absence  of  notice  no  tender  of  annual  or  other  assess- 
ments is  necessary  to  save  forfeiture,^  and  the  notice  must 
conform  to  the  agreement  and  not  require  the  payment  of 
more  than  is  thereby  due.^] 

§  563.  Mutual  Insurance  ;  Lien  ;  Contract  with  Parties  out  of 
the  State.  —  A  mutual  insurance  company  of  New  York,  em- 
powered to  do  business  in  a  particular  county,  and  having  by 
its  charter  a  lien  upon  real  estate  insured  by  it  upon  filing 
notice,  it  has  been  held  in  Canada,  cannot  make  there  a  valid 
contract  with  a  citizen  of  Canada  for  the  insurance  of  his 
buildings.  Such  a  contract  is  void  ah  initio.  There  could 
be  no  mutuality  in  such  a  contract,  and  the  insured  could  not 
subject  his  property  to  the  required  lien.^  But  in  an  action 
against  the  same  company,  the  New  York  courts  held  that  the 
company  might  lawfully  make  in  New  York  a  contract  to  in- 
sure personal  property  situated  in  Canada  and  belonging  to  a 
person  residing  there.*  And  it  is  well  settled  that  as  between 
the  States  of  the  Union  mutual  insurance  companies  incor- 
porated in  one  State  may  make  in  other  States  valid  contracts 
of  insurance,  both  of  the  real  and  personal  property  of  citi- 
zens of  other  States,  although  doubtless  without  the  permission 
of  the  foreign  State,  no  lien  in  such  case  will  attach  to  the 
real  estate.  The  practice  of  mutual  insurance  companies  to 
insure  both  real  estate  and  personal  property  upon  which  they 
can  have  no  lien  is  generally,  if  not  universally,  upheld. 

The  lien  given  by  charter  upon  the  property  insured  is  inef- 
fectual as  against  a  bona  fide  purchaser,^  unless  by  express 
provision  it  is  made  to  run  with  the  land.^  [A  company  may 
still  assert  its  lien  for  assessments  on  funds  paid  into  court 
by  it  in  settlement  of  a  loss,  although  in  another  suit  it  has 
been  determined  that  the  company  could  not  sue  for  the  as- 

1  [Covenant  Mut.  Ben.  Ass.  v.  Spies,  114  111.  403.] 

2  [Mutual  Endowment  Assess.  Ass.  v.  Essender,  59  Md.  463.] 

3  Genesee  Mut.  Ins.  Co.  v.  Westman,  8  U.  C.  (Q.  B.)  487. 

*  Western  v.  Genesee  Mut.  Ins.  Co.,  2  Ker.  (N.  Y.)  258 ;  Columbia  Fire  Ins. 
Co.  V.  Kinyon,  37  N.  J.  L.  33. 

5  Kentucky,  &c.  Ins.  Co.  v.  Mathers,  7  Bush  (Ky.),  23  ;  MoCulIoch  v.  Indiana, 
&c.  Ins.  Co.,  8  Blackf.  (Ind.)  50. 

6  Shirley  v.  Mut.  Ass.  Soc,  2  Rob.  (Va.)  705. 

1286 


CH.  XXXI.]  OF   MUTUAL   INSURANCE.  [§  563  A 

sessments  because  it  had  failed  to  give  the  proper  notice  of 
them,  nor  is  it  estoppel  to  assert  such  lien  by  reason  of  hav- 
ing sought  to  defend  the  suit  of  the  assured  by  maintaining 
that  the  policy  was  forfeited.^] 

[§  563  A.  Suit  against  the  Company  on  a  Mutual  Policy.  — - 
When  the  insured  is  to  receive  a  sum  equal  to  the  amount  re- 
ceived from  a  death  assessment,  not  exceeding  $3000,  after 
proof  of  loss,  satisfactory  proof  of  loss  constitutes  a  demand 
of  payment,  and  the  company  cannot  excuse  non-payment 
on  the  ground  that  no  assessment  has  been  made;  it  is 
its  duty  to  make  the  assessment.^  And  a  suit  may  be 
brought  for  the  neglect  to  make  an  assessment.^  And  an 
action  will  be  sustained  on  the  policy  for  the  maximum 
amount  it  calls  for,  unless  the  company  can  show  that  an 
assessment  at  the  proper  time  would  not  produce  so  much. 
This  is  the  best  doctrine,  though  as  we  shall  see  there  is  some 
conflict. 

In  Iowa  it  has  been  held  that  the  plaintiff  must  show  that 
an  assessment  had  been  made,  and  its  amount,  in  order  to  re- 
cover at  law  on  a  certificate  promising  the  net  amount  of  an 
assessment  not  exceeding  $3000.  The  dissent  of  J.  Beck 
is  clearly  the  better  law.^  The  true  remedy,  the  court  say 
later,  is  maiidamuH  to  compel  an  assessment.^  In  Michigan, 
on  the  contrary,  mandamus  does  not  lie  to  compel  a  mutual 
company  to  levy  an  assessment  and  pay  a  loss.  The  proper 
method  is  to  bring  suit  on  the  contract.^  On  the  other  side 
stand  New  York,  Minnesota,  &c.  A  mutual  certificate  en- 
titling a  member  to  "the  sum  of  one  dollar  for  each  con- 
tributing member,  not  exceeding  $2000,"  is  an  absolute 
agreement  to  pay  an  amount  to  be  determined  by  the  number 
of   contributing   members,  and    it   is   not  necessary  for   the 

1  [Appeal  of  Susquehanna  Ins.  Co.,  105  Pa.  St.  615.] 

2  [Freeman  v.  National  Ben.  Soc,  42  Hun,  252.] 

3  I  Oriental  Ins.  Ass.  c.  Glancey,  70  Md.  101.] 

^  [Bailey  v.  Mut.  Ben.  Ass.,  71  Iowa,  689,  692.] 

s  [Rainsbarger  v.  Union  Mut.  Aid  Ass.,  72  Iowa,  191 ;  Newman  v.  Cove- 
nant Mut.  Ben.  Ass.,  72  Iowa,  242] 

«  [Burland  v.  Mut.  Ben.  Ass.,  47  Midi.  424  ;  Bates  v.  Detroit  Mut.  Ben.  Ass., 
id.  646.] 

1287 


§^>63A]      insurance:  fire,  life,  accident,  etc.     [ch.  xxxi. 

plaintiff  to  allege  an  assessment  and  prove  how  much  was 
realized  by  it.^  Neither  is  it  necessary  to  ask  equity  to  compel 
an  assessment.  A  suit  at  law  for  damages  for  refusal  to 
assess  is  the  proper  remedy,  the  measure  of  damages  being 
the  amount  assessable  on  all  insured,  unless  the  defendant 
alleges  and  proves  that  it  should  be  less.^  In  a  suit  against 
a  mutual  company  the  plaintiff  should  recover  a  money  judg- 
ment. He  is  not  obliged  to  proceed  by  mandajnus  to  compel 
an  assessment,  but  may  give  evidence  of  the  amount  that 
would  be  realized  by  the  assessment,  and  have  a  verdict  ac- 
cordingly .^  If  a  mutual  policy  is  written  for  eiglity  per  cent 
of  an  assessment  not  exceeding  $5-4000,  and  the  company  re- 
fuses to  assess,  it  is  not  necessary  to  bring  a  bill  for 
specific  performance.  An  action  at  law  for  substantial 
damages  may  be  maintained,  and  when  the  allegations  ad- 
mitted by  demurrer  claim  tliat  eighty  per  cent  of  an  assess- 
ment would  realize  $4000,  it  seems  the  recovery  may  be  for 
the  whole  sum.*  If  however  the  policy  provides  that  the 
company  shall  only  be  liable  in  a  proceeding  to  compel 
an  assessment,  the  only  remedy  is  suit  in  chancery  for 
specific  performance.^  After  a  verdict  and  judgment  against 
a  mutual  company,  it  is  improper  for  the  court  to  restrict 
the  verdict  and  judgment  to  the  assessments  made  or  to 
be  made  by  the  company,  as  this  puts  the  payment  in  the 
power  of   the    company.^ 

Amount  of  Recovery.  —  Where  it  is  shown  that  if  the  assess- 
ment had  been  made  within  the  specified  time  the  full  amount 
of  the  policy  would  liave  been  realized,  the  beneficiary  is 
entitled  to  judgment  for  that  amount.'''  It  has  been  said  that 
there  is  no  presumption  that  the  assessments  will  amount  to 
or  exceed  the  sum  named  as  the  limit  of  insurance  in   the 

1  [Neskern  v.  Northwestern  Endowment  &  Legacy  Ass.,  30  Minn.  408.] 

2  [Bentz  V.  Northwestern  Aid  Ass.,  40  Minn   203.] 

2  [O'Brien  v.  Home  Ben.  Soc,  57  Hun.  495.  See  also  Peck  v.  Eq.  Ace.  Ass. 
82  Hun,  255.     Darrow  v.  Family  Fund  Soc,  116  N.  Y.  537.] 

4  [Jackson  v.  Northwestern  Mut.  Rel.  Ass.,  73  Wis.  507,  511-513.] 

5  [Fggleston  v.  Centennial  Mut.  Life  Ins.  Ass.,  18  Fed.  Rep.  14  (Mo.),  1883.] 

6  [Seitzinger  v.  New  Era  Life  Ass.,  Ill  Pa.  St.  557,  560.] 
■J  [Life  Ass.  V.  Lemke,  40  Ivans.  142.] 

1288 


CH.  XXXI.]  OF   MUTUAL   INSURANCE.  [§  5G4 

certificate.  The  burden  is  on  the  plaintiff  to  show  that  fact 
if  it  exists.^  But  other  cases  more  justly  liold  that  the  burden 
is  on  the  company  to  show  how  much  less  than  the  two  thou- 
sand limit  an  assessment  would  raise.^  In  the  absence  of 
pleadings  and  proof  that  the  sum  should  be  reduced,  tlie  suit 
should  be  for  the  maximum  amount.^  The  numbering  of 
the  certificates  is  prhna  facie  evidence  of  the  membership  of 
the  society.*  A  change  in  the  by-laws  may  by  diminishing 
the  class  from  which  the  assessment  is  to  be  made  reduce 
the  amount  recoverable  on  a  policy  already  issued.  The 
power  to  make  by-laws  is  inherent  and  continuous,  and  the 
courts  will  interfere  with  the  directors  only  when  there  is 
a  manifest  abuse  of  discretion.^  A  member  of  a  mutual 
company  must  take  notice  of  its  by-laws,*^  and  is  bound  by 
one  which  requires  an  appeal  to  a  superior  body  of  the  order 
before  suit  in  the  courts.'^  But  the  order  cannot  by  con- 
stitution or  by-law  deprive  a  member  of  the  right  of  final 
resort  to  the  courts.^  Lack  of  a  certificate  of  membership 
is  fatal  to  a  suit  against  a  mutual  company  as  a  member.^ 
Where  the  amount  of  recovery  is  not  limited  by  the  amount 
of  an  assessment,  an  action  may  be  maintained  before  any 
assessment  is  made,  and  a  mandamus  to  compel  an  assess- 
ment may  be  had  as  auxiliary  to  the  main  action,  ^'^'j 

§  564.  Liability  of  Directors  for  neglecting  to  assess,  strictly 
construed.  —  The  insurance  company,  of  which  the  appellees 
were  directors,  issued  a  policy  to  the  appellant  upon  his  barn, 
which  was  afterwards  destroyed  by  fire.  The  company  ad- 
justed the  loss  and  gave  the  appellant  a  note  for  one  thousand 

1  [O'Brien  v.  Home  Ben.  Soc,  46  Hun,  426] 

2  [Supreme  Lodge,  K.  of  P.  v.  Knight,  117  Ind.  489;  Elkhart  Mat.  Aid, 
&c.  Ass.  V.  Houghton,  103  Ind.  286  ;  Protective  Union  v.  Whitt,  36  Kans.  7G0.] 

3  [Lueders  v.  Hartford  Life,  &c.  Ins.  Co.,  11  Ins.  L.  J.  437  (Mo.),  1882  ] 
*  [Neskern  v.  Northwestern  End.  &  Leg.  Ass.,  30  Minn.  407.] 

&  [Supreme  Lodge,  K.  of  P.  v.  Knight,  117  Ind.  489.] 

6  [Gray  v.  Supreme  Lodge,  K.  of  H.,  118  Ind.  293;  Holland  v.  Taylor,  111 
Ind.  121  ] 

T  [Bauer  v.  Samson  Lodge,  K.  of  P.,  102  Ind.  202.] 

8  [Supreme  Council,  &c.  i-.  Garrigus,  104  Ind.  133.] 

9  [Bishop  V.  Empire  Order  of  Mut.  Aid,  43  Hun,  472.] 

1"  [Harl  V.  Pottawattamie  County  Mut.  Fire  Ins.  Co.,  74  Iowa,  39.] 

1289 


§  564]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXXI. 

dollars,  the  amount  of  the  loss,  and  received  from  him  a  writ- 
ten receipt,  discharging  the  company  from  all  further  claims 
on  account  of  the  fire.  This  note  the  company  afterwards 
took  up,  paying  part  of  the  amount  in  cash,  and  giving  a  new 
note  for  the  remainder,  upon  which  the  appellant  afterwards 
brought  suit  and  recovered  a  judgment.  The  directors  failed 
to  satisfy  the  execution  issued  upon  the  judgment,  or  to 
make  an  assessment.  The  statute  touching  insurance  com- 
panies provided  that  "  whenever  sufficient  goods  or  estate  of 
any  such  corporation  cannot  be  found  to  satisfy  an  execution 
issued  against  them  upon  a  judgment  recovered  on  a  policy 
by  them  made,  and  the  said  corporation  have  goods  or  estate 
to  satisfy  such  execution,  and  the  directors  shall  neglect  or 
refuse  to  pay  the  same ;  or  if  the  directors  shall  for  thirty 
days  after  the  rendition  of  such  judgment  refuse  or  neglect  to 
make  such  an  assessment  as  they  may  be  authorized  to  make 
therefor,  and  to  deliver  the  same  to  the  treasurer  for  collec- 
tion, or  fail  to  apply  such  assessment  when  collected  toward 
satisfying  such  execution,  then,  in  eitlier  of  the  cases  afore- 
said, the  directors  shall  be  personally  liable  for  tlie  whole 
amount  of  such  execution."  This  being  in  the  nature  of  a 
penal  statute,  inflicting  upon  the  directors  the  penalty  of  a 
personal  liability  for  a  failure  to  pay  the  execution,  or  to 
make  and  properly  apply  the  assessment,  must  therefore  be 
construed  with  some  degree  of  strictness,  and  cannot  be  ex- 
tended beyond  the  cases  fairly  within  its  terms,  in  order  to 
meet  those  that  might  be  conceived  to  be  withhi  the  spirit 
and  object  of  the  law.  And  where  the  legislature  provides 
the  personal  remedy  against  the  directors  only  in  cases 
where  there  has  been  a  judgment  against  the  corporation 
on  a  policy,  the  court  cannot  extend  the  remedy  to  cases 
where  a  judgment  has  been  recovered  on  something  else 
than  a  policy .^ 

1  Raber  v.  Jones,  Sup.  Ct.  Ind.,  2  Ins.  L.  J.  519. 
1290 


^ri.  XXXII.]  REMEDIES,    EVIDENCE,   ETC. 


CHAPTER   XXXII. 

REMEDIES,   EVIDENCE,   PLEADING,   INSOLVENCY. 

Analysis. 

REMEDIES. 

Insured  against  insurers. 
§  565.  If  the  insurer  refuses  to  deliver  the  policy  in  consequence  of 

a  fire,  &c.,  the  insured  may  sue  in  equity  for  specific  per- 
formance or  at  law  for  damages,  showing  the  contract 
by  other  evidence. 
§§  566-566  B.  Where  the  insured  wishes  to  defend  against  the  plea  of  false- 

hood in  the  answers  by  showing  that  it  is  the  ayent's  fault, 
he  can  in  most  States  show  the  facts  by  parol  and  claim 
waiver  or  estoppel.  Where  this  is  not  possible  he  may 
go  into  Equity  and  have  the  contract  refurmed,  or  get 
an  injunction  against  the  insurers  setting  up  a  fraudulent 
defence. 

Reformation  will  be  granted  upon  clear  and  convincing  evi- 
dence that  the  actual  policy,  through  mutual  mistake, 
or  mistake  on  one  side  and  fraud  on  the  other,  differs 
from  the  agreement  really  made  by  the  parties,  un- 
less the  mistake  was  due  to  the  negligence  of  the  plain- 
tiff, or  he  has  been  guilty  of  laches,  or  the  action  on  the 
policy  if  reformed  would  be  barred,  or  the  assured  has 
already  sued  at  law  and  lost  on  the  merits. 

Equity  will  not  aid  one  who  rests  for  years  on  his  policy,  even 
though  he  had  very  imperfect  knowledge  of  English. 
He  should  have  sought  the  aid  of  others. 

But  if  the  policy  is  obscure  the  insured  is  not  to  blame  for 
not  reading  it,  and  if  the  facts  calling  for  relief  can  be 
made  out  clearl)',  the  court  will  not  put  out  the  excuse  of 
"laches"  merely  because  the  plaintitt'  did  not  read  the 
policy.     He  has  a  right  to  presume  it  is  all  right. 

There  is  no  period  short  of  the  Statute  of  Limitations  within 
which  a  man  must  discover  error  or  fraud. 

If  suit  is  brought  on  the  policy  within  the  time  limited,  a  bill 
for  reformation  may  be  brought  after  that  time. 

Equity  will  enjoin  a  suit  at  law  after  a  bill  has  been  dismissed, 
§  566. 

Cases  in  which  equity  will  reform,  §  566  A. 

Cases  in  which  equity  will  not  reform,  §  566  R. 

No  fraud  or  mutual  mistake.     Parties  did   not  know 
the  facts  at  time  of  insurance,  &c.     Acceptance  of 

1291 


INSURANCE  :    FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XXXII. 

policy  with  knowledge  of  error.  An  intent  to 
limit  the  right  of  a  beneficiar}'  (wife)  iincommu- 
nicated  to  the  company  at  the  time  of  insurance 
Ls  no  ground  for  reformation.  So  where  insured 
stated  goods  to  be  in  building  A.  when  they  were 
in  B.  §  566  B. 
§  566  C.  Equity  continued. 

Bill  for  discovery. 

Specific  performance  of  agreement  to  insure. 
Setting  aside  a  judgment  on  the  ground  of  new  evidence. 
Rescission,  laches. 

Cancellation  not  obtainable  by  one  who  has  allowed 
another  to  take  out  a  policy  on  his  life,  though 
without  interest  and  hostile,  there  being  no  alle- 
gation of  danger. 
Belief  against  forfeiture  not  imposed  by  statute. 
Interpleader. 
Jurisdiction. 
§  567.  Recovery  of  premiums  (with  interest)  may  be  had  if  the  policy 

is  void  ah  initio,  or  the  risk  never  attaches,  and  there 
is  no  agreement  to  the  contiary,  and  no  fraud  or  vio- 
lation of  morals  by  the  plaiutitf.     A  mere  mistaken 
misrepresentation  will  not  prevent  his  recovery. 
In  general,  if  the  risk  attaches  for  a  single  moment 
on  the  whole  property  no  part  of  the  premium  can 
be  recovered,  but  it  is  otherwise  if  the  policy  be- 
comes illegal  by  statute  after  its  issue. 
Excess  of  premium  paid  bycreilitorin  mistake  of  the  law 

for  insurance  beyond  his  debt  may  be  recovered. 
Agent's  promises.     Surrender.     Premiums  paid  after 
forfeiture. 
§  568.  After  war  suit  lies  to  compel  recognition  of  policy,  or  repay- 

ment of  premiums. 
Compulsory  renewal  of  policy. 
§  569.  Surrender  of  policy  unfairly  obtained, 

"Wrongful  refusal  to  deliver  or  continue  policy  or  receive  pre- 
miums, or  give  a  paid-up  policy.     Measure  of  damages. 
§  569  A.  Venue. 

Action  on  policy  transitory. 
Stipulation  limiting  suits  to  home  State  void. 
Foreign  company  may  remove  suits  to  United  States 
courts. 
§  570,  Remedy  of  insured  against  directors. 

§  571.  Stockholders  may  sue  to  compel  correction  of  dividend. 

§  572,  On  forfeiture  company  may  recover  all  premiums  earned  while  the 

risk  continued. 
Equitable  adjustment  by  directors  after  forfeiture. 

Courts  cannot  interfere.     Dividends,     Profits. 
Insurers  against  insured. 
§  573.  Recovery  of  policy  obtained  by  fraud.     Cancellation.     Re- 

scission.    Injunction  against  suit  at  law  on  the  policy. 
§  574.  Cancellation.     Rescission. 

1292 


CH.  XXXII.]  REMEDIES,   EVIDENCE,   ETC. 

§  575.  Payment  on  loss  of  more  than  there  is  a  legal  obligation  to 

pay,  under  a  mistake  of  fact  pertaining  to  liability,  may 
be  recovered,  thougli  the  means  of  knowledge  were  at 
hand,  and  even  though  the  company  had  no  right  to  do 
business. 
False  representations  of  death. 

§  576.  Agents  against  insurers.     Commissions. 

§  577.  Remedies  by  and  against  foreign  insurance  companies. 

Recovery  of  premiums  by  or  from  a  company  that  has  not 
conformed  to  the  condition  of  doing  business.     Service 
of  process,  &c. 
Whether  a  policy  issued  by  such  company  is  void  or  not. 

§  578.  Right  of  foreign  company  to  remove  action  to  United  States 

courts. 

§  578  a.  Retaliatory  legislation.     A  company  does  business  in  another 

State  only  by  comity,  and  any  restrictions  thought  advis- 
able mixy  be  put  upon  it,  which  it  cannot  overcome  by 
the  provisions  of  the  policy.  A  law  affecting  foreign 
insurance  companies  may  however  be  unconstitutional 
as  violating  the  uniformity  of  taxation. 

EVIDENCE. 
§  579.  Burden  of  proof.     Insurable  interest.     Title. 

Neutrality.      Former   transactions.      Identity  of  premises.       Mis- 
representation of  "life"  in  former  transaction  of  his  own 
cannot  affect  creditor's  policy.     Proofs  as  evidence. 
Application.     Other  similar  occasions. 
Admissions  of  adjuster. 
Physician's  privilege  waived. 

Wrong   admission  of  evidence  not   cured   by  telling  jury  to  dis- 
regard it. 
§  579  A.  Declarations  of  the  "life"  not   admissible  against  the  beneficiary 

unless  part  of  res  gestce. 
§  579  B.  Parol  evidence  of  what  passed  at  insurance, 

of  error  in  policy,  as  to  date  or  amount, 
of  meaning  of  "epidemic." 
of  meaning  of  "rags,"  "old  metals."     Usage, 
that  assignment  was  as  collateral. 

circular  saying  that   thirty   days   grace   would   be  given   on 
premiums,  inadmissible. 
§§580,581.    Expert  testimony. 

§  582.  Custom  and  usage.     Particular  custom  must  be  known  to  insured. 

General  custom,  as  to  charge  more  on  unoccupied  houses, 
is  admissible  on  question  of  increase  of  risk.     So  general 
custom  to  give  thirty  days  grace  on  premiums. 
§  583.  Wilful  burning.    A  preponderance  of  evidence  enough. 

Contra,,  a  few  cases. 
Every  circumstance  that  can  throw  light  on  motive  is  evi- 
dence.    Plaintiffs  good  character  admissible. 
§  584.  Issue  of  policy.     Signing  application.     Receipt  of  premium.    Organ- 

ization of  company. 
§  585.  Disease.     Health.     Death. 

§  586.  Eff'ect  of  misrepresentation  a  question  of  law. 

1293 


§  565]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.       [CH.  XXXII. 

§  587.  Suicide.      Belief.     Character.     Fraud.      Value    of   neighboring 

property, 
§  587  A.     Variance. 
§  587  B.     Court  aud  Jury. 

PLEADING,  §§  588-591  A. 
R  589.  Policy  must  be  set  out,  and  application  if  part  of  the  policy. 

Performance  of  conditions  precedent  to  right  of  recovery  must  be 
alleged, 
general  allegation  sufficient,  but  it  must  be  ^ated  that  the 

period  allowed  the  company  for  payment  has  expired, 
must  state  that  notice  and  proofs  were  furnished  as  agreed, 

or  were  waived. 
Proof  of  waiver  of  a  condition  is  admissible  under  the  allega- 
tion of  performance. 
R  590.  Allegations  as  to  interest,  assignment,  value,  description  of 

property,  &c. 
Plaintiff  need  not  aver  matters  of  defence,   exceptions,    condi- 
tions subsequent,  the  right  of  the  company  to  do  business, 
sufficiency  of  capital  (§  589),  &c.,  nor  that  demand  was  made 
before  suit. 
§  591.  Matters  in  defence  must  be  specially  pleaded.     Intentional  injury. 

Arbitration.     Breach  of  warranty. 
Misrepresentation.     Other  insurance. 

Objections  different  from  those  raised  before  suit  will  not  do. 
False  swearing.     Fraud. 
§  591  A.  Ultra  vires.     See  also  §  577,  and  chap.  iv. 

§  591  B.     New  Trial. 

BANKRUPTCY  AND  INSOLVENCY. 
§  592.  Conflict  of  laws.     Assignment  in  domicil  takes  precedence  of 

attachment  in  another  State. 
§  593.  Status  of  the  company  and  powers  of  court. 

K  594.  Powers  and  duties  of  assignees  and  receivers. 

Interest  that  passes  to  the  receiver. 
Status  of  policy-holder. 
§  594  a.  Distribution  of  assets.     Priority  of  claims.     The  measure  of 

a  policy-holder's  claim.     Death  after  insolvency.     Paid- 
up  policies.     Compensation  of  receiver. 

§  595.      Set-off. 

§  r,96  Pule  on  this  subject  as  affected  by  insolvency. 

§  597.      Cessation  of  business.     Selling  out  to  another  company. 

§  565.  Insured  against  Insurer  ;  Refusal  to  deliver  Policy.  — 
It  not  unfrequently  occurs  that,  the  parties  having  come  to 
an  agreement  upon  the  terms  of  the  contract  before  the  de- 
livery of  the  policy,  a  fire  or  some  other  event  intervenes,  and 
the  company  refuses  to  deliver  the  policy  or  to  admit  its  liabil- 
ity. In  such  case  two  courses  are  open  to  the  insured.  He 
may  resort  to  a  court  of  equity  to  compel  the  delivery  of  the 
1294 


CH.  XXXII.]  REMEDIES,    EVIDENCE,   ETC.  .  [§  560 

policy,  when,  in  a  proper  case,  the  court,  having  jurisdiction 
to  compel  specific  performance,  will,  to  avoid  circuity  of  ac- 
tion, decree  payment  for  the  loss,  as  if  a  policy  had  issued.^ 
Or  a  suit  at  law  will  be  sustained.,  upon  competent  and  satis- 
factory evidence,  whether  verbal  or  written,  to  show  the  terms 
of  the  contract.^ 

§  566.  Insured  against  Insurer-,  Reformation  of  Contract.  — 
Where  the  insured  is  likely  to  be  met  with  the  defence  that 
there  is  falsehood  in  his  answers  contained  in  the  application, 
and  he  would  avail  himself  of  the  reply  that  he  was  misled  by 
the  insurers  or  their  agent,  he  will  carefully  consider  how  he 
will  seek  his  remedy.  In  some  States  the  courts  of  law  feel 
obliged,  under  the  strict  rules  of  evidence  which  govern  such 
courts,  to  deny  him  the  privilege  of  proving  the  facts,  and  so 
he  will  fail  in  his  suit ;  while  the  same  courts,  perhaps,  had 
their  aid  been  invoked  in  equity,  would  have  found  some 
way  in  which  the  facts  might  have  been  available.^  In  most 
of  the  States,  however,  courts  of  law  will  apply  the  doctrines 
of  waiver  and  estoppel,  or  allow  proof  of  mistake,  so  as  to 
enable  the  plaintiff  to  maintain  his  action  for  indemnity, 
and  not  drive  him  to  a  court  of  equity.^  And  where  this  is 
not  permitted,  a  court  of  equity  may  be  applied  to  reform 
the  contract,  if  it  does  not  conform  to  the  agreement,  as  made 
by  mistake  of  law  or  fact,  or  procured  by  fraud,  so  that  an 
action  at  law  can  be  maintained.  And  in  this  case,  as  in  the 
case  of  a  bill  in  equity  to  enforce  specific  performance  by  de- 

1  Baile  i-.  St.  Joseph  Ins.  Co.  (Mo),  10  Ins.  L.  J.  657,  66.3;  Rhodes  v.  Railway 
Passengers'  Ins.  Co.,  5  Lans.  (N.  Y.)  71 ;  Union  Mut.  Ins.  Co.  v.  Com.  Mut.  Mar. 
Ins.  Co.,  2  Curtis  (C.  Ct.  U.  S.),524;  s.  c.  affirmed,  19  How.  (U.S.)  318;  Fried  v. 
Royal  Ins.  Co.,  50  N.  Y.  243  ;  Franklin  Fire  Ins.Co.  v.  Hewitt,  3  B.  Mon.  (Ky.)  231. 

2  Perkins  v.  Washington  Ins.  Co.,  4  Cow.  645;  Kentucky  Mut.  Ins.  Co.  v 
Jenks,  5  Ind.  96;  Hamilton  v.  Lycoming  Ins.  Co.,  5  Pa.  St.  339;  Whittaker  i'. 
Farmers'  Union  Ins.  Co.,  29  Barb.  (N.  Y.)  312  ;  City  of  Davenport  v.  Peoria 
Mar.  &  Fire  Ins.  Co.,  17  Iowa,  276;  Commercial  Ins.  Co.  r.  Hallock,  3  Dutch. 
(N.  J.)  645,  affirming  s.  c.  2  id.  268  ;  Sussex  County  Mut.  Ins.  Co.  v.  Woodruff, 
2  id.  541 ;  Sheldon  v.  Conn.  Mut.  Life  Ins.  Co.,  25  Conn.  207 ;  Gerrish  v.  Ger- 
man Ins.  Co.,  55  N.  H.  .355.     And  see  also  ante,  §  23. 

5  Holmes  ef  al.  v.  Charlestown  Mut.  Fire  Ins.  Co.,  10  Met.  (Mass.)  211 ;  Bar- 
rett et  al.  V.  Union  Mut.  Fire  Ins.  Co ,  7  Cush.  (Mass.)  175. 

*  Wilson  V.  Conway  Mut.  Fire  Ins.  Co.,  4  R.  I.  141.  And  see  ante,  §§  143, 
144,  498  et  seq. ;  Gerrish  v.  German  Ins.  Co.,  55  N.  H.  355. 

VOL.  II.— 88  1295 


§  566  ]        INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH,  XXXII. 

livery  of  the  contract,  the  court  having  jurisdiction  to  reform, 
and  for  the  same  reason  will  decree  damages.^  Evidence 
showing  that  the  insurer  and  insured  meant  to  make  a 
certain  contract,  but  by  misconception  of  the  effect  of  the 
language  used  terms  in  the  policy  which  defeated  their  inten- 
tion, makes  a  proper  case  for  its  reformation.^  The  evidence, 
however,  in  such  case  must  be  clear.^  If  there  be  substantial 
doubt  as  to  what  was  the  statement  of  the  applicant,  or  as  to 
the  fairness  of  his  claim  to  have  been  mistaken,  or  the  agree- 
ment of  the  parties,  or  a  material  conflict  of  testimony,  the 
court  will  not  aid  the  plaintiff.  The  affirmative  is  upon  him, 
and  he  must  show  what  statement  he  made,  and  what  the 
agreement  was.  The  fact  that  the  statement  is  not  true,  and 
the  presumption  that  he  would  not  make  a  false  statement, 
the  effect  of  which  would  be  to  invalidate  the  policy,  are  not 
enough.     It  must  also  appear  that  the  mistake  was  mutual,* 

1  Oliver  v.  Mut.  Com.  Mar.  Ins.  Co.,  2  Curtis  (C.  Ct.  U.  S.),277;  Plioenix 
Ins.  Co.  V.  Hoffheimer,  46  Miss.  645;  Collett  v.  Morrison,  12  Eng.  L.  «&  Eq.  171 ; 
Phoenix  Insurance  Co.  v.  Gurnee,  1  Paige  (N.  Y.),  278;  Longhurst  v.  Star  Ins. 
Co.,  19  Iowa,  364;  Neville  v.  Merch.  &  Manuf.  Ins.  Co.,  19  Oliio,  452;  New  York 
Ice  Co.  V.  Nortli  West  Ins.  Co.,  23  N.  Y.  357,  reversing  s.  c.  10  Abb.  Pr.  (N.  Y.) 
341 ;  Stout  V.  Fire  Ins.  Co.  of  New  Haven,  12  Iowa,  371  ;  Perry  v.  Newcastle 
Dist.  Mut.  Fire  Ins.  Co.,  8  U.  C.  (Q.  B.)  363  ;  Harris  v.  Columbiana,  &c.  Ins.  Co. 
18  Ohio,  116;  Hammel  v.  Queen  Ins.  Co.,  50  Wis.  240. 

•^  Maher  v.  Hibernia  Ins.  Co.,  67  N.  Y.  283. 

3  [Andrews  v.  Essex  Fire  &  Mar.  Ins.  Co.,  3  Mason,  6  at  10 ;  Bishop  v.  Clay- 
Ins.  Co.,  49  Conn.  167.  The  proofs  of  mutual  mistake  in  drawing  up  a  policy 
must  be  very  clear  and  convincing.  Blake  Opera  House  Co.  (;.  Home  Ins.  Co., 
73  Wis.  667  ;  Elstner  v.  Cincinnati  Eq.  Ins.  Co.,  1  Dis.  (Ohio)  412  at  419.  Evi- 
dence that  the  company  knew  the  intention  of  the  insured  at  the  time  of  making 
the  policy  must  be  very  clear,  before  the  instrument  will  be  made  to  conform  to 
it.  Graves  v.  Boston  Mar.  Ins.  Co.,  2  Cr.  (U.  S.)  418  at  444.  A  petition  for 
reformation  of  a  policy  must  show  by  clear  allegations  that  the  petitioner  ex- 
pected a  different  protection  from  that  afforded  him,  and  that  the  company 
agreed  to  it,  but  that  by  mistake  or  fraud  such  was  not  incorporated  in  the  poli- 
cy. Davega  v.  Crescent  Mut.  Ins.  Co.,  7  La.  Ann.  228  at  229.  It  is  not  enough 
to  sliow  that  the  insured  applied  for  a  certain  policy,  P.,  and  that  the  company 
issued  one  of  different  terms,  Pi.  it  must  also  be  shown  that  tliey  agrrtd  to  issue 
P.  or  mutual  mistake  is  not  made  out.  Durham  v.  Fire  &  Mar.  Ins.  Co.,  22  Fed. 
Kep.  468;  10  Sawy.  526  (Oregon)  1884.] 

•»  [McHugh  V.  Imperial  Fire  Ins.  Co.,  48  How.  Pr.  230  ;  Balen  v.  Hanover  Fire 
Ins.  Co.,  67  Mich.  179.  Not  merely  from  ignorance  of  the  law  and  the  real  in- 
tended contract  must  be  evident.  Kent  v.  Manchester,  29  Barb.  (N.  Y.)  595  at 
1296 


CH.  XXXII.]  REMEDIES,   EVIDENCE,    ETC.  [§  566 

what  was  the  contract,  and  that  botli  parties  have  done  what 
neither  intended,  or  that  it  was  the  mistake  of  one  party  in- 
duced by  the  fraud  of  the  other,  and  this  by  the  same  clear 
and  distinct  evidence,  free  from  substantial  doubt. ^  Or, 
again,  a  court  of  equity  will,  in  a  proper  case,  enjoin  the  in- 
surers from  setting  up  a  defence  which  would  be  fraudulent 
or  grossly  inequitable  and  unjust.^  But  a* court  of  equity  will 
not  entertain  a  bill  to  reform  a  policy,  upon  which  a  suit 
at  law  has  been  brought  and  failed.  The  insured,  having 
elected  to  sue  upon  the  policy  as  it  was,  must  abide  the  re- 
sult.3  Equity  will  also  enjoin  a  suit  at  law  brought  after  a  bill 
in  equity  has  been  dismissed.*  Where  the  mistake  is  due  to 
the  negligence  of  the  petitioner,^  or  there  has  been  laches  in 
bringing  the  suit,  it  will  not  interfere.'^     [If  the  insured  ac- 

597.  A  written  instrument  will  be  reformed  on  the  ground  of  mistake,  only  when 
the  correction  asked  for  expresses  tlie  understanding  of  both  parties  at  tlie  time 
it  was  executed.  Ledyard  v.  Hartford  Fire  Ins.  Co.,  24  Wis.  490.  If  the  mistake 
was  not  made  by  both  parties,  only  rescission  or  cancellation  will  be  ordered. 
Diman  v.  Prov.  &c.  R.  R.  Co.,  5  R.  I.  1.30  at  137  ;  Kent  v.  Manchester,  29  Barb. 
595  at  597.] 

1  Ibid.;  Nat.  Ins.  Co.  v.  Crane,  16  Md.  260;  Suydam  v.  Columbus  Ins.  Co., 
18  Ohio,  459 ;  Cooper  v.  Farmers'  Mut.  Fire  Ins.  Co.,  50  Pa.  St.  299 ;  Tusson 
V.  Atlantic  Mut.  Ins.  Co.,  40  Mo.  33;  Parsons  v.  Bignold,  15  L.  J.  n.  s.  (Ch) 
379,  per  Lyndhurst,  L.  C. ;  Van  Tuyl  v.  Westchester  Fire  Ins.  Co.,  55  N.  Y- 
657;  Solms  v.  Rutgers  Fire  Ins.  Co.,  8  Bosw.  (N.  Y.)  578;  Moliere  v.  Penn, 
&c.  Ins.  Co.,  5  Rawle  (Pa.),  343;  Bryce  v.  Lorillard  Fire  Ins.  Co.,  55  N.  Y. 
240;  Snell  v.  Atlantic  Fire  Ins.  Co.,  98  U.  S.  85;  Hay  v.  Star  Fire  Ins.  Co., 
13  Hun  (N.  Y.),  496;  Hearne  v.  Marine  Ins.  Co.,  20  Wall.  (U.S.)  488,  490; 
Brugger  v.  State,  &c.  Ins.  Co.,  C.  Ct.  (Oregon),  8  Ins.  L.  J.  293;  Patterson  v.  Ben 
Franklin  Ins.  Co.,  81*  Pa.  St.  454 ;  Liverpool  Ins.  Co.  v.  Wyld,  1  Canada  Sup. 
Ct.  Rep.  604;  Billington  v.  Provincial  Ins.  Co.,  2  Ont.  App.  Rep.  158;  P\)wler  v. 
Scottish  Eq.  Ass.,  28  L.  J.  (Ch.)  225;  Mead  v.  Westchester  Fire  Ins.  Co.,  6t 
N.  Y.  453;  Continental  Ins.  Co.  r.  Jenkins  (Ky.),  5  Ins.  L.  J.  514;  German,  &c. 
Ins.  Co.  V.  Davis  (Mass.),  10  Ins.  L.  J.  670;  [Welles  v.  Yates,  44  N.  Y.  525  at 
529 ;  Wyche  v.  Greene,  11  Ga.  159,  169]. 

-  Woodbury  Sav.  Bank  v.  Charter  Oak  Ins.  Co.,  31  Conn.  518. 

'•^  Washburn  v.  Great  Western  Ins.  Co.,  114  Mass.  175;  Steinbach  v.  Relief 
Ins.  Co.,  12  Hun  (N.  Y.),  640.  [But  the  dismissal  of  an  action  for  damages, 
witiiout  determination  on  the  merits,  is  no  bar  to  a  subsequent  suit  for  reforma- 
tion.    Spurr  V.  Home  Ins.  Co.,  18  Ins.  L.  J.  619  (Minn),  May  1889.] 

*  Tredegar  v.  Windus,  L.  R.  19  Eq.  607. 

6  Ryan  v.  World  Life  Ins.  Co.,  41  Conn.  168  ;  Taylor  v.  Charter  Oak,  &c.  Ins. 
Co.,  C.  C.  P.  (N.  Y.),  10  Ins.  L.  J.  74;  Pindar  v.  Resolute  Ins.  Co  ,  47  N.  Y.  114 

6  Markey  v.  Mutual  Benefit  Ins.  Co.,  C.  Ct.  (Mass.),  6  Ins.  L.  J.  537. 

1297 


§  556]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXXII. 

cepts  and  acts  on  the  policy  for  years  his  laches  will  prevent  his 
having  it  reformed  to  agree  with  his  recollection  of  the  terms 
of  the  contract.!     A  bill  to  reform,  filed  more  than  six  years 
after  knowledge  of  the  ground  on  which  liability  is  denied, 
cannot  be  maintained  in  equity  although  jurisdiction  of  the 
case  is  not  conferred  on  the  court  until  the  six  years  had 
passed,  and  immediately  before  the  filing  of  the  bill.^     If  per- 
sons knowing  themselves  to  have  an  imperfect  knowledge  of 
English,  allow  themselves  to  continue  under  an  erroneous  im- 
pression for  years  without  effort  to  supplement  their  imperfect 
knowledge  with  the  more    perfect  understanding  of  others, 
equity  will  not  aid  them,  where  there  is  no  fraud.^     Where 
the  insured  thought  by  the  representations  of  the  agent  that 
he  was  getting  a  ten  year  paid  up  policy,  but  in  reality  his 
policy  was  an  ordinary  one,  after  ten  years'  neglect  to  examine 
the  policy,  equity  would  not  aid  him  against  his  own  gross 
neglect.^     But  where  a  policy-holder  was  induced  to  surrender 
it  and  take  a  new  one  upon  false  representations  that  the  new 
policy  was  in  its  terms  more  favorable  to  him,  laches  were  not 
to  be  imputed  to  him  for  not  reading  the  instrument  and  discov- 
ering the  fraud  for  five  years,  the  new  policy  being  so  obscure 
that  only  insurance  experts  could  understand  it.^     And  in  op- 
position to  the  Georgia  case  where  the  plaintiff  applied  for  a 
renewal  on  the  same  terms  as  the  old  policy,  and  the  defendant 
promised  to  give  it,  and  the  plaintiff  did  not  examine  the  new 
policy  until  after  loss,  when  he  found  it  different  from  the  old 
one  in  a  matter  materially  affecting  his  rights  of  recovery,  it 
was  held  that  he  was  not  guilty  of  laches,  having  a  right  to 
presume  the  new  policy  to  be  like  the  old  according  to  promise, 
and  tliat  the  policy  should  be  reformed.*'     The  length  of  time 
before  the  assured  discovers  the  mistake  in  the  policy  is  only 
important  as  evidence  of  the  existence  of    such  a  mistake. 

1  [Zalle'e  v.  Conn.  Mut.  Life  Ins.  Co.,  12  Mo.  App.  Ill ;  Goldsmith  i-.  Union 
Mut.  Life  Ins.  Co.,  2  How.  Pr.  n.  s.  32.     See  however  18  Abb.  U.  C  325.] 

2  [Dodge  V.  Essex  Ins.  Co.,  12  Gray,  65  at  72  ] 

8  [Steines  v.  Manhattan  Life  Ins.  Co.,  .34  Fed.  Rep.  441  (Mo.),  1888.] 
4  [Massey  v.  Cotton  States  Life  Ins.  Co.,  70  Ga.  794.] 
s  [Knauer  ;•.  Globe,  &c.  Ins.  Co.,  48  N.  Y.  Snper.  454.] 
«  [Palmer  v.  Hartford  Ins.  Co.,  54  Conn.  488.] 
1298 


CH.  XXXII.]  REMEDIES,   EVIDENCE,    ETC.  [§  5GG  A 

There  is  no  period  short  of  the  statute  of  limitations  within 
which  a  man  must  discover  such  error.i  A  plaintiff  is  not 
by  neglecting  to  'read  his  policy,  guilty  of  such  laches  as  to 
bar  him  from  seeking  to  have  the  policy  reformed  to  agree 
with  the  contract  he  made.'-^  Where  a  suit  on  the  policy  has 
been  brought  within  the  jicriod  of  limitation  agreed  on,  a  bill 
for  reformation  in  aid  thereof  may  be  brought  after  the  limit. 
Such  a  bill  is  not  a  suit  on  the  policy.-^  A  bill  to  reform  will 
not  be  entertained  if  action  on  the  policy  would  be  barred  even 
were  it  reformed.*] 

[§  566  A.  When  Equity  will  Reform.  —  An  error  in  a  policy 
may  be  corrected  by  the  memorandum  of  the  agreement  or  by 
the  application  marked  "  accepted  "  over  the  initials  of  an  officer 
of  the  company .5  If  by  mistake  of  the  agent  a  policy  is  issued 
in  wrong  form  or  with  errors,  equity  will  reform  it  even  after 
a  loss.^  A  mistake  brought  about  by  wrong  information  given 
by  the  agent  of  the  company,  he  being  a  lawyer,  by  which  the 
policy  was  issued  in  the  name  of  the  mortgagor  instead  of 
the  mortgagee,  will  ground  a  bill  for  reformation.^  Where  the 
agent  fails  to  state  the  interest  that  is  intended  to  be  insured, 
the  policy  will  be  reformed.^  If  a  policy  differs  from  the 
memorandum,  the  policy  will,  by  equity,  be  made  agreeable  to 
the  memorandum.^  Where  the  policy  omits  the  name  of  the 
insured,  and  states  sixty  days  as  the  term  of  insurance  instead 
of  a  year,  as  agreed  upon  by  the  parties  in  the  verbal  contract 
which  the  policy  was  intended  to  embody,  the  policy  will  be 
reformed.  Upon  "  clear  and  convincing  "  evidence  of  mistake 
by  one  party  and  fraud  by  the  other,  or  of  mutual  mistake  so 

1  [Bidwell  V.  Astor  Mut.  Ins.  Co.,  16  N.  Y.  264  at  206] 

2  [Barnes  v.  Hekla  Fire  Ins.  Co.,  75  Iowa,  ll.j 

3  [Rosenbaum  v.  Council  Bluffs  Ins.  Co.,  37  Fed.  Rep.  724  (Iowa),  1889.] 
*  [Thonnpson  v.  Phoenix  Ins.  Co.,  25  Fed.  Rep.  296  (Oregon),  1885.] 

5  [Lippincott  v.  Insurance  Co.,  3  La.  546  at  549 ;  Wylde  v.  Union  Mar.  Ins. 

Co.,  1  N.  S.  Eq.  203;  Banks  v.  Wilson,  id.  210;  Equitable  Ins.  Co.  v.  Hearne,  20 

Wail.  494  at  496.] 

«  [Bailey  v.  Amer.  Cent.  Ins.  Co.,  13  Fed.  Rep.  250,  286  (Iowa),  1882.] 

7  [Slas  V.  Roger  Williams  Ins.  Co.,  8  Fed.  Rep.  183  (N.  H.),  1881.] 

»  [Williams  v.  Nortb  Germ.  Ins.  Co.,  24  Fed.  Rep.  625  (Iowa),  1885.] 

■'  [Motteux  y.  London  Ass.  Co.,  1  Atkins,  545  at  546  j  Delaware  Ins.  Co.  v. 

Hogan,  2  Wash.  4,  6] 

1299 


§  566  A]      INSURANCE  :    fire,  life,   accident,  etc.       [cH.  XXXII. 

that  the  writing  does  not  carry  out  the  intention  of  either, 
equity  will  reform. ^     When  the  insurer  by  mistake  inserted 
the  name  of  another  vessel  than  the   one  intended  to  be  in- 
sured, the  policy  was  reformed  after  loss.^     A  policy  issued  in 
the  wrong  name,  by  mistake  of  the  company's  agent,  may  be 
rectified  after  loss,  although  the  said  agent  signed  the  applica- 
tion with  his  own  name  for  the  applicant.^     When  the  insurer 
by  mistake  indorsed  "  eight  boxes  "  &c.,  on  the  policy  from  a 
bill  of  lading  given  by  the  insured  of  a  shipment,  when  in  fact 
it  was  eighteen,  which  was  not  discovered  until  after  loss,  the 
policy  was  reformed.      The  rule  that  mistake  must  be  mutual 
does  not  prevail  where  there  is  bad  faith  on  the  part  of  the 
defendant,  or  where  confidence  was  reposed  in  him,  and  he 
was   intrusted    with    and  assumed    the    preparation  or  com- 
pletion of  the  instrument,  in  which  wilfully  or  negligently  he 
has  omitted  what  had  been  clearly  stated  to  him  as  the  intent 
of  the  plaintiff,  who  relies  on  the  defendant  in  the  matter.* 
When  the  insurance  company  was  told  that  no  charter  of  the 
ship  was  at  hand  and  the  insured  did  not  know  just  where  she 
would  touch,  but  wanted  a  policy  for  the  round  trip  which 
would  cover  everything  ;  and  when  the  company  purported  to 
give  such  a  policy,  but  in  fact  limited  it  in  opposition  to  the 
charter,  when  found,  equity  ordered  a  reformation  of  the  con- 
tract.^    When  circumstances  indicate  that  a  policy   was  in- 
tended to  be  issued  for  two  months,  and  the  premium  was 
paid  for  that  time  only,  and  the  policy  was  written  for  a  longer 
time,  equity  will  reform  the  policy  on  the  company's  request.^ 
If  a  certificate  for  two  thousand  dollars  is  by  mistake  issued 
upon  an  agreement  for  a  one  thousand  dollar  policy,  the  com- 
pany is  entitled  to  have  the  document  reformed.'] 

1  [Devereuxw.  Sun  Fire  Office,  51  Hun,  147.  The  plaintiff  did  not  discover 
tlie  defects  in  the  poHcy  until  after  loss.  See  Avery  v.  Equitable  Life  Ass.  Soc, 
62  Hun,  392] 

2  [Bates  V.  Grabham,  2  Sulk.  444  at  444] 

8  [Hill  V.  Millville  Mut.  Mar.  &  Fire  Ins.  Co  ,  39  N.  J.  Eq.  66.] 
4  [Brioso  )'.  Pacific  Mut  Ins.  Co.,  4  Daly,  246  at  250] 
6  [National  Traders'  Bank  v.  Ocean  Ins.  Co.,  62  Me.  519  at  523.] 
6  [North  American  Ins.  Co.  ?\  Whipjile,  2  Biss.  418.] 
1  [Gray  v.  Supreme  Lodge  K.  of  H.,  118  Ind.  293.] 
1300 


CH.  XXXII.]  KEMEDIES,    EVIDENCE,    ETC.  [§  566  B 

[§  5G6  B.    "When  Equity  will  not   Reform.  —  A   policy  which 
does  not  state  truly  the  interest  of  the  assured  cannot    be 
reformed  after  loss,  where  the  agents  of  the  company  and  of 
the  insured  both  testify  that  they  did  not  know  the  true  state 
of  the  title.     The  element  of  mistake  necessary  to  ground  the 
equity  is  absent.^     D.  applied  to  G.  for  a  certain  kind  of  policy 
he  was  unable  to  write  in  any  of  the  companies  he  represented. 
G.  applied  to  A.,  a  friend  in  the  insurance  business,  and  A.  wrote 
the  policy  in  one  of  his  companies.     By  mistake  it  did  not 
read  as  A.  and  G.  intended  and  agreed,  and  G.  knew  this  fact 
but  D.  did  not,  and  it  was  the  very  sort  of  policy  he  had  applied 
for.     After  loss  it  was  held  that  G.  was  not  D.'s  agent  as  to 
knowledge  of  the  error,  and  that  as  D.  had  no  actual  knowledge 
of  it,  it  was  not  a  mutual  mistake,  and  equity  could  not  reform 
the  contract.2     "  When  an  application  for  insurance  does  not 
attempt  to  set  forth  all  the  provisions  which  the  policy  shall 
contain,  and  the  agent  with  or  without  authority  represents 
that  the  policy  will  contain  certain  stipulations  which  are  not 
unlawful,  then  the  policy  must  contain  them  or  the  insured 
will  not  be  obliged  to  accept  it ;  "  ^  but  if  he  elects  to  take  it 
he  cannot  afterwards  set  up  the  omission  when  sued  on  his 
premium  note.     That  a  man  has  obtained  a  divorce  from  his 
wife  is  no  ground  for  reforming  a  policy  in  which  she  is  a 
beneficiary.*     If  he  intended  that  the  funds  should  not  go  to 
her  unless  she  continued  to  be  his  wife,  but  failed  to  communi- 
cate this  intent  to  the  company  at  the  time  of  insurance,  there 
is  no  mutual  mistake.^     When  the  insured  by  mistake  stated 
that  the  tobacco  insured  was  in  building  A.  when  in  fact  it  was 
in  B.,  after  a  loss  there  could  be  no  reformation  of  the  policy.^ 
That  would  not  be  to  correct  the  policy  to  the  terms  agreed 
on,  but  to  make  a  new  contract.     The  company  never  agreed 
to  insure  goods  in  building  5.] 

1  [Farmville  Ins.  &c.  Co.  v.  Butler,  55  Md.  233.] 

2  [St.  Paul  Fire  &  Mar.  Ins.  Co.  v.  Shaver,  76  Iowa,  282.] 
8  [American  Ins.  Co.  v.  Neiberger,  74  Mo.  167  at  173] 

*  [Goldsmith  v.  Union  Mut.  Life  Ins.  Co.,  2  How.  Pr.  n.  s.  32.] 
**  [Id.  17  Abb.  N.  C.  15.     This  case  was  however  reversed  on  the  ground  that 
there  tvas  evidence  of  mutual  mistake  in  the  matter.     See  18  Abb.  N.  C.  325.] 
^  [Severance  v.  Continental  Ins.  Co.,  5  Biss.  156  at  158.] 

1301 


§  566  C]       INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXXII. 

[§  566  C.  Other  Matters  in  Equity.  —  A  bill  for  discovery 
will  lie  to  compel  the  insured  to  answer  interrogatories,  mate- 
rial in  enabling  the  court  to  determine  the  question  of  misrep- 
resentation.^  It  is  not  necessary  in  a  bill  for  discovery  to 
allege  that  the  complainant  is  not  able  to  prove  his  case  at 
law  without  it.  He  is  entitled  to  discovery  of  evidence  to  at- 
tack and  to  rebut  his  adversary .^  Equity  may  enforce  an 
agreement  to  insure,  and  compel  the  execution  of  the  policy, 
and  if  loss  has  occurred,  order  payment  therefor.^  Equity  hav- 
ing taken  jurisdiction  to  enforce  delivery  of  a  policy,  will,  if 
there  has  been  a  loss,  retain  it  to  decree  payment  on  the 
policy.^  There  must  be  conclusive  proof  that  a  contract  of 
insurance  was  made  in  order  to  compel  a  company  to  issue  a 
policy.^  Equity  will  not  usually  relieve  on  accouut  of  mere 
cumulative  evidence,  but  where  the  defence  was  originally 
imperfect  for  want  of  distinct  proof,  a  judgment  on  a  policy 
may  be  set  aside  on  the  ground  of  newly  discovered  fraud 
sufficient  for  a  perfect  defence.^  A.  gave  a  note  for  the  pre- 
mium, and  the  policy  was  delivered  to  him  in  May.  A  month 
after  he  discovered  on  looking  at  the  policy  that  it  was  invalid 
through  an  act  of  the  agent,  and  when  payment  of  the  note 
was  demanded  in  August  he  refused  to  pay  saying  the  policy 
was  "  no  good."  In  November  suit  was  brought  on  the  note, 
and  not  until  the  next  November  did  the  insured  ofi'er  to  re- 
scind, which  was  held  not  to  be  within  a  reasonable  time.'' 
Where  the  insured  relies  on  his  policy  for  fifteen  years,  and 
does  not  use  the  means  at  hand  of  testing  the  representations 
of  the  agent  as  to  the  profits  of  the  company  being  sufficient 
to  protect  policy-holders  against  liability  for  loans,  he  cannot 
go  into  equity  and  claim  a  rescission.^  One  upon  whose  life 
another  has  taken  out  a  policy  with  his  consent,  cannot  com- 

1  [Union  Mutual  Life  Ins.  Co.,  v.  Gilbert,  25  N.  B.  R.  221.] 

■■2  [Atlantic  Ins.  Co.  v.  Lunar,  1  Sand.  Ch.  91.] 

3  [Carpenter  v.  Mutual  Safety  Ins.  Co.,  4  Sandf.  Ch.  (N.  Y.),  408  at  410.] 

*  [Hebert  v.  Mut.  Life  Ins.  Co.,  12  Fed.  Rep.  807  ;  8  Sawy.  198  (Oregon),  1882.] 

5  [McCann  v.  Mina.  Ins.  Co.,  3  Neb.  198  at  206.] 

6  [Ocean  Ins.  Co.  v.  Fields,  2  Story,  59  at  77.] 

7  [Plympton  v.  Dunn,  148  Mass.  523.] 

6  [Maclntyre  v.  Cotton  States  Life  Ins.  Co.,  82  Ga.  478,  499.] 

1302 


CH.  XXXII.]  REMEDIES,    EVIDENCE,    ETC.  [§  567 

pel  its  cancellation,  on  the  ground  that  the  beneficiary  has  no 
insurable  interest  and  is  hostile  to  him,  there  being  no  alle- 
gation of  danger,  altliough  he  offer  to  reimburse  the  pre- 
miums.i  Equity  will  not  relieve  against  a  forfeiture  imposed 
by  statute.2  If  a  policy  on  the  life  of  A.,  payable  to  B.,  is 
surrendered  without  B.'s  consent  and  a  new  policy  issued  pay- 
able to  C,  the  company  cannot  maintain  a  bill  of  interpleader 
against  B.  and  C,  for  it  may  be  liable  to  each.^  Although 
gross  fraud,  misrepresentation,  and  concealment  in  procuring 
a  policy  were  charged,  the  court  of  equity  in  South  Carolina 
held  that  it  had  no  jurisdiction.^] 

§  567.  Recovery  back  of  Premium.  —  If  a  policy  be  void  ab 
initio,  or  if  the  risk  never  attaches,  and  there  is  no  actual 
fraud  on  the  part  of  the  insured,  and  the  contract  is  not 
against  law  or  good  morals,  though  there  may  have  been  mis- 
representation or  breach  of  warranty,  he  may  recover  back  all 
the  premiums  he  may  have  paid,  either  in  an  action  for  them 
alone,  or  on  a  count  for  money  had  and  received,  coupled  with 
a  count  on  the  policy  in  an  action  for  the  loss.^     So,  if  he  has 


1  [Peckham  v.  Grindlay,  17  Abb.  N.  C.  18.] 

2  [vVinchell  v.  Hancock  Mut.  Life  Ins.  Co.,  8  Rep'r  549,  1st  Cir.  (Mass.) 
1879.] 

3  [National  Life  Ins.  Co.  v.  Pingrey,  141  Mass.  411.] 

*  [Charleston  Ins.  Co.  v.  Potter,  3  Des.  (S.  C.)  6  at  7-8.] 

3  Clark  V.  Manufacturers'  Ins.  Co.,  2  Woodb.  &  Minot  (C.  Ct.  U.  S.),  472  ; 
Mutual  Ass.  Co.  v.  Mahon,  5  Call  (Va.),  517  ;  Tyrie  v.  Fletcher,  Cowp.  666,  668; 
Fowler  v.  Scottish  Eq.  Life  Ins.  Co.,  28  L.  J.  Ch.  225  ;  Rochester  Ins.  Co.  v 
Martin,  13  Minn.  59;  Foster  v.  U.  S.  Ins.  Co.,  11  Pick.  (Mass.)  85;  Mulvey  v. 
Gore  Ins.  Co.,  25  U.  C.  (^  B.)  424;  Delavigne  v.  U.  S.  Ins.  Co.,  1  Johns.  (Ch.) 
310.  [Where  the  contract  is  not  immoral  or  contrary  to  law,  the  assured  may 
in  the  absence  of  express  agreement  to  the  contrary,  recover  his  premiums 
where  the  risk  has  not  commenced  or  the  contract  is  void  ab  initio.  iEtna  Life 
Ins.  Co.  V.  Paul,  10  Brad.  431  ;  Anderson  v.  Thornton,  8  Exch.  425  at  427.  By 
reason  of  a  misrepresentation  not  fraudulent,  for  example.  Feise  v.  Parknison, 
4  Taunt.  640  at  642 ;  Insurance  Co.  v.  Pyle,  44  Ohio  St.  19.  Where  a  mort- 
gagee obtained  insurance,  the  policy  being  conditioned  to  be  void  if  the  interest 
of  the  assured  when  other  than  the  sole  ownership  was  not  expressed,  it  was 
held  that,  the  policy  being  void  ab  initio  and  there  being  no  fraud  on  the  part  of 
the  insured,  he  could  recover  his  premiums.  Waller  v.  Northern  Ass.  Co.,  64 
Iowa,  101 ;  Penson  v.  Lee,  2  B.  &  P.  3-30  at  333.  And  he  may  have  interest  on 
his  money  for  the  time  the  insurers  have  had  the  use  of  the  same.  Waddington 
V  Insurance  Co.,  17  Johns.  23  at  24.     When  a  ship  illegally  sailed  four  days 

1303 


§  567]  INSURANCE  ;    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXXII. 

been  induced  to  accept  a  policy  by  false  representations. ^  So 
where  the  premium  is  applicable  to  two  risks,  and  one  never 
attaches,  the  premium  paid  on  the  latter,  if  ascertainable,  may 
be  recovered  back.^  So  if  the  insured,  after  alienation,  has 
the  option  to  surrender  his  policy  and  take  up  his  deposit  note, 
he  may  recover  back  so  much  of  the  premiums  paid  as  may 
not  be  required  for  the  payment  of  losses  up  to  the  time  of  the 
surrender.^  So  he  may  recover  back  premiums  paid  on  a 
policy  improperly  cancelled,  or  a  sum  sufficient  to  procure  new 
insurance  at  the  former  rate.*  And  such,  doubtless,  would  be 
the  case  where  premiums  are  paid  after  forfeiture  of  the 
policy,  in  the  belief  that  the  forfeiture  has  been  waived.^  But 
if  the  policy  be  obtained  by  means  of  fraudulent  misrepresen- 
tation, for  that  reason,  tliough  the  risk  never  attaches,  the 
^  premium  cannot  be  recovered  back.^  So  if  the  policy  be  an 
illegal  contract,  neither  party  can  have  any  remedy  in  the 
courts  against  the  other.^  But  if  the  risk  once  attaches,  the 
premium  is  not  apportionable.^  [There  is  in  general  no  return 
of  premium  where  the  policy  attaches,  though  it  be  but  for  a 

before  the  proper  license  was  issued,  it  was  held  that  the  policy  was  void  but 
that  the  premium  must  be  returned.  Ilentig  v.  Staniforth,  5  M.  &  S.  122  at  124. 
When  the  company  acknowledges  in  the  policy  the  receipt  of  the  premium, 
the  unearned  portion  of  it  may  be  recovered  in  an  action  for  money  had  and  re- 
ceived, even  when  it  was  paid  by  a  promissory  note  and  the  note  has  not  been 
paid.     Hemmenway  v.  Bradford, 14  Mass.  121  at  122.] 

1  Martin  v.  iEtna  Life  Ins.  Co.  (Tenn.),  4  Ins.  L.  J.  899  ;  Boland  v.  Whit- 
man, .33  Ind.  64;  United  States  Life  Ins.  Co.  v.  Wright  (Oliio),  8  lus.  L.  J.  169. 

2  Bunyon,  Insurance,  95. 

3  Sullivan  v.  Massachusetts  Mut.  Fire  Ins.  Co.,  2  Mass.  318. 

4  Braswell  ?;.  American  Ins.  Co.,  75  N.  C.  8. 

5  McKee  v.  Phoenix  Ins.  Co.,  28  Mo.  383. 

B  Friesmouth  v.  Agawam  Mut.  Ins.  Co.,  10  Cush.  (Mass.)  587;  Hoyt  y.  Gil- 
man,  8  Mass.  3.36.  [But  upon  a  mere  misrepresentation  without  actual  fraud 
where  the  risk  never  attached  the  premiums  may  be  recovered.  Feise  v.  Park- 
nison,  4  Taunt.  640  at  641.] 

'  Browning  v.  Morris,  Cowp.  700;  Andree  r.  Fletcher,  2  T.  R.  161  ;  Howson 
V.  Hancock,  8  T.  R.  575;  Russell  v.  De  Grand,  15  Mass.  35;  Campbell  v.  Allan' 
9  Mor.  Dec.  (Scotch),  Appendix,  Ins.  13.  [The  courts  will  not  interfere  to  give 
a  return  of  premium  on  an  illegal  policy  except  in  cases  of  oppression.  Lowry 
V.  Bourdieu,  2  Doug  468  at  470  ] 

»  Bermon  v.  Woodbridge,  Doug.  781  ;  Fulton  v.  Lancaster  Ins.  Co.,  7  OhiO' 
325;  Merchants'  Ins.  Co.  v.  Clapp,  11  Pick.  (Mass.)  56. 

1304 


CH.  XXXII.]  REMEDIES,    EVIDENCE,    ETC.  [§  567 

single  moment.^  But  tlie  rule  that  if  the  risk  attaches  the 
right  to  the  premium  is  indefeasible  is  not  without  excep- 
tions. If  a  policy  is  legal  when  made  but  becomes  subse- 
quently illegal  by  statute,  both  parties  are  discharged ;  the 
insured  loses  his  indemnity,  and  the  insurer  his  premium.^ 
A.  chartered  a  ship  to  sail  to  the  Spanish  Main  and  bring 
back  a  cargo  of  wines,  and  insured  the  profits  of  said  cargo, 
no  other  evidence  of  interest  to  be  required  than  the  policy, 
and  if  the  goods  did  not  arrive  he  was  to  recover  for  a  total 
loss ;  the  ship  did  not  take  the  cargo,  and  it  was  held  that  the 
premium  could  not  be  recovered  since  the  insurers  had  taken 
the  risk  of  the  return  of  the  ship.  If  she  had  not  returned 
the  company  would  by  the  policy  have  had  to  pay  whether 
there  were  any  goods  on  board  or  not,  for  the  agreement  was 
that  no  other  proof  of  interest  should  be  required  than  the 
policy.  It  was  a  wager  contract.^  In  a  Pennsylvania  case  an 
unjust  rule  was  applied,  the  company  being  compelled  to  re- 
turn the  premiums  without  any  allowance  for  carrying  the  risk 
during  the  life  of  the  contract,  the  court  saying  that  as  there 
had  been  no  loss  the  insured  had  received  no  substantial  bene- 
fit from  the  contract.*  That  seems  queer  reasoning.  If  the 
carrying  of  a  risk  is  no  substantial  benefit,  why  do  so  many 
men  pay  so  much  money  to  some  one  to  render  them  that 
imaginary  service  ?  The  rule  gives  the  assured  the  cost  of 
obtaining  a  new  policy  as  good  as  the  old  one.  Where  a 
policy  was  issued  without  examination  of  the  insured  by  a 
physician  and  afterward  taken  up  by  the  company  for  that 
cause,  and  the  beneficiary  who  was  without  fault  and  had  paid 
in  good  faith  a  number  of  premiums  was  promised  by  the  agent 
that  he  should  have  the  policy  all  right,  or  his  money,  the 
company  is  liable  in  assumpsit.^]  The  promise  of  an  agent  of 
a  company  at  the  time  of  the  delivery  of  the  policy,  which  was 
objected  to  on  certain  grounds,  but  accepted  and  acted  uj)on 

1  [Waters  v.  Allen,  5  Hill,  N.  Y.  421  at  424  ;  Moses  i'.  Pratt,  4  Camp.  297  at 
298.] 

2  [Gray  v.  Sims,  3  Wash.  C.  C  276  at  280.] 

3  [.Julill  V.  Delonguemere,  2  Johns.  Cas.  N.  Y.  333  at  334.] 

4  [American  L'fe  Ins.  Co.  v.  McAden,  109  Pa.  St.  399.] 
6  [Frain  v.  Life  Ins.  Co.,  67  Mich.  527.] 

1305 


§  568]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.      [CH.  XXXII. 

by  the  payment  of  premiums,  that  the  company  would  make 
it  all  right,  will  not  authorize  a  subsequent  disaffirmance  of 
the  contract  and  recovery  back  of  the  premium  by  the  insured. ^ 
But  in  such  case  the  insured  may  compel  the  execution  and 
delivery  of  a  valid  policy .^ 

In  Leonard  v.  Washburn,^  an  agent  of  a  foreign  insurance 
company  took  the  acceptance  of  the  applicant  for  the  pre- 
mium to  be  paid,  and  agreed  to  procure  and  deliver  a  policy, 
which  he  accordingly  did,  in  the  usual  form  of  policies  issued 
by  the  office.  The  terms  of  the  policy  proving  objectionable 
to  the  applicant,  a  modification  was  obtained,  but,  being  still 
unsatisfactory,  the  applicant  refused  to  accept  it,  and  demanded 
a  return  of  his  acceptance.  But  this  had  been  negotiated,  and 
the  proceeds  forwarded  to  the  company  on  the  receipt  of  the 
policy.  The  acts  of  the  agent  were  in  contravention  of  his 
instructions  as  to  the  receipt  of  the  premium ;  but  the  policy 
had  been  issued  under  such  circumstances  that  it  would  be 
valid.  The  applicant  paid  his  acceptance  at  maturity,  and 
then  brought  suit  against  the  agent  to  recover  the  amount. 
But  it  was  held  that  as  the  agent  had  done  all  he  had  agreed 
to  do,  and  the  policy  actually  issued  was  a  valid  one,  the  ac- 
tion could  not  be  sustained. 

Where  the  premium  covers  an  illegal  excess  of  insurance,  as 
wdiere  a  creditor  insures  the  life  of  his  debtor  for  more  than 
the  amount  of  his  debt,  both  parties  being  under  mistake  of 
the  law,  the  proportional  excess  of  premium  may  be  recovered 
back  by  the  insured.^ 

§  568.  Insured  against  Insurer  ;  Suit  to  revive  Policy  de- 
clared forfeited,  or  to  recover  back  Premiums  paid.  —  Cohen  v. 
New  York    Mutual  Life  Insurance   Company  ^  presented  the 

^  Mecke  v.  Life  Ins.  Co.  of  New  York,  8  Phila.  Rep.  6. 

2  Perry  v.  Newcastle  Dist.  Mut.  Fire  Ins.  Co.,  8  U.  C.  (Q.  B.)  363.  And  see 
also  ante,  §  544. 

3  100  Mass.  251.  See  also  Perry  v.  Newcastle,  &c.  Ins.  Co.,  8  U.  C.  (Q.  B.) 
363. 

*  London,  &c.  Ins.  Co.  v.  Lapierre,  1  Legal  News,  506. 

s  50  N.  Y.  610,  overruling  the  same  case  cited  cmte,  §  41,  upon  the  point  that 
the  failure  to  pay  the  premiums  as  tliey  fell  due  worked  a  forfeiture.  2  Ins. 
L.  J.  426.     This  case  must  also  be  considered  as  overruling  O'Reiley  v.  Mutual 

1306 


CH.  XXXII.]  REMEDIES,    EVIDENCE,    ETC.  [§  568 

case  of  an  insured,  who,  on  the  breaking  out  of  the  war,  was 
compelled  thereby  to  suspend  the  payment  of  the  annual  pre- 
miums as  required  by  the  policy,  but  on  the  termination  of  the 
war  tendered  the  whole  amount  due.  The  insurers  refusing 
to  accept,  the  insured  brought  suit  to  compel  acceptance  and 
to  have  the  policy  declared  valid,  or  to  compel  the  return  of 
premiums  theretofore  paid.  The  court  upheld  the  action 
against  the  objections  of  the  defence.  "  The  defendant  also 
objects,"  said  the  court,  by  Allen,  J.,  "  to  the  right  of  the 
plaintiff  to  maintain  an  action  at  this  time,  there  having  been 
no  loss,  and  therefore  no  cause  of  action  under  the  policy. 
The  allegations  of  the  complaint  are,  that  the  plaintiff  has 
tendered  the  premiums  due,  and  that  the  defendant  refused 
them,  and  declared  the  said  policy  cancelled  and  forfeited. 
This  is  a  peculiar  case,  and  there  are  many  reasons,  unless 
there  is  some  rigid  rule  forbidding  the  court  to  entertain  juris- 
diction, why  it  should  determine  the  matters  in  controversy 
at  this  time.  1.  There  is  an  actual  controversy  existing,  and 
the  only  parties  to  it  are  before  the  court.  There  is  not  the 
reason  for  declining  jurisdiction  that  presented  itself  in  some 
of  the  cases  cited  by  the  defendant,  as  in  Grove  v.  Bastard,^ 

Life  Ins.  Co.,  2  Abb.  Pr.  n.  s.  (N.  Y.  Superior  Ct.)  167.  See  also  Hancock  v. 
New  York  Life  Ins.  Co.,  U.  S.  C.  Ct.,  East.  Dist.  Va.,  2  Ins.  L.  J.  903,  in  which 
a  similar  action  was  upheld  on  a  policy  for  S5000,  payable  at  the  death  of  the 
insured,  and  where  the  rule  of  damages  was  said  to  be  the  amount  of  the  pol- 
icy less  the  amount  of  premiums  unpaid,  and  less  also  such  a  number  of  an- 
nual premiums  as  the  plaintiff's  chance  of  life  would  probably  require  him  to 
pay.  If  he  has  suffered  such  a  cliange  in  health  that  his  life  is  not  reinsurable, 
be  may  recover  full  damages  exceeding  the  amount  of  premiums  paid,  but  not 
exceeding  the  amount  insured.  Union  Central  Ins.  Co.  v.  Poettker  (Superior 
Ct.  Cincinnati),  5  Big.  Life  &  Ace.  Ins.  Cas.  449.  In  Holdich's  Case,  L.  R.  14 
Eq.  72,  the  value  of  a  current  policy  was  held  to  be  the  sum  which  would  buy 
a  similar  policy  in  a  safe  office.  3  Big.  Life  &  Ace.  Ins.  Cas.  272.  The  insured 
has  the  right  to  sue  in  his  own  name  an  insurance  company  which  has  assumed 
the  liabilities  of  the  company  in  which  he  is  insured,  the  latter  having  trans- 
ferred its  assets  and  liabilities  to  it.  Fischer  v.  Hope  Ins.  Co.,  69  N.  Y.  101.  See 
also  Fletcher  v.  ^tna  Ins.  Co.,  Superior  Court,  Montreal,  4  Ins.  L.  J.  236,  where 
fraud  in  obtaining  the  policy  was  successfully  set  up  in  defence  to  an  action  to 
recover  it.  A  like  defence  will  be  effectual  to  an  action  to  recover  back  pre- 
miums paid.  Trabandt  v.  Conn.  Mut.  Life  Ins.  Co.  (Mass.),  not  yet  reported; 
Lewis  V.  Phoenix  Ins.  Co.,  89  Conn.  100. 
1  2  Ph.  (Eng.  Ch.  22),  619. 

1307 


§  568]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXXII. 

that  all  the  parties  in  interest  could  not  be  heard  and  their 
rights  determined.     2.  Present  riglits  under  the  policy,  and 
incident  to  it,  are  denied  the  plaintiff,     Fler  policy  having 
been  declared  forfeited  and  cancelled,  she  is  excluded  from  the 
privileges  and  denied  the  rights  wliich  belong  to  lier  as  a 
member  of  the  company.     She  is  entitled,  unless  the  claim  of 
the  defendant  is  well  grounded,  at  once  and  at  all  times  to  tlie 
privileges  of  other  policy-holders,  and  to  be  recognized  as  such. 
3.  The  plaintiff  is  entitled,  if  the  right  to  pay  the  premiums 
and  continue  the  policy  still  exists,  to  pay  the  arrearages  and 
stop  the  accruing  of  interest,  and  to  make  the  future  payments 
as  they  accrue  and  become  due,  without  interest,  and  relieve 
herself  as  well  of  the  risk  and  burden  of  retaining  the  money 
which  of  right  belongs  to  the  defendant.     4.  The  contract  of 
insurance  where  the  policy  is  to  be  kept  alive  by  periodical 
payments  is  peculiar ;  and  the  duty  to  pay,  and  obligation  to 
receive,  are  mutual.     It  is  somewhat  different  from  a  simple 
obligation  to  pay  money,  a  tender  to  perform  wliich  would  bar 
an  action  upon  it.     So,  too,  a  receipt  or  acknowledgment  of 
the  payment  is  customarily  given,  and  is  as  essential  as  evi- 
dence of  the  continuance  of  the  contract  as  is  the  original 
policy.     The  policy-holder  is  entitled  to  some  evidence  of  the 
performance  of  the  condition  on  his  part,  if,  as  is  believed,  the 
universal  usage  is  for  the  insurers  to  certify  in   some    way 
the  fact  that  the  annual  premiums  are  paid.     5.  It  is  fit  and 
proper  that  both  parties  to  the   contract   should  know   their 
rights.     Especially  is  it  important  to  the  plaintiff  and  the  in- 
sured that  if  this  policy   is  avoided   they  may  seek  insurance 
elsewhere,  and  if  valid,  that  they  may  perform  the  conditions 
of    the    policy.      In  ordinary  cases  courts    will    not,   in  ad- 
vance of  any  present  duty,  obligation,  or  default,  declare  the 
rights  and  obligations  of  suitors ;  they  will  do  it  where  pecu. 
liar  circumstances  render  it  necessary  to  the  preservation  of 
right.     It  was  done  in  Baylies  v.   Payson."  ^     In  McKce  v. 
Phoenix  Insurance  Company,-  where  a  wife  insured  the  life  of 
her  husband,  and,  after  making  several  payments,  obtained  a 
divorce,  but  continued  to  pay  the  annual  premiums  after  the 

1  5  Allen,  473.  ^  28  Mo.  .383. 

1308 


CH.  XXXII.]  REMEDIES,   EVIDENCE,   ETC.  [§  569 

divorce,  until  the  company  refused  to  receive  them,  on  tlie 
ground  that  she  no  longer  had  an  insurable  interest,  it  was 
held  that  tlie  refusal  was  wrongful,  and  the  insured  miglit,  if 
she  chose,  treat  the  contract  as  at  an  end,  and  recover  back  all 
the  premiums  she  had  paid.  In  Girdlcstone  v.  North  British 
Mercantile  Insurance  Company ,i  a  bill  was  brought  to  compel 
the  insurers  to  reinstate  the  insured,  in  a  policy  which  tlie  in- 
surers claimed  had  lapsed  by  the  failure  of  the  insured  to  pay 
his  premium.  And  tlie  court,  in  aid  of  the  bill,  ordered  the 
defendants  to  answer  certain  interrogatories  relative  to  the 
plaintiff's  case. 

§  569.  Same  Subject.  —  So  equity  will  compel  the  renewal 
of  a  policy  the  surrender  of  which  has  been  obtained  unfairly ,2 
as  well  as  the  surrender  of  a  policy  so  obtained,^  or  a  suit 
may  be  brought  for  damages  for  breach  of  the  contract  to  con- 
tinue the  policy  according  to  its  terms,*  as  where  one  company 
turns  over  its  policies  to  another,  and  suspends  business.^ 
The  declaration  by  an  insurance  company  that  a  life  policy 
was  void  (on  the  ground  that  the  insured  had  become  of  in- 

i  11  L.  R.  (Eq.)  197;  ante,  §  356. 

2  Tabor  v.  Mich.  Mut.  Life  Ins.  Co.  (Mich.),  10  Ins.  L.  J.  97. 

3  Fletcher  v.  ^tna  Life  Ins.  Co.  (Superior  Ct.,  Montreal),  4  Ins.  L.  J.  236. 

*  [If  no  proper  grounds  exist  for  the  refusal  to  continue  the  insurance,  the 
insured  may  recover  all  money  he  has  paid  under  the  policy.  JEtna  Life  Ins.  Co. 
V.  Paul,  10  Brad.  431.  The  measure  of  damages  is  the  amount  of  premiums  paid 
with  interest  on  each  from  the  time  of  its  payment.  Ala.  Gold  Life  Ins.  Co. 
V.  Garmany,  74  Ga.  51.  But  in  New  York  it  is  held  that  the  measure  of  dam- 
ages for  the  refusal  to  continue  a  valid  policy  is  not  the  amount  of  premiums 
paid  with  interest,  but  the  difference  between  the  present  value  of  the  premi- 
ums  the  insured  would  have  to  pay  on  the  policy  during  the  life  of  the  subject, 
and  the  present  value  of  what  he  would  have  to  pay  to  secure  equally  good  m- 
surance  elsewhere,  and  if  the  life-subject  is  not  insurable  the  measure  of  dam- 
ages is  the  value  of  the  policy  at  the  time  of  the  breach.  Speer  v.  Phoenix 
Mut.  Life  Ins.  Co.,  36  Hun,  322.  If  the  company  fail  to  deliver  the  policy 
as  agreed,  the  premium  may  be  recovered,  although  the  parol  contract  binds 
them  and  the  plaintiff  is  really  insured.  Collier  v.  Bedell,  -39  Hun,  238.  But 
where  the  risk  attaches  premiums  paid  cannot  be  recovered :  Continental  Life 
Ins.  Co.  V.  Houser,  111  Ind.  266,  although  the  company  afterwards  wrong- 
fully refuses  a  panl-up  policy.  Standley  v.  Northwestern  Mut.  Life  Ins.  Co.,  9-') 
Ind.  254,  258.  The  remedy  is  specific  performance  or  suit  for  the  value  of  the 
policy.] 

&  Fischer  v.  Hope  Mut.  Ins.  Co.,  69  N.  Y.  161. 

1309 


§  570]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXXII. 

temperate  habits),  and  a  refusal  to  receive  further  premiums, 
does  not  make  the  policy  presently  payable.  The  policy- 
holder has  a  threefold  remedy  :  1.  To  treat  the  policy  as 
rescinded,  and  sue  for  its  present  value.  2.  To  continue  to 
tender  premiums,  and,  on  the  death  of  the  insured,  sue  for 
the  sum  insured.  3.  To  go  into  equity,  and  ask  to  have  the 
policy  decreed  in  force.^ 

[§  569  A.  Venue.  —  An  action  on  a  policy  of  insurance  is 
transitory  and  may  be  brought  wherever  the  company  can  be 
found,  regardless  of  the  location  of  the  property  or  the  place 
where  the  agreement  was  made.^  A  stipulation  in  a  policy  of 
a  foreign  insurance  company  that  suits  on  it  should  only  be 
brought  in  the  State  in  which  the  company  was  incorporated, 
is  void,  as  against  public  policy,  and  in  violation  of  the  statutes 
of  Missouri.3  Xn  insurance  company  doing  business  in  one 
State  but  organized  and  having  its  principal  office  iu  another, 
is  entitled,  on  being  sued  in  the  former,  to  have  the  cause  trans- 
ferred to  the  United  States  Circuit  Court.*] 

§570.  Insured  against  Directors;  Premiums;  Loss. — Direc- 
tors and  others  making  or  permitting  false  statements  as  to 
the  condition  and  assets  of  an  insurance  company,  whereby  a 
party  is  induced  to  insure  in  a  worthless  company,  are  person- 
ally liable  to  him  in  an  action  at  law  for  the  deceit,^  although 
no  actual  damage  has  been  sustained  beyond  the  payment  of 
the  premiums.^  [Directors  of  a  stock  company  who  fraud- 
ulently hold  out  to  the  public  the  promise  of  certain  dividends, 

1  Day  V.  Connecticut  General  Life  Ins.  Co.,  45  Conn.  480. 

2  [Mohr,  &c.  Distilling  Co.  v.  Insurance  Cos.,  12  Fed.  Rep.  474;  11  Ins.  L.  J. 
546  ;  14  Repr.  109,  6tli  Cir.  (Ohio),  1882] 

3  [Richard  v.  Manhattan  Life  Ins.  Co.,  31  Mo.  518  at  528.] 

*  [Stevens  v.  Phoenix  Ins.  Co.,  41  N.  Y.  149  at  154  ;  Holden  v.  Putnam  Fire 
Ins.  Co.,  46  N.  Y.  1  at  4  ;  Hobbs  v.  Manhattan  Ins.  Co.,  56  Me.  417,  if  all  tiie 
members  of  the  company  are  citizens  of  the  charter  state  and  it  is  a  legal  pre- 
sumption that  they  are  so.  Knorr  v.  Home  Ins.  Co.  of  New  York,  25  Wis. 
143  at  149,  a  suit  by  or  against  a  corporation  is  a  suit  against  a  city  of  the 
State  under  whose  laws  the  company  is  organized,  citing  Ohio,  &c.  Ry.  v.  Wlieel- 
er,  1  Black,  286.] 

6  Salmon  v.  Richardson,  30  Conn.  .360. 

6  Pontifex  v.  Bignold,  3  M.  &  G.  42;  Tebbetts  v.  Hamilton  Mut.  Ins.  Co.,  3 
Allen  (Mass.),  569. 

1310 


CH.  XXXII.]  REMEDIES,    EVIDENCE,    ETC.  [§  572 

are  personally  liable  on  the  failure  of  such  guaranty.^]  And 
so,  perhaps,  is  the  secretary  of  a  company  who  assures  the  ap- 
plicant that  he  may  "hold  himself  insured,"  when  in  fact 
the  negotiations  have  not  arrived  at  such  a  stage  as  to  make  a 
binding  contract,  the  applicant  thereby  losing  all  benefit  of 
insurance  by  reliance  upon  the  statement  of  the  secretary  .2 
Where  directors  are  made  liable  if  they  do  not  promptly 
assess  to  pay  losses,  the  liability  will  be  strictly  construed. 
And  if  a  loss  be  settled  by  the  company  by  giving  its  note,  a 
failure  to  assess  to  pay  the  note  is  not  within  the  liability.^ 

§571.  Mutual  Insurance;  Dividend. — Where  a  dividend 
which  has  been  made  proves  to  be  incorrectly  computed,  the 
company  may  be  compelled,  at  the  suit  of  a  stockholder,  to 
readjust  and  correct  the  same.^ 

§  572.  Forfeiture  ;  Equitable  Adjustment  ;  Dividend  ;  Profits. 
—  [The  insurer  may  on  forfeiture  of  the  policy  recover  all 
premiums  earned  while  he  carried  the  risk.°]  Where  a  pol- 
icy becomes  forfeited  by  violation  of  its  terms,  a  clause  pro- 
viding that  in  such  case  "  the  party  interested  shall  have  the 
benefit  of  such  equitable  adjustment  as  may  from  time  to  time 
be  provided  by  the  board  of  directors,"  does  not  give  the 
courts  the  right  to  compel  an  adjustment,  unless,  perhaps,  the 
directors,  having  established  general  rules  upon  the  subject, 
might  be  held  to  abide  by  these  rules  in  the  particular  case.^ 
A  provision  of  a  charter  of  a  mutual  insurance  company,  that 
if  the  holder  of  certificates  of  proportionate  premiums  shall 
not,  within  five  years  of  the  publication  of  notice  that  they 
will  be  redeemed,  present  them  for  payment,  they  shall  be 
cancelled  on  the  books  of  the  company,  is  not  a  forfeiture 
against  which  equity  will  relieve,  but  a  limitation  which  bars 
a  claim  after  the  lapse  of  the  time,  whether  the  cancellation 

1  [Gerhard  v.  Bates,  2  E.  &  B.  476.] 

2  Christie  v.  North  Brit.  Ins.  Co.,  3  Ct.  of  Sess.  Cas.  (Scotch),  519. 

3  Ante,  §  564. 

«  Luling  V.  Atlantic  Mat.  Ins.  Co.,  45  Barb.  (N.  Y.)  510. 

*  [Hibernia  Ins.  Co.  v.  Blanks,  35  La.  Ann.  1175.] 

6  Nightingale  v.  State  Mut.  Life  Ins.  Co.  of  Worcester,  5  R.  I.  38.  Is  not  the 
failure  to  establish  rules  negligence  which  they  cannot  set  up  to  defeat  the 
rights  of  others "? 

VOL.  II.  —  39  1311 


§  573]  INSUEANCE :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXXII. 

on  the  books  be  made  or  not.^  But  where  the  policy  has  been 
suffered  to  lapse,  the  holder  cannot  claim  dividends  which  be- 
fore the  lapse  he  might  have  appropriated,  either  in  reduction 
of  premium  or  in  the  purchase  of  additional  insurance.^  And 
such  profits  as  may  be  due,  though  not  declared,  may  be  recov- 
ered in  a  suit  for  the  loss.'*^ 

§  573.  Insurers  against  Insured;  Policy  obtained  by  Fraud. — 
Equity  will  also  interfere  to  compel  the  surrender  of  a  policy 
wrongfully  obtained  or  delivered  under  a  mistake  of  the  facts 
induced  by  the  misrepresentation  or  concealment  of  the  as- 
sured. So  it  was  decreed  in  a  recent  case,*  even  when  the 
policy  had  been  assigned  for  value,  without  notice  of  the 
concealment.  The  insured  had  made  his  proposal,  which, 
after  the  usual  examination,  was  accepted,  and  he  was  duly 
notified  of  the  acceptance.  He  was  at  the  same  time  notified 
that  until  payment  of  the  premium  the  company  incurred  no 
risk,  and  that  any  alteration  in  the  mean  time  in  his  health 
would  render  the  policy  invalid,  unless  disclosed  to  the  insur- 
ers before  the  actual  receipt  of  the  premium.  After  this  notice, 
and  before  payment  of  the  premium,  the  insured  was  told  by 
a  special  physician,  whom  he  travelled  a  considerable  dis- 
tance to  consult,  that  he  was  dangerously  ill,  his  ordinary 
medical  attendant,  however,  advising  him  that  he  consid- 
ered the  appearances  upon  which  the  physician  first  con- 
sulted predicated  his  opinion,  as  of  a  temporary  character 
only.  After  all  these  facts  had  transpired,  the  assured  for- 
warded his  check  for  the  amount  of  the  premium,  making  no 
mention  of  the  facts  about  his  health,  but  leaving  this  ques- 
tion to  stand  upon  his  original  answers  that  he  was  well,  and 
had  always  been  well,  and  could  not  recollect  that  he  ever 
had  any  illness,  and  received  his  policy.  But  the  court,  in  a 
bill  in  equity,  brought  by  the  insurers  against  the  assignee  to 
compel  him  to  deliver  up  to  them  the  policy,  decreed  for  the 

1  Lang  V.  Delaware  Mut.,  &c.  Ins.  Co.  (Pa.),  10  Ins.  L.  J.  226. 

'^  Forrester  v.  Mut.  Life  Ins.  Co.  (Baltimore  City  Ct.),  4  Ins.  L.  J.  79. 

3  Schlect  V.  World  Ins.  Co.  (N.  Y.  Sup.  Ct.,  1875,  not  reported).  See  also 
post,  §  694;  Belcher  v.  International,  &c.  Ins.  Co.,  Cochran  (Nova  Scotia),  35. 

4  The  British  Eq.  Ass.  Co.  v.  Tiie  Great  Western  Railway  Co.,  20  L.  T.  n.  s. 
422. 

1312 


CH.  XXXII.]  REMEDIKS,    EVIDENCE,    ETC.  [§  o74 

complainant,  on  the  ground  that  the  policy  was  void,  both 
because  of  the  suppression  of  the  facts  transpiring  after  notice 
of  the  acceptance  of  tbe  proposal,  and  because  the  answers 
contained  in  the  policy,  as  to  the  health  of  the  insured,  wei-e 
not  true,  as  of  the  date  when  the  premium  was  j)aid  and  tlie 
policy  issued.^  If  a  policy  of  insurance  be  obtained  by  fraud, 
and  with  the  intent  to  defraud,  whicli  gives  an  apparent  cause 
of  action  to  the  holder  against  the  company,  the  court,  on  a 
bill  in  equity,  may  order  the  policy  to  be  delivered  up  and 
cancelled ;  ^  or  restrain  by  an  injunction  an  action  at  law  on 
the  policy  ;^  but  some  courts  will  not  interfere,  especially  after 
a  loss,  where  the  fraud  may  be  set  up  in  defence  at  law.*  And 
the  party  seeking  to  rescind  must  offer  to  return  all  he  has 
received  under  the  contract.^ 

Under  such  a  bill  in  equity  to  cancel,  a  loss  may  be  set  up 
as  a  counter-claim,  and  if  the  plaintiff  fail,  the  defendant  may 
I'ecover  on  his  counter-claim.^ 

§  574.  Right  to  cancel  Policy  strictly  construed.  —  This  right 
can  only  be  exercised  within  the  limits  of  good  faith.  A  sub- 
stantial change  in  the  circumstances  increasing  the  risk  is  the 
usual  and  sufficient  ground  on  the  part  of  the  insurers.  But 
they  cannot  avail  themselves  of  such  a  right  in  tbe  face  of  a 
fire  actually  threatening  the  destruction  of  the  ])roperty  in- 
sured ;  because,  if  this  could  be  done,  a  policy  of  insurance 

1  This  was  in  affirmation  of  the  judgment  of  Malins,  V.  C,  in  the  same  casp, 
19  Law  Times,  n.  s.  476  ;  Equitable  Life  Ins.  Co.  v.  Patterson,  C.  Ct.  (Mass.),  10 
Ins.  L.  J.  384;  London  Assurance  v.  Mansel,  L.  R.  11  Ch.  D.  303.  Upon  the 
question  of  jurisdiction  the  following  cases  were  cited  :  Slim  v.  Croncher,  1  Do 
G.,  F.  &  J.  518  ;  Jones  v.  The  Provincial  Ins.  Co.,  3  C.  B.  n.  s.  65 ;  Fowkes  v. 
The  Manchester  &  London  Life  Assur.  Ass.,  3  Best  &  Sm.  017  ;  Trail  v.  Baring, 
4  Giff.  485;  Thornton  v.  Knight,  IG  Sim.  509;  The  Prince  of  Wales  Ass.  Co.  v. 
Palmer,  25  Beav.  605. 

2  Commercial  Ins.  Co.  v.  McLoon,  14  Allen  (Mass.),  351 ;  French  v.  Connelly, 
2  Anstruther,  454;  Imperial  Ins.  Co.  )'.  Gunning,  81  111.  236. 

3  National  Life  Ins.  Co.  v.  Egan,  20  U.  C.  (Ch.)  469. 

4  Phoenix  Ins.  Co.  v.  Bailey,  13  Wall.  (U.  S.)  616;  New  York,  &c.  Ins.  Co.  r. 
Bangs  (U.  S.),  12  Reptr.  1  ;  Home  Ins.  Co.  v.  Stanclifiehl,  C.  Ct.  (Minn.),  2  Abb. 
C.  C.  6;  Hoare  v.  Bremridge,  L.  R.  8  Ch.  App.  22;  Globe  Ins.  Co.  v.  Reals,  50 
How.  Pr.  Rep.  237. 

5  Harris  v.  Equitable  Life  Ins.  Co.,  64  N.  Y.  106. 

6  Revere  Fire  Ins.  Co.  v.  Chamberlin  (Iowa),  10  Ins.  L.  J.  397. 

1313 


§  575]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXXIL 

would  be  in  many  cases  worthless,  since  it  would  be  possible, 
in  every  case  where  fire  approaches  from  without,  to  give 
notice  of  cancellation,  and  thus  escape  all  risk  under  the 
policy.^  And  the  right  can  only  be  exercised  by  a  strict  com- 
pliance with  the  terms  and  conditions  upon  which  it  is  ad- 
missible.^ If  refunding  the  premium,  or  a  portion  of  it,  be 
one  of  the  terms,  there  must  be  a  payment  or  tender.  An 
agreement  with  the  insured  tliat  he  shall  return  the  policy 
to  be  cancelled,  and  receive  his  premium,  is  no  cancellation.^ 
But  if  the  agreement  be  that  upon  alienation  the  policy  shall 
be  returned  for  cancellation,  and  a  ratable  proportion  of  the 
premium  shall  be  returned,  the  policy  becomes  void  by  the 
alienation,  and  the  premium  is  only  to  be  paid  on  its  return.* 
The  right  to  rescind  depends  upon  placing,  or  the  offer  to 
place,  the  insured  in  statu  quoP 

§  575.  Loss  paid  or  received  by  Mistake.  —  If  a  loss  be  paid 
under  a  mistake  of  facts  pertaining  to  the  loss,  as  distinguished 
from  facts  inducing  the  contract,  which,  if  known  to  the  in- 
surers, would  have  enabled  them  to  successfully  resist  the 
claim,  they  may  recover  back  the  amount  so  paid  on  rede- 
livery of  the  policy.^  In  Columbus  Insurance  Company  v. 
Walsh,'  where  a  loss  had  been  paid  in  ignorance  of  the  fact 
that  the  policy  had  become  void  by  subsequent  insurance? 
obtained  without  assent,  and  contrary  to  the  provisions  of  the 
policy,  the  insurers  were  allowed  to  recover  it  back.  And  it 
has  been  said  that  this  is  so  whether  the  company  so  paying 

1  Home  Ins.  Co.  v.  Heck,  65  IIl.-lll. 

2  Runkle  v.  Citizens'  Ins.  Co.  (C.  Ct.,  Ohio),  11  Reptr.  599;  ante,  §§  67-69; 
Cliase  r.  Phoenix,  &c.  Ins.  Co.,  67  Me.  85. 

3  Hathorn  v.  Gerniania  Ins.  Co.,  55  Barb.  (N.  Y.)  28. 
*  Buchanan  v.  Westchester  Ins.  Co.,  61  N.  Y.  611. 

5  Peoria  Fire  &  Mar.  Ins.  Co.  v.  Botto,  47  III.  516.  See  also  Grace  v.  Ameri- 
can, &c.  Ins.  Co.  (C.  Ct.  N.  Y.),  8  Ins.  L.  J.  731 ;  International  Ins.  Co.  v.  Frank- 
lin Ins.  Co.,  66N.  Y.  119. 

6  Mut.  Life  Ins.  Co.  v.  Wager,  27  Barb.  (N.  Y.)  .354;  Hartford  Live  Stock 
Ins.  Co.  V.  Mattliews,  102  Mass.  221 ;  North  Western  Ins.  Co.  v.  Elliott,  C.  Ct. 
(Oregon),  10  Ins.  L.  J.  .333 ;  North  British,  &c.  Ins.  Co.  v.  Stewart,  9  Ct.  of  Sess. 
Cas.,  3d  series,  534  ;  s.  c.  3  Big.  Life  &  Ace.  Ins.  Cas.,  510  ;  Berkshire  Mut.  Fire 
Ins.  Co.  V.  Sturgis,  13  Gray  (Mass.),  177;  McConnell  v.  Delaware  Ins.  Co.,  18 
111.  228  ;  ante,  §  442. 

7  18  Mo.  229. 

1314 


CH.  XXXII.]  REMEDIES,    EVIDENCE,   ETC.  [§  575 

has  the  means  of  knowing  the  facts  or  not,^  [If  payment 
of  a  policy  is  made  with  a  knowledge  by  the  company  that  a 
defence  is  open  to  them,  they  cannot  recover  the  amount  back, 
There  must  have  been  a  belief  in  fact  which  turned  out  to 
be  untrue.  If  the  company  paid  because  it  feared  the  elfect 
that  resisting  tlie  claim  would  have  on  its  reputation,  it  can- 
not afterward  change  its  mind,  and  without  showing  fraud  or 
mistake  of  fact,  recover  the  money .'-^  It  makes  no  difference, 
however,  that  the  directors  of  the  company  ought  to  have 
known  that  the  policy  was  lapsed  and  void.  It  is  no  defence 
in  such  an  action  to  show  that  care  would  have  discovered  the 
truth.3]  But  insurers  cannot  be  permitted,  in  the  absence  of 
fraud  upon  them,  to  reopen  and  try  a  case,  upon  a  ground 
which  might  have  been  presented  and  tried  when  the  claim 
was  made  under  the  policy  for  the  loss ;  as,  for  instance,  that 
the  policy  was  void  for  misrepresentation,  of  which  they  were 
aware  at  the  time  of  payment  of  the  loss,  or  might  have  been 
upon  due  inquiry.*  Nor  can  the  insured,  who  has  adjusted  his 
claim  disadvantageously,  under  pressure  not  amounting  to 
fraud,  maintain  an  action  for  a  further  recovery.^  But  if  either 
party  practises  fraud  in  procuring  the  adjustment  or  payment, 
the  other  may  avail  himself  of  it  to  open  the  matter,  and  re- 
cover back  the  loss,  if  paid.^  In  Trefz  v.  Knickerbocker  Life 
Insurance  Company,  a  bill  in  equity  to  set  aside  a  judgment  at 
law  rendered  against  the  insurers  the  year  before,^  on  the 
ground  that  up  to  and  until  after  the  trial  at  law  the  fact  that 

1  De  Halin  v.  Hartley,  1  T.  R.  343 ;  Kelly  v.  Solari,  9  M.  &  W.  54,  55. 

2  [Nat.  Life  Ins.  Co.  v.  Jones,  1  N.  Y.  Supr.  Rep.  466  at  471.] 

a  [Kingston  Bk.  v.  Eltinge,  40  N.  Y.  391,  and  Union  Nat.  Bk.  v.  Sixth  Nat. 
Bk.,  43  N.  Y.  452 ;  citing  Kelly  v-  Solari,  9  M.  &  W.  54.] 

<  Mut.  Life  Ins.  Co.  v.  Wager,  27  Barb.  (N.  Y.)  354;  National  Life  Ins.  Co. 
V.  Minch,  53  N.  Y.  144;  ante,  §  442;  Eagan  v.  ^tna  Fire  Ins.  Co.,  10  W.  Va. 
583 ;  Smith  v.  Glens  Falls  Ins.  Co ,  62  N.  Y.  85 ;  American  Ins.  Co.  v.  Craw- 
ford, 89  111.  62. 

5  Mayhew  v.  Phoenix  Ins.  Co.,  23  Mich.  105 ;  ^tna  Ins.  Co.  v.  Reed,  33 
Ohio  St.  283. 

'■  Johnson  v.  Continental  Ins.  Co.,  39  Mich.  33 ;  Northwestern  Life  Ins.  Co.  v. 
Elliott,  C.  Ct.  (Oregon),  11  Reptr.  325;  Harris  v.  Equitable,  &c.  Ass.  Co.,  6  T.  & 
C.  (N.  Y.)  108;  s.  c.  affirmed,  64  N.  Y.  196. 

7  6  Ins.  L.  J.  850. 

1315 


§  575]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXXII. 

the  insured  was  a  common  drunkard,  and  had  died  of  delirium 
tremens^  which  fact  the    defendant  "  took    pains  to  conceal," 
and  the  insurers,  using  due  diligence,  were  unable  to  obtain 
sufficient  evidence  of  until  after   the  judgment,  was  upheld, 
as  in  the  nature  of   an    application   for  a    new  trial  on  the 
ground    of  newly  discovered    evidence.^     [Where    insurance 
has  been  paid  upon  false  representations  of  death  it  may  be 
recovered  by  the  company  in  assumpsit  or  in  an  action  for 
fraud.'^    But  a  misrepresentation  which  was  not  really  relied 
on  by  the  company  or  which  does  not  result  in  making  the  loss 
figure  more  than  it  really  is,  will  not  enable  the  company  to 
recover  insurance  money  it  has  paid  ;  the  company  must  have 
relied  on  the  statement  to  their  damage.^    Fraud  in  obtaining 
the  policy  or  fraudulent  representations  made  to  obtain  the 
money,  will  base  a  claim  of  the  company  to  a  return  of  the 
money  if  they  did  not  know  of  the  fraud  at  the  time  they  paid 
it.*     But  by  paying  the  loss  the  company  waive  or  settle  all 
questions  of  law  or  fact  as  to  the  validity  of  the  original  con- 
tract (except  fraud),  which  they  had    the    means    of  raising 
when  they  paid  the  loss.     Even  ignorance   of  a  fact  which 
might  have  enabled  the  company  to  defend  an  action  upon  the 
policy  on  account  of  a  breach  of  warranty  is  not  such  a  mistake 
of  fact  as  will  enable  it  to  recover  the  money.     It  will  be  pre- 
sumed that  the  company  either  knew  the  fact  or  intended  to 
waive   any  such    defence,   and  voluntarily  paid   the   money. 
Otherwise   there  would   be   no   end  to  controversy  and   lit- 
igation, and  the  insured  would  hold  the  money  subject  to  a 
lawsuit  until  the  statute  of  limitations  intervened.^    When  one 
part-owner  insured    more  than   his   part,  and  recovered  the 
amount  on  loss,  it  was  held  that  the   insurer  could   recover 
it  back,  although   the  insured  intended  the  insurance   to  be 
for  himself   and    other  co-owners,  but  neglected    so   to  state 

1  C.  Ct.  (N.  J.),  10  Ins.  L.  J.  590.  See  also  National  Life  Ins.  Co.  v.  Mincli, 
supra;  ante,  §  442;  Hercules  Ins.  Co.  r.  Hunter,  14  Ct.  of  Sess.  Cas.  (Scotch), 
147,  1137. 

2  [Northwestern  Mut.  Life  Ins.  Co.  v.  Elliott,  10  Ins.  L.  J.  333  (Oregon),  1880.] 
8  [Royal  Ins.  Co.  v.  Byers,  9  Ont.  R.  120] 

4  [Nat.  Life  Ins.  Co.  v.  Minch,  53  N.  Y.  144.] 
6  [Ibid.] 

1316 


CH.  XXXII.]  REMEDIES,    EVIDENCE,    ETC.  [§  577 

in  the  policy.^  Money  paid  by  an  underwriter  with  full  knowl- 
edge of  facts  but  in  ignorance  of  the  law  cannot  be  recovered 
back. 2] 

§576.  Remedy  ;  Agents  against  Insurers  ;  Commissions. — An 
insurance  agent  who  has  voluntarily  left  the  service  has  no 
claim  to  subsequently  accruing  commissions  on  policies  he  ob- 
tained.3  And  though,  in  the  case  last  cited,  the  jury  were 
instructed  that  if  the  agent  was  dismissed  without  cause  he 
would  have  a  claim,  yet  if  the  contract  is  for  commissions  on 
premiums  "  collected  and  transmitted,"  and  is  terminable  at 
the  pleasure  of  either  party,  the  agent  has  no  claim  for  such 
commissions  on  premiums  not  actually  collected  by  him,  nor  is 
evidence  that  it  is  the  custom  of  other  companies  to  pay  com- 
missions on  renewals  admissible.'*  But  the  form  of  the  con- 
tract may  be  such  as  to  give  a  claim  for  renewals  for  a  certain 
time.^  In  such  cases,  the  rule  of  damages,  where  an  agent 
has  been  discharged  during  his  engagement,  is  the  amount  he 
has  lost,  less  the  amount  he  may  have  earned.  And  the  tes- 
timony of  witnesses  is  competent  to  show  the  probable  value 
of  renewals  during  the  remainder  of  the  term ;  but  an  esti- 
mate of  his  probable  earnings  after  the  discharge,  based  upon 
the  amount  of  his  collections  and  commissions  before  the 
trial,  was  held  to  be  inadmissible  as  too  speculative.*^ 

§  577.  Remedies  by  and  against  Foreign  Insurance  Companies. 
—  Where  foreign  insurance  companies  are  prohibited  by  stat- 
ute from  entering  into  contracts  of  insurance  until  they  have 
complied  with  certain  conditions,  it  is  generally  held  that  they 
cannot  recover  on  their  premium   notes   until  they  have  so 


1  [Pearson  v.  Lord,  6  Mass.  81  at  85.] 

'^  [Bilbie  v.  Lumley,  2  East,  469  at  472.] 

3  Sliaw  V.  Home  Life  Ins.  Co.,  49  N.  Y.  681  ;  Myers  v.  Knickerbocker  Life 
Ins.  Co.,  C.  C.  P.  (Pa.),  2  Big.  Life  &  Ace.  Ins.  Cas.  144. 

*  Spaulding  v.  New  York,  &c.  Ins.  Co.,  61  Me.  329.  See  also  Machette  v. 
N.  E.  Ins.  Co.,  1  Brewster,  C.  C.  P.  (Pa.),  313;  Partridge  v.  Pliornix  Ins.  Co., 
15  Wall.  (U.  S.)  573  ;  Medcalf  v.  Brooklyn  Life  Ins.  Co.,  4  Big.  Life  &  Ace.  Ins. 
Cas.  505. 

5  Ensworth  v.  N.  Y.  Life  Ins.  Co.,  C.  Ct.  (Ohio),  1  Big.  Life  &  Ace.  Ins.  Cas. 
645. 

6  Lewis  V.  Atlas,  &c.  Ins.  Co.,  61  Mo.  534. 

1317 


§  577]  INSURANCE  :   FIRE,   LIFE,   ACCIDENT,    ETC.       [CH.  XXXTI. 

complied.!  And  the  rule  applies  to  a  suit  against  an  agent 
to  recover  premiums  which  he  has  collected.^  And  the  in- 
sured is  not  so  far  in  pari  delictu  as  to  prevent  his  recovering 
back  the  premiums  paid.^  But  a  compliance  after  the  nego- 
tiation of  the  contract  will  permit  a  recovery.*  And  a  sub- 
scription to  stock,  payable  in  instalments,  is  also  recoverable. 
The  prohibition  does  not  apply  to  stock  notes  given  as  part 
of  the  capital  in  organizing  the  company  ;  nor  is  the  taking  of 
such  notes  "doing  business,"  within  the  meaning  of  a  statute 
which  prohibits  foreign  insurance  companies  from  doing  busi- 
ness except  under  certain  conditions.^  In  Missouri,  it  is  held 
that  recovery  may  be  had  without  such  compliance.^  Policies 
and  premium  notes  issued  under  such  circumstances  are 
generally   held   to   be  valid.''     And    foreign   insurance    com- 

1  Jones  V.  Smith,  3  Gray  (Mass. ),  500  ;  Wash.  County  Mut.  Ins.  Co.  v.  Dawes, 
6  id.  376;  Wasli.  County  Mut.  Ins.  Co.  v.  Hastings,  2  Allen  (Mass.),  398;  Gen- 
eral Mut.  Ins.  Co.  V.  Phillips,  13  Gray  (Mass.),  90;  ^tna  Ins.  Co.  v.  Harvey,  U 
Wis.  394;  Williams  v.  Cheney,  8  Gray  (Mass.),  206;  Cincinnati  Mut.  Health 
Ass.  Co.  V.  Rosenthal,  55  111.  85;  Ford  v.  Buckeye  State  Ins.  Co.,  6  Bush  (Ky.), 
135;  Columhia  Ins.  Co.  v.  Kmyon,  87  N.  J.  83;  American  Ins.  Co.  v.  Stoy,  41 
Mich.  388. 

2  Thorne  v.  Travelers'  Ins.  Co.,  80  Pa.  St.  15. 

3  Union,  &c.  Ins.  Co.  v.  Thomas,  46  Ind  44. 

*  National  Mut.  Fire  Ins.  Co.  v.  Pursell,  10  Allen  (Mass.),  231  ;  Atlantic,  &c. 
Ins.  Co.  V.  Concklin,  6  Gray  (Mass.),  73 ;  American  Ins.  Co.  v.  Pettijohn,  62  Ind. 
382;  Daly  v.  National,  &c.  Ins.  Co.,  64  Ind.  1;  Mut.  Benefit  Life  Ins.  Co.  i-. 
Charles,  0.  Ct.  (111.),  4  Ins.  L.  J.  265;  United  States  Life  Ins.  Co.  v.  Hessberg, 
27  Ohio  St.  393. 

5  Payson  v.  Withers,  C  Ct.  (Ind.),  2  Ins.  L.  J.  599. 

6  Clark  V.  Middleton,  19  Mo.  53;  Columbus  Ins.  Co.  i;.  Walsh,  18  id.  229. 

"  Columbus  Ins.  Co.  v.  Walsh,  ubi  supra  ;  Leonard  v.  Washburn,  100  Mass. 
251 ;  Hartford  Live  Stock  Ins.  Co.  v.  Matthews,  102  id.  221 ;  Ehrman  v.  Union 
Central  Ins.  Co.,  C.  Ct.  (Ark.),  9  Ins.  L.  J.  347;  Watertown  Ins.  Co.  v.  Simons, 
96  Pa.  St.  520  ;  id.  597  ;  American  Ins.  Co.  v.  Wellnian,  69  Ind.  413.  See  also 
Behler  v.  German  Ins.  Co.,  68  Ind.  347,  where  Slaughter's  case,  to  the  contrary, 
20  Ind.  520,  is  overruled.  [An  innocent  plaintiff  may  recover  for  a  loss  al- 
though tlie  company  has  not  complied  with  the  conditions  of  the  law  authoriz- 
ing it  to  do  business  in  the  state.  Ganser  v.  Fireman's  Fund  Ins.  Co.,  34  Minn. 
372.  A  policy  or  a  premium  note  is  not  rendered  void  because  the  company  is  a 
foreign  one,  that  has  failed  to  comply  with  the  law  as  to  prerequisites  of  doing 
business.  Provincial  Ins.  Co.  v.  Lapsley,  15  Gray,  262,  263;  Atlantic  Mut.  Ins. 
Co.  V.  Concklin,  6  Gray,  73,  75  ;  Union  Mut.  Life  Ins.  Co.  v.  McMillen,  24  Ohio 
St.  67,  79 ;  Insurance  Co.  v.  Whipple,  61  N.  H.  61  ;  Conn.  R.  Mut.  Fire  Ins.  Co.  v. 
Way,  62  N.  H.  622  ;  Ehrman  i'.  Teutonia  Ins.  Co.,  1  Fed.  Rep.  471 ;  9  Ins.  L.  J. 
1318 


CH.  XXXII.]  REMEDIES,    EVIDENCE,   ETC.  [§  577 

panics  doing  business  in  a  State  without  complying  with  the 
statute  of  the  State  relative  to  the  conditions  upon  which 
such  companies  may  do  business  therein,  cannot  set  up  their 
own  neglect  to  comj)ly  with  the  statute  as  a  defence  to  an 
action  against  them  for  a  loss,  or  to  recovci-  preuiiums  paid  on 
an  invalid  policy.^  In  Haverhill  Insurance  Company  v.  Pres- 
cott,'^  the  suit  was  on  a  note,  and  the  question  of  the  validity 
of  the  policy  did  not  arise.  As  against  tiie  State,  the  validity 
of  the  certihcate  of  authority  to  transact  business  may  be 
inquired  into.  But  whether,  if  the  certificate  be  valid,  the 
authority  conferred  by  it  can  be  modified  by  subsequent  legis- 
lation is  an  open  question.'^  The  proliibition  docs  not  apply 
where  the  agent,  having  no  authority  to  contract,  merely 
forwards  the  proposals  and  premium  notes  to  his  foreign 
principal.*  Nor  do  such  statutes  prevent  suits  in  the  Federal 
courts  of  the  State.^  [A  foreign  company  may  be  served 
with  a  summons  by  service  on  any  one  of  its  agents  appointed 
to  transact  its  business  in  another  State.^  Proof  of  service  on 
the  insurance  commissioner  is  good  though  he  refuses  to  re- 
ceive the  papers.^     It  has  been  said  that  it  is  questionable 


393  (Ark.),  1880.  Contra,  a  policy  issued  in  Oregon  by  a  company  prohibited  from 
doing  business  in  that  State  is  null  and  void.  Northwestern  Mut.  Life  Ins.  Co. 
V.  Elliott,  6  Sawy.  17 ;  10  Ins.  L.  J.  333.  So  in  Franklin  Ins.  Co.  v.  Louisville, 
&c.  Packet  Co.,  9  Bush  (Ky.),  500,  592,  it  was  held  that  a  policy  issued  by  a 
company  that  has  not  complied  with  the  conditions  of  doing  business,  is  void. 
A  premium  note  given  for  a  policy  in  a  foreign  company  which  liad  not  com- 
I)lied  with  the  law,  is  held  void.     Hoffman  v.  Banks,  41  Ind.  1  at  7.] 

1  Swan  V.  Watertown  Fire  Ins.  Co.,  96  Pa.  St.  37  ;  10  Ins.  L.  J.  392  ;  Daniels 
V.  Citizens'  Ins.  Co.,  C.  Ct.  (Ind.),  11  Reptr.  420;  Union  Central  Ins.  Co.  v. 
Thomas,  46  Ind.  44. 

2  42  N.  II.  547. 

^  Hartford  Ins.  Co.  v.  Kansas,  9  Kans.  210. 

*  Bowser  v.  Lamb,  C.  Ct.  (Ind.),  fi  Ins.  L.  J.  .37.5.  See  also  antp,  §  66  ;  Clay 
Fire  Ins.  Co.  v.  Huron,  &c.  Co.,  31  Mich.  346;  Columbia  Fire  Ins.  Co.  v.  Kin- 
yon,  37  N.  J.  33. 

5  Northwestern  Ins.  Co.  r.  Elliott,  C.  Ct.  (Oregon),  10  Ins.  L.  J.  333. 

6  [Johnson  v.  Hanover  Fire  Ins.  Co.,  15  Fed,  Rep.  97;  11  Bi.ss.  452  (111  ), 
1883  ;  Moch  v.  Virginia  Fire,  &c.  Ins.  Co.,  4  Hughes,  61  ;  10  Fed.  Hep.  696 
(Va.),  1882.] 

^  [Knapp,  &c.  Co.  v.  Nat.  Mut.  Fire  Ins.  Co.,  30  Fed.  Rep.  607  (Mo.), 
1887.] 

1319 


§  578  a]       INSURANCE  :    fire,    life,    accident,   etc.       [CH.  XXXII. 

whetlier  a  suit  to  wind  up  a  foreign  company  or  interfere  with 
its  affairs,  can  be  maintained  in  New  York.  ^] 

§  578.  Foreign  Insurance  Company  ;  Right  to  remove  Action. 
—  It  was  formerly  held  in  several  of  the  States  that  if  a 
foreign  insurance  company  submits  itself  to  the  exclusive 
jurisdiction  of  the  courts  of  a  State,  as  a  condition  of  the 
privilege  of  doing  business  in  that  State,  it  waives  any  riglit 
it  may  possess  as  a  quasi  citizen  of  another  State  to  remove  to 
the  courts  of  the  United  States  an  action  commenced  in  the 
courts  of  such  State,  upon  a  cause  of  action  accruing  there. 
But  it  has  since  been  decided  by  the  Supreme  Court  of  the 
United  States  that  such  submission  is  not  a  waiver  if  the 
petition  for  removal  be  made  before  a  final  trial,  which  is  held 
to  mean  the  last  trial  if  successive  trials  are  had.^  And  the 
rule  applies  to  a  British  insurance  company  doing  business  In 
one  of  the  States  of  the  Union.^  Now,  under  act  of  Congress, 
March  3,  1875,  State  courts  are  held  to  have  no  authority  to 
pass  upon  the  question  of  removal,  or  to  consider  the  suffi- 
ciency of  the  petition  or  bond.*  If  the  petition  or  bond  prove 
defective,  the  case  will  be  remanded.^ 

§  578  a.  Foreign  Insurance  Company  ;  Retaliatory  Legislation, 
&c.  —  In  Alabama  it  was  recently  held  that  retaliatory  legisla- 
tion, by  w^hich  the  same  taxes,  fines,  penalties,  and  disabilities 
imposed  by  other  States  respectively  upon  Alabama  companies 
should  be  imposed  upon  the  companies  from  those  States 
doing  business  in  Alabama,  was  unconstitutional,  as  conflict- 
ing with  the  principle  of  uniformity  of  taxation.^  And  so  it 
has  been  held  in  Indiana,  and,  it  seems,  in  Georgia.''  [But  a 
State  may  place  a  tax  on  a  foreign  corporation  as  a  price  of 
its  doing  business  therein.^     And  retaliation  as  to  restrictions, 

1  [Taylor  v.  Charter  Oak  Life  Ins.  Co.,  8  Abb.  N.  C.  .3-31.] 

2  Insurance  Co.  v.  Morse,  20  Wall.  44-5 ;  Doyle  v.  Continental  Ins.  Co.,  94 
U.  S.  5-35.  See  also  State  v.  Doyle,  40  Wis.  175,  criticising  Morse's  case  ;  Ten- 
nessee ().  Davis,  100  U.  S.  257. 

a  Terry  v.  Imperial  Ins.  Co.  (C.  Ct.,  Kan.),  4  Ins.  L.  J.  824. 

4  Osgood  V.  Chicago,  &c.  R.K.Co.,  Ch.  Legal  News,  April  17,  1875;  O'Malia 
V.  Home  Ins.  Co.,  C.  C.  P.  (Pa.),  4  Ins.  L.  J.  719. 

5  McMurily  v.  Conn.  Ins.  Co.,  C.  Ct.  (Pa.),  6  Ins.  L.  J.  6G6. 

6  Clark  V.  Mobile  (Ala.),  10  Ins.  L.  J.  357.  ^  ibid.,  note. 
8  [Liverpool  Ins.  Co.  v.  Massachusetts,  10  Wall.  566  at  576.] 

1320 


CH.  XXXIL]  REMP]I)IES,    EVIDENCE,    ETC.  [§  579 

formalities,  &c.,  is  iiiiqucstionaljly  lawful.  It  is  only  iipou  the 
question  of  taxation  that  the  pica  of  unconstitutionality  can 
be  made.  For  example,  Iowa  extends  against  companies  of 
any  other  State  the  same  restrictions  as  arc  imposed  on  Iowa 
companies  by  the  laws  of  that  State. ^  A  foreign  corporation 
has  no  right  to  do  business  in  a  State  without  that  State's  con- 
sent, and  then  only  subject  to  its  conditions.^  A  State  statute 
making  certain  provisions  as  to  licensing  and  taking  a  bond 
from  foreign  insurance  companies,  is  not  in  condict  with  the 
clause  of  the  United  States  Constitution,  as  to"  privileges  and 
immunities  of  citizens,"  nor  with  the  one  that  "  Congress  has 
power,  &c.,  to  regulate  commerce."  Furthermore,  corpora- 
tions arc  not  citizens  outside  of  their  own  States.^  A  company 
doing  business  in  another  State  than  its  home  must  be  bound 
by  its  laws,  and  its  contracts  are  interpreted  by  those  laws.* 
A  foreign  company  cannot  withdraw  itself  from  the  operation 
of  the  laws  of  the  state  in  which  it  is  doing  business,  by  pro- 
visions put  in  its  policies.^  The  "  Fire  Insurance  Act  "  R.  S. 
0.  ch.  162,  is  applicable  to  all  companies,  foreign  or  not,  li- 
censed to  do  business  in  the  Dominion  and  taking  risks  on 
property  in  Ontario.^] 

§  579.  Evidence.  —  The  general  rules  of  evidence,  as  laid 
down  in  the  special  treatises  on  that  subject,  are  applicable 
to  the  contract  of  insurance  as  well  as  to  other  contracts. 
[The  burden  of  proving  a  loss  from  a  cause  and  to  an  amount 
for  which  the  insurers  are  liable  is  upon  the  assured.''  When 
the  policy  provided  that  the  assurers  should  not  be  liable  unless 
the  loss  were  at  least  7|  per  cent,  the  onus  is  on  the  assured 
to  show  that  there  was  such  a  loss.^     If  testimony  as  to  a 

1  [State  V.  Fidelity,  &c.  Co.,  77  Iowa,  648  ;  18  Ins.  L.  J.  774.] 

2  [N.  Y.  Life  In.s.  Co.  v.  Best,  23  Oliio  St.  105  at  113,  citintj  Paul  v.  Virginia, 
8  Wall.  168;  Liverpool  Ins.  Co.  v.  Massachusetts,  10  Wall.  5G(3,  57().] 

3  [Paul  V.  Virginia,  8  Wall.  168;  Ducat  v.  Chicago,  10  Wall.  410. | 

*  [Queen  Ins.  Co.  u.  Jefferson  Ice  Co.,  64  Tex.  578;  Tliwing  v.  Insurance 
Co.,  Ill  Mass.  93;  Cox  i'.  United  States,  6  Pet.  172.] 

5  [Fletcher  v.  N.  Y.  Life  Ins.  Co.,  13  Fed.  Kep.  526  (Mo.),  1882] 

6  [Citizens',  &c.  Ins.  Cos.  v.  Parsons,  4  Can.  Supr.  Ct.  R.  215.] 

T  [Cory  V.  Boylston  Ins.  Co.,  107  Mass.  140  at  147  ;  Ileebner  v.  Eagle  Ins. 
Co.,  10  Gray,  131  at  143.] 

8  [Merchants'  Mut.  Ins.  Co.  v.  Wilson,  2  Md.  217  at  244.] 

1321 


§  579]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,  ETC.        [CH.  XXXII. 

disputed  fact  is  equally  balanced,  he  who  affirms  it  must  fail.^ 
Where  the  insurable  interest  of  the  plaintiff  is  put  directly  in 
issue  by  the  pleadings  he  must  prove  title.^  In  case  of  a  war- 
ranty that  the  subject-matter  insured  is  neutral  property,  it  is 
usual  at  the  trial  to  give  general  evidence  of  the  truth  of  that 
warranty,  and  leave  it  to  the  defendant  to  falsify  it.^  Evi- 
dence of  former  transactions  between  the  parties  is  admissible 
to  prove  the  meaning  of  the  parties  in  the  matter  in  question.* 
When  a  policy  is  made  in  the  name  of  anotlier  than  the  plain- 
tiff, it  is  necessary  for  the  plaintiff  to  show  not  only  the  policy, 
but  his  interest  therein,  and  there  must  be  something  to  show 
that  the  party  effecting  the  policy  in  his  own  name  intended 
to  embrace  the  interest  of  the  person  who  sues  thereon.^  Upon 
a  valued  policy  it  is  only  necessary  to  prove,  at  law,  a  substan- 
tial interest  in  a  subject  corresponding  to  and  satisfying  the 
description  in  the  policy.^  When  the  policy  provides  that  it 
shall  be  sufficient  proof  of  interest  in  case  of  loss,  —  if  there 
is  judgment  against  the  company  by  default,  the  plaintiff  in 
the  writ  of  inquiry  needs  only  to  prove  the  defendant's  sub- 
scription to  the  policy  without  proving  interest  therein.'^  The 
proof  of  the  description  of  the  premises  need  not  be  as  partic- 
ular as  in  ejectment.  Reasonable  evidence  that  the  house 
burned  was  on  the  plaintiff's  land  is  sufficient.^  Evidence  of 
conversation  between  the  assured  and  the  agent  to  prove  that 
the  description  is  not  the  former's,  is  admissible.^  The  mis- 
representation of  the  "  life  "  in  a  prior  application  of  his  own 
cannot  be  imported  into  a  subsequent  transaction  in  which 
a  creditor  insures  the  said  life,  and  in  his  application  leaves 
blank  the  question  wrongly  answered  by  the  "  life "  on  the 
previous  occasion.^"     A  copy  of  the  proofs  of  loss  may  be  in- 

1  [Rogers  i'.  Trarlers'  Ins.  Co.,  6  Paige,  583. | 

2  [Planters'  Ins.  Co.  v.  Diggs,  8  Baxter  (Tenn.),  563  at  565.] 
8  [Ludlow  V.  Union  Ins.  Co.,  2  S.  &  R.  118  at  133.] 

*  [Bourne  v.  Gatliff,  11  CI.  &  F.  45  at  70.] 

6  [De  Bolle  v.  Penn  Ins.  Co.,  4  Whart.  (Tenn.)  68  at  69  ] 

6  [Atlantic  Ins.  Co.  v.  Lunar,  1  Sandf.  Cii.  (N.  Y.),  91  at  97.] 

^  [Thelluson  v.  Fletcher,  Doug.  315  at  316.] 

*  [Breckinridge  i'.  Amer.  Cent.  Ins.  Co.,  87  Mo.  62.] 
8  [Maher  v.  Hibernian  Ins.  Co.,  6  Hun,  353  at  355.] 

10  [Conn.  Mat.  Life  Ins.  Co.  v.  Luchs,  108  U.  S.  498,  509.] 

1322 


CH.   XXXII.]  REMEDIES,    EVIDENCE,    ETC.  [§  579  A 

troducod  in  showing  compliance  with  the  requirements  of  the 
policy,  but  not  to  prove  the  loss.^  A  written  application  for 
a  policy  is  the  best  evidence  of  what  it  contains,  and  secondary 
evidence  will  not  be  received  unless  the  impossibility  of  pro- 
curing the  best  is  shown.^  A  company  refused  to  receive  an 
overdue  premium,  the  insured  sued  to  recover  the  premiums 
paid,  averring  the  forfeiture  unlawful  and  offering  the  policy  in 
evidence.  On  objection  of  the  company,  the  policy  was  ex- 
cluded. The  defence  was  non-payment  of  premium.  It  was 
held  that  in  the  absence  of  the  policy,  forfeiture  for  non-pay- 
ment could  not  be  presumed,  and  that  the  policy  could  not  be 
introduced  by  the  defendant,  after  it  had  objected  to  such  ad- 
mission.^ When  the  action  was  on  a  policy  for  alleged  dam- 
age to  blankets  from  sea-water,  and  the  defence  was  that  the 
damage  arose  in  manufacture  and  packing,  evidence  was  held 
admissible  to  prove  that  other  bales  of  blankets  from  the 
maker  had  sustained  the  same  kind  of  damage.*  The  admis- 
sions of  an  adjusting  agent  are  competent  against  the  com- 
pany.^ The  declarations  of  the  company's  agents  while 
adjusting  a  loss  are  admissible  against  the  coni))any.^  The 
physician's  incompetency  to  testify  of  information  received 
from  a  patient  may  be  waived  by  the  latter,  and  his  waiver  in 
liis  application  precludes  all  who  claim  under  him.'^  The  im- 
proper admission  of  evidence  is  not  cured  by  subsequent  in- 
structions to  the  jury  to  disregard  it.^] 

[§  579  A.  Declarations  of  the  Life-subject  are  not  admissible 
against  the  beneficiary  unless  part  of  the  res  gestce.  The  declara- 
tions of  the  "  life  "  after  issue  of  the  policy  are  not  competent 
against  the  beneficiary.^     Evidence  of  declarations  made  by  the 

1  [Hiles  V.  Hanover  Fire  Ins.  Co  ,  65  Wis.  585;  People's  Ace.  Ass.  v.  Smitli, 
126  Pa.  St.  317;  Commonwealth  Ins.  Co  v.  Sennet,  41  Pa.  St.  161  ;  Lycoming 
Ins   Co.  V.  Schreffler,  42  Pa.  St.  188  1 

2  [Lewis  V.  Hudmon,  56  Ala.  186] 

3  [American  Life  Ins.  Co.  v.  McAder,  109  Pa.  St.  399  ] 

*  [Bradford  v.  Boylston  Fire  &  Mar.  Ins.  Co.,  11  Pick.  162  at  166.] 

5  [Bartlett  v.  Fireman's  Fund  Ins.  Co.,  77  Iowa,  155.] 

6  [Bowes  V.  National  Ins.  Co.,  20  N.  B.  R.  438.] 

•?  [Adreveno  v.  Mut.  Res.  Fund  Life  Ass.,  34  Fed.  Rep.  870  (Mo  ),  1888.) 

8  [Lycoming  Fire  Ins.  Co.  v.  Rubin,  79  III.  402  at  408.] 

9  [Dial  V.  Valley  Mut.  Life  Ass.,  29  S.  C.  560.] 

1323 


§  579 B]     insurance:  fire,  life,  accident,  etc.     [cii.  xxxii. 

insured  before  insuring  for  the  benefit  of  his  wife,  are  not  admis- 
sible against  her  as  inconsistent  with  his  warranties,  unless 
thev  had  reference  to  his  acts,  or  some  fact  connected  with  his 
bodily  condition.^  And  even  where  so  connected  they  are  not 
admissible  unless  part  of  the  res  gestce.  Where  C.  and  his 
wife  make  joint  application  for  a  policy  on  C.'s  life  for  the 
sole  benefit  of  the  wife,  evidence  will  not  be  admitted  in  a  suit 
by  the  wife  to  show  that  C.«liad  made  declarations  at  a  time 
prior  to  the  application,  that  were  contradictory  to  his  answer 
in  the  application  concerning  his  health  for  years  past.  In 
making  the  prior  declarations  he  did  not  act  as  the  agent  of 
his  wife,  they  were  the  acts  of  a  stranger  and  could  not  affect 
her.2  If,  however,  the  statements  of  the  life-subject  contra- 
dictory to  his  representations  in  the  application,  as  to  his 
health,  for  example,  were  made  so  near  the  time  of  the  appli- 
cation as  to  be  part  of  the  res  gestce^  they  are  admissible 
against  the  beneficiary  ;  otherwise  not.^] 

[§  579  B.  Parol  evidence  of  what  passed  at  the  time  of  mak- 
ing a  policy  is  not  admissible  to  restrain  the  effect  of  the 
same.^  Parol  evidence  that  "  27th  "  in  the  margin  of  a  policy 
should  be  "  20th  "  and  that  a  memorandum  so  stating  was  left 
with  the  underwriters,  is  inadmissible  at  law,  though  equity 
might  reform  the  contract.^  Evidence  for  the  company  to 
show  that  the  word  "  epidemics  "  included  yellow  fever  by  the 
understanding  of  both  parties,  has  been  held  inadmissible. 
The  agreement  was  in  writing  without  ambiguity,  and  the 
ordinary  meaning  of  the  words  could  not  be  varied  or  ex- 
plained by  oral  evidence  of  the  intent  of  the  parties.^  Evi- 
dence is  admissible  to  show  that  by  the  usage  of  the  junk 
dealer's  trade  the  words  "  rags  "  and  "old  metals"  have  a 
broader  meaning  than  commonly  belongs  to  them.  It  was 
shown  that  "  rags "  means  all  articles  used  in  the  manu- 
facture of  paper,  and  that  the  term  "  old   metals  "  includes 

1  [Terwilii^er  r.  Royal  Arcanum,  49  Hun,  305.] 

2  [Union  Cent.  Life  Ins.  Co.  v.  Cheever,  36  Ohio  St.  208.] 

8  [Schwarzbach  v.  Protective  Union,  25  W.  Va.  622,  646-647.] 

«  [Weston  V.  Ernes,  1  Taunt.  115  at  117] 

5  [Ewer  V.  Washington  Ins.  Co.,  16  Pick.  502  at  503  ] 

6  [Pohalski  v.  Mut.  Ins.  Co.,  45  How.  Pr.  R.  504  at  511.] 

1324 


CH.  XXXII.]  REMEDIES,   EVIDENCE,   ETC.  [§  580 

old  rubber  and  old  glass.^  No  usage  of  an  insurance  company 
nor  even  the  express  agreement  of  the  parties,  whether  made 
previous  to  or  at  the  time  of  the  execution  of  the  policy,  can 
be  admitted  to  explain,  modify,  or  control  the  written  con- 
tract.2  Evidence,  outside  of  the  policy,  of  facts  and  circum- 
stances, to  show  the  intention  of  the  parties,  is  admissible, 
when  the  policy  is  not  clcar.^  Parol  is  admissible  to  sliow 
that  a  policy  written  for  |2000  was  intended  to  be  for  itflOOO, 
and  that  the  rate  was  that  appropriate  to  a  $1000  j)olicy  ;*  and 
to  show  that  a  written  assignment  of  a  policy  was  collateral 
security  for  an  obligation  now  settled.^  A  circular  issued  by 
the  company  stating  that  "  thirty  days'  grace  would  be  allowed 
on  all  payments  after  the  first "  cannot  be  admitted  to  vary 
the  actual  terms  of  the  policy.^] 

§580.  Evidence;  Experts. — In  Joyce  v.  Maine  Insurance 
Company,'^  it  was  decided  that  an  expert  in  insurance  matters 
could  not  be  permitted  to  give  his  opinion  whether  "the  rate 
of  premium  for  insurance  would  be  increased  by  vacating  a 
dwelling-house."  The  condition,  made  part  of  the  contract, 
made  the  insurance  void  and  of  no  effect  if  the  risk  should 
be  increased  by  any  means  whatever  within  the  control  of  the 
insured.  It  was  said  not  to  be  a  question  of  science  or  skill. 
So  it  has  been  held,  and  for  a  like  reason,  that,  under  sul). 
stantially  similar  terms  of  the  contract,  experts  could  not  he 
permitted  to  testify  whether  "  leaving  a  dwelling-house  unoc- 
cupied for  a  considerable  length  of  time  "  was  an  increase  of 
risk.*^  And  generally  their  opinions  as  to  the  materiality  of 
certain  facts  to  the  risk  are  incompetent.^     But  in  Schenck 

1  [Mooney  v.  Howard  Ins.  Co.,  138  Mass.  375  ] 

2  [111.  Mut.  Fire  Ins.  Co.  v.  O'Neile,  13  111.  89  at  03  ] 

3  [Mauger  v.  Holyoke  Mut.  Fire  Ins.  Co.,  1  Holmes  (U.  S.  C.  C),  287  at  289- 
(The  question  was  as  to  what  ^oods  were  covered.)] 

4  [^tna  Life  Ins.  Co.  v.  Brodie,  5  Can.  Supr.  Ct.  1.] 

6  [Summers  v.  U.  S.  Ins.  Co.,  13  La.  Ann.  504  at  605.] 

6  [Fowler  v.  Metropolitan  Life  Ins.  Co.,  116  N.  Y.  389.] 

7  45  Me.  168. 

8  Luce  V.  Dorchester  Mut.  Fire  Ins.  Co.,  105  Mass.  298;  Cannell  v.  Phoenix 
Ins.  Co.,  59  Me.  582.  In  Foy  v.  ^tna  Ins.  Co.,  3  Allen  (N.  B.),  29,  such  evi- 
dence was  admitted  without  objection. 

9  Jefferson  Lis.  Co.  v.  Cotheal,  7  Wend.  (N.  Y.)  72  ;  Hartford  Prot.  Ins.  Co. 

1325 


§  580]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXXII. 

V.  Mercer  County  Mutual  Insurance  Compan},^  a  fireman  was 
allowed  to  testify  whether  the  risk  of  fire  was  increased  by 
certain  alterations ;  and  it  was  decided  in  the  case  last  cited 
from  Massachusetts  that  the  question,  whether  such  leaving  a 
dwelling-house  unoccupied  is  material  to  the  risk,  might  be 
tested  by  the  question  whether  underwriters  generally  would 
in  such  case  charge  a  higher  premium.^      The  first  question 
was  said  to  be  as  to  a  subject  within  common  knowledge,  as 
to  which  opinions  were  inadmissible,  wliile  the  latter  related 
to  a  matter  which  was  within  the  peculiar  knowledge  of  per- 
sons versed  in  the    business  of  insurance.     The  distinction, 
though  fine,  seems  to  be  sound  ;  it  is  between  an  inadmissible 
opinion  and  an  admissible  fact.     The  inference  of  increased 
risk,  based  upon  the  fact  known  to  him  of  a  higher  rate  of 
premium  in  such  cases,  cannot  be  stated  by  the  witness ;  but 
he  may  state  the  fact,  which  is  to  liim  a  matter  of  special 
knowledge,  and  from  this  the  jury  may  draw  the  inference 
of    increased    risk.       That     persons    having    this    peculiar 
knowledge    may    testify    thereto    is    a    well-settled    rule    of 
evidence.^      But  the  insurer  cannot  be  permitted  to  testify 
that  he  would  not  have  taken  the  risk  had  he  known  the 
facts.^      [Whether  or  not  a  witness  is  entitled  to  be  heard 
as  an  "expert"  is  for  the  court  in  the  first  instance.^     An 
expert  witness  may  be  impeached  by  showing  that  upon  a 


V.  Harmer,  2  Ohio  St.  452  ;  Hill  v.  Lafayette  Ins.  Co.,  2  Mich.  476.    Contra,  Kcrn 
V.  South  St.  Louis  Mut.  Fire  Ins.  Co.,  40  Mo.  19. 

1  4Zab.  (N.J.)  447. 

2  And  see  also  Merriam  v.  Middlesex  Ins.  Co.,  21  Pick.  162  ;  Daniels  r.  Hud- 
son River  Fire  Ins.  Co.,  12  Cush.  (Mass.)  416;  Hobby  v.  Dana,  17  Barb.  (X.  Y.) 

111. 

3  Webber  v.  Eastern  Railroad  Co.,  2  Met.  (Mass.)  147;  Mulry  v.  Mohawk 
Valley  Ins.  Co.,  5  Gray  (Mass.),  541  ;  Hawes  v.  New  England  Ins.  Co.,  2  Curtis 
(C.  Ct.),229;  Lyman  v.  State  Ins.  Co.,  14  Allen  (Mass  ),  329;  Hartman  v.  Key- 
stone Ins.  Co.,  21  Pa.  St.  4G6;  Quin  v.  National  Ass.  Co.,  Jones  &  Cary  (Irish), 
316. 

*  Campbell  v.  Rickards,  5  B.  &  Ad.  840  ;  Perkins  v.  Equitable  Ins.  Co.,  4 
Allen  (N.  B.),  562.  In  Martin  v.  Franklin  Ins.  Co.,  42  N.  J.  46,  an  insurance 
agent  was  permitted  to  testify  at  wliat  rate  he  could  have  procured  insurance  on 
the  property  in  question. 

5  [Gulf  City  Ins.  Co.  v.  Stephens,  51  Ala.  121  at  123-124.] 

1326 


CH.  XXXII.J  REMEDIES,   EVIDENCE,   ETC.  [§  583 

former  occasion  he  had  expressed  a  different  extra-judicial 
opinion.^] 

§  581.  Evidence  ;  Experts.  —  In  life  insurance,  physicians 
may  give  their  opinion  as  to  the  causes  of  disease,  and 
whether  a  particular  disease  or  infirmity  or  injury  or  habit  is 
the  cause  of  death,  or  tends  to  shorten  life ;  2  but  neither  thcv 
nor  experts  in  insurance  can  be  allowed  to  give  their  opinion 
upon  tlie  question  whether  the  applicant  was  an  insurable 
subject,  nor  whether  certain  facts  render  the  subject  uninsur- 
able.3  Nor  can  experts  be  permitted  to  testify  what  would 
have  been  their  opinion  upon  hypothetical  facts.  These 
opinions  must  be  based  upon  observation,  or  upon  proved  facts.'* 

§  582.  Evidence  ;  Custom.  —  Evidence  of  a  particular  custom 
of  the  insurers,  not  brought  home  to  the  knowledge  of  the 
insured,  is  inadmissible.^  But  evidence  of  a  general  custom 
of  insurance  companies,  as,  for  instance,  to  charge  a  higher 
rate  of  premium  on  unoccupied  dwelling-houses,  is  admissible, 
on  the  issue  whether  there  is  an  increase  of  risk  in  a  case 
where  a  dwelling-house  occupied  at  the  time  of  insurance  was 
afterwards  left  unoccupied.^  So  of  a  general  custom  of  in- 
surance companies  to  give  thirty  days'  grace  for  the  payment 
of  the  annual  premiums.'  So  the  usage  of  life  insurance 
companies  is  competent  evidence,  in  a  question  between  them 
and  their  agents,  as  to  the  nature  and  amount  of  interest  the 
latter  may  have  in  the  policies  they  procure.^ 

§  583.  Evidence  ;  Wilful  Burning.  —  Where  the  defence  to 
an  action  on  a  policy  of  insurance   involves  the  proof  of   a 

1  [Patchin  v.  Astor.  Mut.  Ins.  Co.,  3  Kern.  2G8  at  272  ;  Sanderson  v.  Nashua, 
44  N.  H.  492.] 

2  Miller  v.  Mut.  Ben.  Life  Ins.  Co.,  31  Iowa,  216. 

3  Rawls  V.  Am.  Life  Ins.  Co.,  36  Barb.  357  :  s.  c.  affirmed,  27  N.  Y.  282. 
*  Higbie  v.  Guardian  Mut.  Life  Ins.  Co.,  53  N.  Y.  603. 

5  Adams  v.  Otterbach,  15  How.  (U.  S.)  539;  Carter  v.  Boebm,  3  Bnrr.  1005; 
Hartford  Prot.  Ins.  Co.  v.  Harmer,  2  Ohio  8t.  452  ;  Luce  v.  Dorchester  Mut.  Fire 
Ins.  Co.,  105  Mass.  298 ;  Taylor  v.  ^tna  Life  Ins,  Co.,  13  Gray  (Mass.),  434. 

**  Luce  V.  Dorchester  Mut.  Fire  Ins.  Co.,  105  Mass.  298. 

7  Heime  v.  Phila.  Life  Ins.  Co.,  61  Pa.  St.  107.  But  see  contra,  Mut.  Ben.  Life 
Ins   Co  V.  Ruse,  8  Ga.  534. 

8  Ensworth  v.  New  York  Life  Ins.  Co.  (C.  Ct.  U.  S.),  North  Dist.  Ohio,  7  Am. 
Law  Reg.  n.  s.  332.     But  see  contra,  §  576. 

VOL.  11.  —  40  1327 


§  583]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXXII. 

crime,  as  the  wilful  setting  fire  to  the  premises,  or  the  design- 
edly casting  away  a  vessel,  the  authorities  differ  upon  the 
question  of  proof  whether  the  rule  in  civil  or  criminal  cases 
shall  be  the  guide.  In  Thurtell  v.  Beaumont,^  the  jury  were 
instructed  that  they  must  be  as  clearly  satisfied  of  the  fact  as 
if  the  insured  were  on  trial  on  the  criminal  charge.  The  rule 
is  the  same  in  Scotland.^  And  this  rule  was  adopted  in  the 
case  of  Shultz  v.  Pacific  Insurance  Company.^  And  so  it  has 
been  apparently  held  on  the  authority  of  Thurtell  v.  Beau- 
mont, in  Illinois,*  though  the  point  was  not  much  considered. 
But  reason  and  the  weight  of  authority  are  the  other  way.^ 
[It  is  not  necessary  to  tell  the  jury  that  the  evidence  need  not 
be  as  strong  as  on  a  criminal  suit.  It  is  enough  to  state 
the  rules  of  evidence  that  do  apply  without  stating  those 
which  do  not.^  Upon  a  charge  that  the  plaintiff  caused 
or  procured  the  fire,  every  circumstance  that  throws  light 
on  the  plaintiff's  motives  may  be  inquired  into,  such  as, 
over-insurance,  excessive  proof  of  loss,  assignment  of  policy, 
or  disposition  of  goods  in  a  manner  aside  from  the  usual 


1  1  Bing.  339. 

2  Hercules  Ins.  Co.  v.  Hunter,  15  Ct.  of  Sess.  Cas.  800. 

8  Sup.  Ct.  of  Florida,  2  Ins.  L.  J.  495;  [Kane  v.  Hibernia  Mat.  Fire  Ins.  Co., 
38  N.  J.  441  at  446.     See,  however,  second  note  below.] 

*  McConnel  v.  Delaware  Ins.  Co.,  18  111.  228;  Gordon  v.  Parmelee,  15  Gray, 
416. 

5  Schmidt  v.  N.  Y.  Union  Mut.  Fire  Ins.  Co.,  1  Gray  (Mass.),  529;  Washing- 
ton Ins.  Co.  V.  Wilson,  7  Wis.  169 ;  Wightman  r.  West.  Mar.  &  Fire  Ins.  Co.,  8 
Rob.  (La.)  442  ;  Hoffman  ;;.  West.  Mar.  &  Fire  Ins.  Co  ,  1  La.  Ann.  216;  Scott  v. 
Home  Ins.  Co.,  1  Dillon  (C.  Ct.  U.  S.),  105;  Bayly  v.  Lancashire,  &c.  Ins.  Co., 
C.  Ct.  (La.),  4  Ins.  L.J.  503;  Ellis  v.  Buz/.ell,  60  Me.  209;  Marshall  v.  Thames 
Fire  Ins.  Co.,  48  Mo.  586  ;  Knowles  v.  Scribner,  57  Me.  495,  497  ;  Matthews  v. 
Huntley,  9  N.  H.  146,  150;  Folsom  v.  Brawn,  5  Foster  (N.  H),  114,  122;  Sibley 
i>.  St.  Paul  Ins.  Co.,  C.  Ct.  (111.),  8  Ins.  L.  J.  461  ,  Kincade  v.  Bradshaw,  3  Hawk. 
(N.  C.)  63,  65 ;  Blaeser  v.  Milwaukie,  &c.  Ins.  Co.,  37  Wis.  31 ;  Howell  v.  Hart- 
ford, &c.  Ins.  Co.,  C.  Ct.  (111.),  3  Ins.  L.  J.  649,  653.  [A  preponderance  of  evidence 
is  sufficient.  Carlwitz  v.  Germania  Fire  Ins.  Co.,  12  Ins.  L.  J.  127  (N.  J.),  1883 ; 
Somerset  County  Mut.  Fire  Ins.  Co.  v.  Usaw,  112  Pa.  St.  80;  Continental  Ins. 
Co.  V.  Jachnichen,  110  Ind.  59;  Huchberger  v.  Merchants'  Fire  Ins.  Co.,  4 
Biss.  265  at  266;  Mack  v.  Lancashire  Ins.  Co.,  2  McCrary,  211  at  215;  JEtna. 
Ins.  Co.  V.  Johnson,  11  Bush  (Ky.),  587  at  593;  Regnier  r.  La.  St.  Ins.  Co..  12 
La.  3-37  at  .342 ;  Simmons  v.  Insurance  Co.,  8  W.  Va.  474  at  499.] 

6  [Bayley  v.  Lond.  &  Life  Ins.  Co.,  4  Ins.  L.  J.  503,  508  (U.  S.  C.  C),  1875] 

1328 


CH.  XXXII.]  REMEDIES,   EVIDENCE,    ETC.  [§  584 

course  of  business,  &c.i  Evidence  of  the  plaintiff's  good  char- 
acter is  admissible.2  A  suggestion  by  the  assured  that  the 
fire  might  have  originated  in  some  oiled  shavings  in  the  cellar 
is  no  evidence  of  arson.-*^  It  is  error  to  cliarge  that  the 
burden  is  on  the  plaintiff  to  show  the  loss  an  honest  one. 
There  is  no  presumption  that  the  insured  burns  his  house 
or  is  in  fault,  but  a  contrary  presurpption.*] 

§  584.  Evidence  ;  Issue  of  Policy  ;  Signing  Application  ; 
Receipt  of  Premium  ;  Organization  of  Company.  —  The  recital 
in  a  premium  note  that  a  policy  has  issued  is  prima  facie  evi- 
dence of  that  fact  against  the  maker  of  the  note.^  So  the 
statement  of  the  secretary  that  a  policy  has  issued,  in  an  ac- 
tion of  covenant  on  a  lost  policy,  is  sufficient  evidence  that 
the  policy  was  issued.^  The  court  were  divided,  in  Foster  v. 
Mentor  Life  Assurance  Company,"  on  the  question  whether 
the  insured,  having  accepted  a  policy  reciting  that  he  had 
signed  the  declaration,  might  show  to  the  contrary,  two  judges 
thinking  the  jury  should  decide  the  question  of  signature,  and 
two  holding  that  the  jury  should  be  instructed  that  the  recital 
was  prima  facie  proof  of  the  signature.  And  by  the  weight  of 
authority  the  recital  in  a  delivered  policy  of  the  receipt  of 
the  premium  is  prima  facie,  and  only  prima  facie,  evidence 
of  the  fact.^     But  it  is  held  to  be  conclusive  in  Illinois  ^  and 


1  [Dwyer  i'.  Continental  Ins.  Co  ,  63  Tex.  354-1 

2  [Mosley  v.  Vt.  Mut.  Fire  Ins.  Co.,  55  Vt.  142.] 

3  [Farmers'  Mut.  Fire  Ins.  Co.  v.  Gargett,  42  Mich.  289  at  292.] 
*  [Dwyer  v.  Continental  Ins.  Co.,  57  Tex.  181.] 

5  New  England  Mut.  Fire  Ins.  Co.  v.  Belknap,  9  Cusli.  (Mass.)  140. 

6  Sussex  County  Mut.  Ins.  Co.  v.  Woodruff,  2  Dutcli.  (N.  J.)  542;  Harding  v. 
Carter,  Park,  Ins   5. 

7  3  E.  &  B.  48 ;  s.  c.  24  Eng.  L.  &  Eq.  10-3. 

8  Siieldon  V.  Atlantic  Fire  &  Mar.  Ins.  Co.,  26  N.  Y.  460;  Insurance  Co.  of 
Penn.  v.  Smith,  3  Whart.  (Pa.)  520 ;  Baker  v.  Union  Mut.  Life  Ins.  Co.,  43  N.  Y. 
2-'3,  reversing  s.  c.  6  Robt.  .393;  Bergson  v.  Builders'  Ins.  Co.,  38  Cal.  541  ;  Rob- 
ert V.  New  England  Mut.  Life  Ins.  Co.,  2  Disney  (Ohio),  106;  Pitt  v.  Berkshire 
Life  Ins.  Co.,  100  Mass.  500;  Troy  Fire  Ins.  Co.  v.  Carpenter,  4  Wis.  32;  anlc, 
§  359;  Union  Ins.  Co.  v.  Grant,  68  Me.  229.  A  mere  receipt  is  no  contract.  It  is 
a  mere  statement  of  a  fact,  and  may  always  be  contradi'.'ted.  The  Tuskar, 
1  Sprague  (U.  S.  Dist.  Ct.  Mass.),  71;  Hildretli  v.  O'Brien,  10  Allen  (Mass.), 
104 ;  1  Greenl.  Ev.  §  305. 

9  Prov.  Life  Ins.  Co.  v.  Fennell,  49  111.  180. 

1329 


§  586]  INSURANCE  :    FIRE,   LIFE,    ACCIDENT,    ETC.       [CH.  XXXII. 

in  Maryland.^  The  production  of  a  premium  note,  signed  by 
the  insured,  is  also  prima  facie  evidence,  as  against  him,  that 
the  company  is  duly  organized.^ 

§    585.    Evidence  ;   Chronic  Disease  ;   State  of  Health  ;  Death. 
—  A  post  mortem   examination,  fifteen  hours  after  death,  in 
New   Orleans,  in    October,  developing  an  inflammation  and 
ulceration  of  the  intestines,  which  in  the  opinion  of  the  physi- 
cians had  been  of  long  standing,  is  not  sufificient  evidence  of 
chronic  disease  existing  in  June  of  the  same  year,  in  a  climate 
where  fifteen  hours  of  mortification  may  have  made  great  rav- 
ages, especially  if  at  that  time  the  insured  appeared  in  perfect 
health.^     In  Schaible  v.  Washington  Life  Insurance  Company, 
a  photograph  of  the  deceased,  taken  a  short  time  before  the 
insurance  was  effected,  was  permitted  to  go  to  the  jury  as  evi- 
dence of  the  physical  appearance  and  condition  of  the  assured 
at  that  time.*     The  sudden  disappearance  of  the  insured,  and 
inability  to  find  him  after  diligent  search,  under  circumstances 
where  he  could  not  well  go  long  without  discovery,  he  being 
in  such  a  physical  and  mental  condition  as  to  excite  anxiety, 
are   sufficient  to  justify  a  finding  of  death.^     Letters  testa- 
mentary are  not   competent   evidence   of   the   death   of   the 
person  upon  whose  estate  the  letters  are  issued.^     Absence  for 
seven  years  without  being  heard  from  raises  a  presumption  of 
death  ;  but  there  is  no  presumption  from  this  fact  alone  as  to 
the  time  of  death  during  the  period  of  absence.     This  must 
depend   upon   other  circumstances.'^       [Proofs  of  death  fur- 
nished by  the  plaintiffs  to  the  company  are  admissible  in  favor 
of  the  latter.^] 

§  586.    Evidence  ;   Effect    of    Misrepresentation.  —  In   Wash- 
ington Life  Insurance  Company  v.   Haney,  the  president  of 

1  Consolidated  Ins.  Co.  v.  Cashow,  41  Md.  59. 

2  Williams  v.  Cheney,  3  Gray  (Mass.),  215;  Topping  v.  Bickford,  4  Allen 
(Mass.),  120. 

3  Murphy  v.  Mnt.  Ben.  Life  Ins.  Co.,  6  La.  Ann.  518. 
*  Leg.  Int.  vol.  v.  p.  232,  July  18,  1873 

6  John  Hancock,  &e.  Ins.  Co.  v.  Moore,  34  Mich.  41. 

6  Mutual  Benefit  Ins.  Co.  v.  TisJale,  1>1  U.  S.  238,  reversing  s.  c.  3  Ins. 
L  J.  59. 

^  Hancock  i'.  American  Life  Ins.  Co.,  62  Mo.  26. 
8  [Goldschmidt  v.  Mut.  Life  Ins.  Co.,  33  Hun,  441.] 

1330 


CH.  XXXII.]  REMEDIES,    EVIDENCE,    ETC.  [§  587  A 

the  insurance  company  which  issued  the  policy  was  not  per- 
mitted to  testify  that  the  policy  was  issued  in  the  belief  that 
the  statements  in  the  application  were  true,  and  that  no  pol- 
icy would  have  been  issued  had  the  company  had  any  reason 
to  believe  that  the  representations  and  answers  were  in  anv 
respect  false.  It  is  to  be  presumed  that  a  policy  is  issued 
upon  the  facts  stated  in  the  application  ;  and  how  far  false 
statements,  if  any  there  are  in  the  application,  affect  the  valid- 
ity of  the  contract,  is  a  question  of  law  for  the  court,  and  not 
one  to  be  settled  by  the  opinion  or  judgment  of  either  party, 

§  587.  Evidence  ;  Intentional  Suicide  ;  Fraud  ;  Character  ; 
Value.  —  A  man's  religious  belief  or  unbelief  al'furds  no 
ground  upon  which  to  infer  whether  he  intentionally  com- 
mits suicide  or  not,  and  cannot  be  j)ut  in  evidence.^  And 
j)roof  of  good  character  is  inadmissible  on  an  issue  of  fraud- 
ulent overvaluation  of  loss.^  The  value  of  other  similar 
neighboring  properties  is  evidence  of  the  value  of  the  prop- 
erty burned  or  lost.^^ 

[§  587  A.  Variance.  —  In  an  action  on  a  policy  on  a  frame 
dwelling-house  the  answer  alleged  that  the  assured  used  and 
occupied  the  building  insured,  at  the  time  he  procured  the  pol- 
icy, and  afterward,  as  a  boarding  house  and  hotel,  and  that  the 
policy  was  thereby  rendered  void.  No  change  in  the  occupa- 
tion was  alleged.  Evidence  that  the  building  after  the  date  of 
the  policy  was  occupied  as  a  hotel  without  the  consent  of  the 
defendant  was  excluded  as  being  a  different  defence  from  the 
answer,  and  one  requiring  special  pleading.*  But  an  honest 
mistake  of  the  assured  in  his  proofs  of  loss  as  to  the  man- 
ner in  which  the  fire  originated  may  be  corrected  at  the  trial 
by  contradictory  evidence,  when  such  will  not  operate  as  a 
surprise  to  the  insurer.^  And  when  the  pleadings  allege  the 
proofs  without  averment  of  the  mistake,  the  variance  must  be 


1  Gibson  v.  Am.  Mut.  Life  Ins.  Co.,  37  N.  Y.  580. 
^  Fowler  v.  iEtna  Fire  Ins.  Co.,  6  Cow.  (N.  Y.)  673. 

3  Iliiines  V.  Republic  Fire  Ins.  Co.,  52  N.  H.  467  ;  Howard  i;.  City  Fire  Ins. 
Co.,  4  Denio  (N.  Y.),  502. 

*  [Pierce  v.  Coliasset  Ins.  Co.,  123  Mass.  572  at  57o.] 

6  [W^aldeck  v.  Springfield  Fire  &  Mar.  Ins.  Co.,  63  Wis.  129  at  131.] 

1331 


§  f)89J  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXXII. 

disregarded  under  §  2669  R.  S.  The  fact  that  the  plaintiff 
states  in  his  preliminary  proofs  under  oath  that  the  fire  was 
caused  by  X.  does  not  preclude  him  in  the  absence  of  fraud 
from  showing  at  the  trial  that  it  was  caused  by  Y}  The  in- 
sured may  show  that  the  death  was  by  accident,  although  she 
has  stated  in  her  proofs  of  loss  that  it  was  by  suicide.^] 

[§  587  B.  Court  and  Jury.  —  Whether  or  not  a  misrepre- 
sentation as  to  title  and  incumbrances  is  material  or  fraudu- 
lent is  for  the  jury,  and  must  not  be  withdrawn  from  thcm.^ 
Whether  inquiries  and  answers  in  the  application  are  material 
or  not  is  a  question  for  the  court.^  If  all  the  evidence  given 
and  inferences  to  be  drawn  are  not  legally  sufficient  to  estab- 
lish the  fact  in  issue,  it  is  not  to  be  left  to  the  jury  to  find  the 
fact.°  The  decisions  of  State  courts,  except  upon  points  aris- 
ing under  a  statute,  are  not  binding  on  United  States  courts  in 
ascertaining  the  meaning  and  effect  of  an  insurance  contract. 
But  the  law  of  the  State  will  govern  so  far  as  the  right  to 
maintain  an  action  at  common  law  is  concerned.^  It  is  no 
objection  to  a  special  juror  being  sworn,  in  an  action  against 
a  life  insurance  company,  that  he  is  a  director  in  another  com- 
pany unless  that  company  has  granted  an  unpaid  policy  to  the 
same  person  as  in  this  suitJ] 

§  588.  Pleading.  —  The  rules  of  pleading,  as  well  as  of  evi- 
dence, are  the  same  in  their  application  to  the  contract  of 
insurance  as  to  other  contracts,  though  these  are  to  a  greater 
extent  modified  by  local  laws.  These  modifications  it  is  not 
proposed  to  state.  Nor  is  it  proposed  to  consider  the  subject 
of  pleading  generally,  but  only  to  state  some  general  rules  of 
such  frequent  occurrence  in  practice  as  to  make  a  statement 
here  specially  convenient. 

§  589.  General  Statement  of  Plaintiffs  Case.  —  In  declaring 
upon  a  contract  of  insurance,  it,  or  so  much  of  it  as  will  show 

1  [Smiley  i:  Citizens'  Fire,  Mut.  &  Life  Ins.  Co.,  14  W.  Va.  33  at  40.] 

2  [Keels  V.  Mut.  Reserve  Fund  Ass.,  29  Fed.  Rep.  198  (S.  C),  1886.] 
8  [Bellatly  v.  Thomaston  Mut.  Fire  Ins.  Co.,  61  Me.  414  at  417.] 

4  [MuUin  V.  Vt.  Mut.  Fire  Ins.  Co.,  54  Vt.  223.] 

6  [Fay  V.  Alliance  Ins.  Co.,  16  Gray,  455  at  461.] 

6  [Sias  V.  Roger  Williams  Ins.  Co.,  9  Ins.  L.  J.  154,  1st  Cir.  N.  Y.  1880.] 

'  [Craig  V.  Fenn,  1  Car.  &  Mar.  43.] 

1332 


CH.  XXXII.]  REMEDIES,    EVIDENCE,    ETC.  [§  589 

a  right  to  recover,  must  be  set  out  in  terms  or  in  substance. 
The  rule  that  obtains  in  dcclarinji;  upon  a  penal  bond  at  com- 
mon law,  where  the  plaintiff  may  simply  count  on  the  bond, 
and  leave  the  defendant  to  set  up  the  condition  and  plead 
performance,  does  not  obtain  here.  [If  the  pleading  is  based 
on  an  instrument  required  to  be  in  writing,  it  will  be  subject 
to  demurrer  unless  a  copy  is  attached. ^  The  complaint  must 
exhibit  the  policy  or  a  copy  of  it.^  If  the  apj)lication  is  set  out 
in  hcec  verba,  as  part  of  the  declaration,  the  legal  elfect  is  the 
same  as  if  every  fact  therein  had  been  expressly  averred  in 
the  ordinary  way.^  If  the  application  is  made  part  of  the  pol- 
icy the  policy  is  not  admissible  in  evidence  without  the  appli- 
cation, if  it  is  in  the  power  of  the  party  to  produce  it.^  In 
Indiana  and  Michigan,  however,  there  is  authority  that  the  ap- 
plication need  not  be  set  out  though  made  a  part  of  the  policy 
by  reference.^]  As  in  cases  of  insurance  the  money  is  only 
recoverable  on  the  performance  of  certain  acts  by  the  insured 
and  the  existence  of  certain  facts,  the  performance  of  these 
acts  and  the  existence  of  these  facts  must  be  alleged.^     But 


1  [King  V.  Enterprise  Ins.  Co.,  45  Ind.  43  at  54.] 

2  [Ind.  Ins.  Co.  v.  Hartwell,  100  Ind.  566.] 

3  [Continental  Life  Ins.  Co.  v.  Rogers,  119  111.  474.] 

*  [Lycoming  Fire  Ins.  Co.  v.  Storrs,  97  Pa.  St.  354;  American  Underwriter's 
Ass.  V.  George,  id.  238.] 

5  [Continental  Life  Ins.  Co.  v.  Kessler,  84  Ind.  310 ;  Throop  v.  N.  A.  Fire  Ins. 
Co.,  19  Mich.  428,  439,  Christiancy,  J.,  dissenting,  because  he  rightly  deemed  it 
as  necessary  for  the  plaintiff  to  establish  his  compliance  with  such  warranties 
as  tlie  application  might  contain  as  with  any  other  warranties  pertaining  to  the 
contract.] 

6  [It  has  been  said  that  performance  of  conditions  must  be  specijicnily  averred. 
Perry  v.  Phoenix  Ass.  Co.,  8  Fed.  Rep.  643,  1st  Cir.  (R.  I.)  1881.  It  is  not  ne- 
cessary, liowever,  to  set  out  the  precise  words  of  each  condition  and  allege  per- 
formance in  detail.  Tripp  &  Bailey  v.  Insurance  Co.,  55  Vt.  100.  And  it  is 
usually  held  that  a  general  averment  that  the  plaintiff  has  performed  all  the 
conditions  of  the  policy  is  sufficient.  Commercial  Union  Ins.  Co.  v.  State,  113 
Ind.  331;  Amer.  Cent.  Ins.  Co.  v.  Sweetser,  116  Ind.  370;  Ferrer  v.  Home  Mut. 
Ins.  Co.,  47  Cal.  417  at  431  (statute).  But  when  the  policy  provides  that  the 
loss  shall  be  paid  sixty  days  after  due  notice  and  proof,  it  is  not  sufficient  to 
aver  in  the  declaration  that  "  all  the  conditions  of  the  policy  have  been  complied 
with."  This  shows  no  cause  of  action.  It  must  be  averred  that  the  sixty  days 
have  elapsed.  That  is  not  one  of  the  conditions  of  the  contract  within  the 
meaning  of  a  statute  permitting  the  general  pleading  of  performance  of  all  con- 

1333 


§  589]         INSURANCE  :    FIRE,  LIFE,   ACCIDENT,   ETC,       [CH.  XXXII. 

this  applies  only  to  conditions  and  facts  precedent.  Condi- 
tions subsequent  to  the  right  of  recovery,  and  all  acts  to  be 
done  by  the  insurers  in  discharge  of  their  liability,  may  be 
omitted  from  the  declaration,  and  left  for  the  insurers  to  set 
up  in  defence.^  And  upon  the  same  principle  it  has  been  held 
that  a  covenant  that  the  capital  stock  and  funds  of  the  com- 
pany should  be  subject  and  liable  to  make  good,  and  should  be 
applied  to  pay  and  make  good,  all  such  losses  and  damages 
as  might  happen  to  the  subject-matter  of  insurance  within  a 
certain  amount,  and  that  the  capital  stock  and  funds  of  the 
company  should  alone  be  liable,  is  an  absolute  covenant  on 
the  part  of  the  company  to  pay  the  sum  insured  when  a  loss 
should  happen  ;  and  it  is  not  necessary  to  aver  in  the  declara- 
tion the  sufficiency  of  the  capital  stock  and  funds,  that  being 
a  "matter  to  be  pleaded  by  the  insurers,  if  a  defence  at  all.^ 
[It  is  a  necessary  part  of  the  plaintiffs  prhna  facie  case  to 
show  that  he  furnished  proofs  of  death  to  the  company,  as 
required  by  the  policy.  He  shows  no  right  of  recovery  without 
such  evidence.^  The  plaintiff  must  plead  notice  of  loss  and 
proofs  or  waiver  of  them.^  The  giving  of  notice  and  proofs 
must  be  alleged  and  proved.^  Proof  as  to  waiver  of  notice  of 
loss  may  be  made  without  special  averment  in  the  pleading.^] 
The  weight  of  authority  seems  to  be  that,  under  an  allegation 

ditions.  Doyle  v.  Phoenix  Ins.  Co.,  44  Cal.  264  at  269  ;  Carberry  v.  German  Ins. 
Co.,  51  Wis.  605  at  609.  Tlie  petition  must  always  aver  the  lapse  of  the  time 
necessary  before  action  can  be  brought,  —  the  sixty  days  after  proof  or  other 
time  allowed  for  payment,  &c.  Von  Geneciitin  i-.  Citizens'  Ins.  Co.,  75  Iowa, 
544 ;  Cowan  v.  Phenix  Ins.  Co.,  78  Cal.  181.] 

1  Rockford  Ins.  Co.  v.  Nelson,  65  111.  415;  Home  Ins.  Co.  v.  Duke,  43  Ind. 
418;  Phcenix  Ins.  Co.  v.  Perkey,  92  111.  164;  Edgerly  v.  Farmers'  Ins.  Co.,  48 
Iowa,  644 ;  Campbell  v.  American  Pop.  Life  Ins.  Co.,  4  Am.  Law  Times  (U.  S.), 
6 ;  8.  c.  1  Big.  Life  &  Ace.  Ins.  Cas.  16 ;  Campbell  v.  New  England  Mut.  Life  Ins. 
Co.,  98  Mass.  381.  A  more  general  statement  seems  to  be  permissible  in 
Louisiana.  Mason  v,  La.  St.  Mar.  &  Fire  Ins,  Co.,  1  Rob.  (La.)  192;  Perry  j;. 
Phoenix  Ass.  Co.,  C.  Ct.  (U.  I.),  12  Reptr.  584. 

2  Sunderland  Mar.  Ins.  Co.  v.  Kearney  et  al.,  6  Eng.  L.  &  Eq.  812. 

3  [Schwarzbach  v.  Protective  Union,  25  W.  Va.  624,  667.] 

*  [Ind.  Ins.  Co.  v.  Capehart,  108  Ind.  270 ;  East  Texas  Fire  Ins.  Co.  v. 
Dyches.  56  Tex.  565;  Fire  Ins.  Ass.  v.  Miller,  2  Tex.  Civ.  Cas.  §  334;  McCor, 
mack  V.  North  Brit.  Ins.  Co.,  78  Cal.  468.] 

6  [Donalme  v.  Windsor  Co.  Mut.  Fire  Ins.  Co.,  56  Vt.  374.] 

6  [Schultz  V.  Merchants'  Ins.  Co.,  57  Mo.  331  at  336  (?).] 

1334 


CH.  XXXII.]  REMEDIES,   EVIDENCE,    ETC.  [§  590 

of  performance  of  a  condition,  proof  of  a  waiver  is  admissible 
without  alleging  the  waiver.^ 

§  590.  Special  Allegations  ;  Interest  ;  Survivorship  ;  Value  ; 
Compliance  -with  Statute  Requirements  ;  Negative  Allegations.  — 
The  plaintiff  must  aver  an  insurable  interest,  or,  if  he  has 
not  that,  the  grounds  upon  which  he  rests  his  right  to  sue.^ 
[The  ownership  of  the  property  both  at  the  time  of  insur- 
ance and  of  loss  must  be  showii.^  In  a  declaration  on  a  pol- 
icy which  on  the  face  of  it  has  no  words  to  show  it  not  to  be 
an  interest  policy,  it  is  not  necessary  that  the  plaintiff  should 
aver  an  interest  in  order  to  recover.^  Insurable  interest,  being 
an  essential  fact,  must  be  alleged.  Where  the  loss  is  payable  to 
a  mortgagee  "  as  his  interest  may  appear  "  the  complaint  must 
make  his  interest  appear.^  There  must  be  an  insurable  inter- 
est at  the  time  of  insurance  and  at  the  time  of  loss,  and  the 
plaintiff  must  show  that  he  is  entitled  to  assert  that  interest ; 
but  under  the  Alabama  code  it  is  not  necessary  that  the  com- 
plaint should  aver  either  of  these  facts.^]  In  Gilbert  v.  National 
Insurance  Company,'^  it  was  held  that,  as  the  statement  in  the 
policy  that  the  insured  premises  were  the  property  of  the 
plaintiff  did  not  amount  to  a  warranty,  the  declaration  need 
not  aver  such  ownership.^  Where  the  purchaser  or  assignee 
of  the  "  subject  insured  "  is  by  the  terms  of  the  policy  entitled 
to  sue,  his  declaration  should  show  that  he  has  the  whole 
interest.  To  allege  that  he  has  an  interest  is  not  sufficient.^ 
An  allegation  by  the  plaintiff  that  "  his  "  store  was  consumed 
is  a  sufficient  allegation  of  ownership  after  verdict ;  and  an 

1  Levy  V.  Peabody  Ins.  Co.,  10  W.  Va.  560,  and  cases  cited.  [Where  the 
declaration  averred  tliat  proofs  were  furnisiied,  and  the  evidence  showed  a 
waiver,  it  was  held  an  inomaterial  variance.  Penn  Fire  Ins.  Co.  v.  Dougherty, 
102  Pa.  St.  508.] 

2  Freeman  v.  Fulton  Ins.  Co  ,  ?S  Barb.  (N.  Y.)  247. 

3  [Phoenix  Ins.  Co.  v.  Benton,  87  Ind.  132.] 

1  [Nantes  v.  Thompson,  2  East,  386  at  394.] 

5  [Chrisman  v.  State  Ins.  Co.,  16  Orepron,  283.] 

6  [Commercial  Fire  Ins.  Co.  v.  Cap.  City  Ins.  Co.,  81  Ala.  320.] 
•  12  Irish  Law,  143. 

8  But  see  contra,  Illinois  Mut.  Fire  Ins.  Co.  v.  Marseilles  Manufacturing  Co., 
1  Gilm.  (111.)  2:)6. 

9  Granger  v.  Howard  Ins.  Co.,  5  Wend   (N.  Y.)  200. 

1335 


§  590]  INSURAiNCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXXII. 

omission  to  allege  the  value  of  the  property  lost  cannot  be 
objected  to ;  ^  otherwise  on  demurrer.^  [The  statement 
that  "  the  assured  did  sustain  loss  to  the  amount  of  $231.00 
by  reason  of  a  fire  in  above  described  premises  "  is  not  a  suf- 
ficient averment  on  a  policy  of  insurance.  It  should  be 
stated  that  the  loss  arose  from  injury  to  the  goods  insured.^] 
An  allegation  that  the  defendant  "  insured  the  plaintiff  to  the 
amount  of  three  thousand  dollars  on  ten  thousand  bushels  of 
oats,"  sufficiently  states  an  insurable  interest.*  Nor  need  the 
description  of  the  property  be  more  specific  than  that  con- 
tained in  the  policy.^  [The  house  burned  must  be  identified 
with  the  one  insured,  and  the  pleading  must  show  an  insurable 
interest  in  the  assured  at  the  time  of  fire,  and  that  the  prem- 
ises were  occupied  if  there  be  a  condition  against  vacancy,  but 
it  will  be  presumed  that  the  house  was  of  some  value.^j  The 
plaintiff  need  not  allege  that  the  defendants  —  a  foreign  in- 
surance company — have  complied  with  the  statutes  giving 
them  authority  to  transact  business  within  the  jurisdiction.' 
And  in  an  action  by  a  foreign  insurance  company,  non-com- 
pliance will  not  be  presumed,  but  must  be  set  up  in  defence.^ 
The  plaintiff  need  not  aver  the  truth  of  statements  contained 
in  the  application,^  nor  the  performance  or  non-performance 

1  Lane  v.  Maine  Mut.  Fire  Ins.  Co.,  12  Me.  44;  Insurance  Co.  v.  Seitz,  4  W. 
&  S.  (Pa.)  273;  New  Hampshire  Mat.  Fire  Ins.  Co.  v.  Walker,  10  Fost.  (N.  H.) 
,324;  Howard  Fire  Ins.  Co.  r.  Cornick,  24  111.  455;  Ferrer  v.  Home  Mut.  Ins.  Co  , 
47  Cal.416. 

2  Ibid. ;  Fowler  v.  New  York  Ind.  Ins.  Co.,  26  N.  Y.  422,  reversing  s.  c.  23  Barb. 
(N.  Y.)  143.  [The  value  at  the  time  of  loss  must  be  alleged.  Phoenix  Ins.  Co. 
V.  Benton,  87  Ind.  132.  But  when  the  pleader  sets  out  the  policy  which  men- 
tions in  detail  the  articles  insured  and  the  several  amounts  thereon,  and  then 
avers  an  interest  to  the  value  of  said  amounts  and  total  loss,  it  is  not  necessary 
to  mention  the  specific  articles  lost  or  their  value.  Phoenix  Ins.  Co,  v.  Perkey, 
92  III.  1G4  at  168.] 

3  [Rodi  V.  Rutgers  Ins.  Co.,  6  Bos.  23  at  24  ] 

4  Rising  Sun  Ins.  Co.  v.  Slaughter,  20  Ind.  520. 

5  Aurora  Fire  Ins.  Co.  v.  Jolmson,  46  Ind.  315. 

6  [iEtna  Ins.  Co.  v.  Black,  80  Ind.  513 ;  yEtna  Ins.  Co.  v.  Kittles,  81  Ind.  90 
(insurnble  interest).] 

7  Fitzsimmons  v.  City  Fire  Ins.  Co  ,  18  Wis.  234. 

8  Williams  r.  Cheney,  3  Gray  (Mass.),  215. 

9  Herron  v.  Peoria  Mar.  &  Fire  Ins.  Co.,  28  111.  235;  Germania  Fire  Ins.  Co. 

1336 


CH.   XXXII.]  REMEDIES,    EVIDENCE,    ETC.  [§  591 

of  conditions  subseiiuent,^  nor  negative  prohibited  acts,^  or 
allege  that  he  is  within  the  excepted  risks.^  [It  is  not  neces- 
sary to  aver  demand  of  payment  before  suit  brought,*  nor  to 
allege  that  the  loss  did  not  occur  through  fraud  or  evil  prac- 
tice on  the  part  of  the  plaintiff.^  An  omission  to  state  in 
pleading  that  the  company  has  power  to  make  contracts  of 
insurance  is  not  demurrable.^  When  a  condition  in  a  policy 
is  void  as  opposed  to  statute  law  it  is  needless  to  set  it  forth 
in  the  declaration  or  mention  it  in  any  way,  and  although  the 
stipulation  is  set  out  without  referring  to  the  statute,  it 
cannot  be  claimed  that  the  plaintiff  waived  the  benefit  of  the 
law.'  The  assured  is  not  bound  to  set  forth  and  prove  the 
truth  of  his  representations.^  When  to  a  declaration  on  a  pol- 
icy of  insurance,  the  defendants  pleaded  that  a  condition  as 
to  going  beyond  certain  limits  (which  condition  was  set  forth 
in  the  declaration)  had  been  broken,  the  court  refused  to  allow 
the  plaintiffs  in  replication  to  say  that  at  the  time  of  making 
the  policy  certain  places  not  mentioned  therein  were  also  ex- 
cepted, to  which  the  plaintiff  might  go.  An  equitable  re])li- 
cation  can  never  be  made  where  it  would  put  the  plaintiff  in 
a  better  position  than  if  the  matter  had  been  set  out  in  the 
declaration.^] 

§  591.  Matters  in  Defence ;  Breach  of  Warranty ;  Misrepre- 
sentation ;   Other  Insurance  ;  False  Swearing  ;  Fraud.  —  Matters 

V.  Curran,  8  Kans.  9 ;  ante,  §  577  ;  Pierlmnnt,  &c.  Ins.  Co.  v.  Ewing,  92  U.  S.  377 ; 
Union  Ins.  Co.  ;;.  McGookey  (Ohio),  8  Ins.  L.  J.  417. 

1  Ketchum  v.  Prot.  Ins.  Co,  1  Allen  (N.  B.),  136  ;  Forbes  v.  Am.  Mut.  Life 
Ins.  Co.,  15  Gray  (Mass.),  249;  ^tna  Ins.  Co.  v.  Phelps,  27  111.  71  ;  Kedman  v. 
JEtna.  Ins.  Co.,  49  Wis.  431.  [MaUers  of  defence,  e.  g.,  terms  of  the  policy  con- 
stituting conditions  subsequent,  exceptions  or  prohibitions,  need  not  be  set  out  by 
the  plaintiff.     East  Tex.  Fire  Ins.  Co.  r.  Dyches,  56  Tex.  505.]     Ante,  §  586. 

2  Hunt  V.  Hudson  River  Fire  Ins.  Co.,  2  Duer  (N.  Y.  Superior  Ct),  481 ;  Troy 
Fire  Ins.  Co.  v.  Carpenter,  4  Wis.  32. 

3  Lounsbury  v.  Prot.  Ins.  Co.,  8  Conn.  459 ;  Ferrer  v.  Home  Mut.  Ins.  Co.,  47 
Cal.  416. 

*  [Excelsior  Mut.  Aid  Ass.  v.  Riddle,  91  Ind.  84,  86.] 

6  [Bank  v.  German  Anier.  Ins.  Co.,  72  Wis.  535.] 

6  [Feeney  i:  People's  Fire  Ins.  Co.,  2  Rob.  599  at  600.] 

7  [Dolbier  v.  Agricultural  Ins.  Co.,  67  Me.  180  at  183.] 

8  [Herron  v.  Peoria  Mar.  &  Fire  Ins.  Co.,  28  111.  235  at  288.] 

9  CRees  V.  Scottish,  &c.  Assn.,  2  li.  &  N.  19  at  20.] 

1337 


§  591]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXXII. 

in  defence  cannot  be  availed  of  unless  pleaded.^  [If  it  is 
intended  to  show  that  death  resulted  from  "  intentional  in- 
juries," within  an  excepting  clause,  this  defence  must  be 
specially  pleaded.  It  cannot  be  put  in  under  an  answer  con- 
taining merely  a  general  denial.  "  Stipulations  added  to  a 
principal  contract,  which  are  intended  to  avoid  the  defendant's 
promise  by  way  of  defeasance  or  excuse,  must  be  pleaded  in 
defence."  ^  A  corporation  when  sued  cannot  plead  md  tiel 
corporation  unless  in  case  of  misnomer  or  dissolution.^  A 
condition  in  a  policy  that  ''  no  holder  shall  be  entitled  to  main- 
tain any  action  until  he  shall  have  oftercd  to  submit  to  a 
reference  "  cannot  be  set  up  as  a  defence  unless  set  forth  in 
the  specifications.'*  When  a  company  is  sued,  it  cannot  make 
any  objections  to  paying  losses  which  are  different  from  or 
additional  to  those  named  by  it  before  suit.-^  A  denial  that 
the  plaintiff's  loss  exceeded  $4000,  as  claimed  by  him,  is  not  an 
admission  of  any  part  of  his  claim.^  Irregularities  in  proceed- 
ings caused  by  the  company's  wrongfully  repudiating  its 
liability  will  not  avail  it  as  a  defence.']  In  setting  forth  the 
grounds  of  defence  it  is  not  enough  merely  to  negative  the 
trutli  of  a  declaration  or  performance  of  a  condition  in  the 
application  made  by  the  insured.  The  particulars  in  which 
the  untruthfulness  or  breach  consists  should  be  set  out  as  far 
as  can  reasonably  be  done,  that  the  plaintiff  may  have  some 
notice  of  what  he  is  to  meet.  Thus,  where  the  plaintiff  in 
his  application  stated  that  he  had  not  had  symptoms  of  gout, 
"  or  any  other  complaint,"  the  plea  that  he  had  had  symptoms 

1  Haskins  v.  Hamilton  Mut.  Ins.  Co..  5  Gray  (Mass.),  432;  New  York  Cen- 
tral Ins.  Co.  V.  Nat.  Prot.  Ins.  Co.,  20  Barb.  (N.  Y.)  468;  Sussex  County  Mut. 
Ins.  Co.  V.  Woodruff.  2  Dutch.  (N.  J.)  541 ;  Cassacia  v.  Phoenix  Ins.  Co.,  28  Cal. 
628;  Devendorf  v.  Beardsley,  23  Barb.  (N.  Y.)  656;  Mulrey  v.  Mohawk  Ins. 
Co.,  5  Gray  (Mass.),  541.  So  far  as  Phoenix  Ins.  Co.  v.  Lawrence,  4  Met.  (Ky.) 
9,  is  to  the  contrary,  it  is  obiter. 

2  [Coburn  ;;.  Travelers'  Ins.  Co.,  145  Mass.  226,  229.] 

3  [McCullough  V.  Talladega  Ins.  Co.,  46  Ala.  376  at  377.] 

*  [Dyer  v.  Piscataqua  Fire  &  Mar.  Ins.  Co.,  53  Me.  118  at  110.] 

5  [Castner  v.  Farmers'  Mut.  Fire  Ins.  Co.,  50  Mich.  273  ;  Richards  v.  "Wash- 
ington Fire  &  Mar.  Ins.  Co  ,  60  Mich.  420.] 

6  [Hiles  V.  Hanover  Fire  Ins.  Co.,  65  Wis.  585.] 

7  [Shiells  V.  Scottish  Ass.  Corp.,  26  Scot.  L.  R.  702.] 

1338 


CH.   XXXII.]  REMEDIE.-^,    EVIDENCE,    ETC.  [§  o91 

of  disease  of  the  stomach  was  lield  insufficient,  as  too  vague  ; 
and  it  was  said  that  while  the  court  would  not  tie  the  defend- 
ant down  very  strictly  at  the  trial,  he  must  honestly  do  his 
best  to  furnish  particulars.  The  particular  symptoms  should 
be  stated.^  So  where  misrepiesentation  of  title  or  breach 
of  warranty  is  alleged,  facts  from  which  the  court  can  see 
that  there  is  misrepresentation  or  breach  of  warranty  must  Ix? 
stated."^  So  a  plea  of  a  defective  fireplace  should  show  in 
what  the  defect  consisted,  and  that  it  was  material  to  the 
risk.^  And  a  plea  that  the  roof  is  defective  does  not  open 
the  question  of  defects  in  other  parts  of  the  building.*  A  plea 
of  other  insurance  should  state  the  particulars.'^  If  fraud 
is  alleged  in  defence,  it  should  show  that  the  fraud  was  com- 
mitted by  the  plaintiff  or  some  party  in  interest,^  and  in  what 
particulars.'  [Wilful  and  intentional  fraud  in  regard  to  a 
material  matter  will  avoid  the  contract.*  A  policy  obtained 
through  fraud  is  void  both  in  law  and  equity.^  But  evidence  of 
fraud  in  an  action  on  a  policy  can  only  be  admitted  if  specially 
pleaded.^^  If  the  assured  fraudulently  claims  more  than  is  due 
him,  he  can  recover  nothing."  When  the  company  pleaded 
that  they  had  reason  to  sus{>ect  the  loss  claimed  to  be  fraud- 
ulent, and  that  the  goods  claimed  to  be  destroyed  were  not.  all 
letters  appertaining  to  the  motive  of  the  insured  and  the  posses- 
sion of  the  goods  at  the  time  of  loss  are  admissible.^^  When  a 
person  is  induced  by  fraud  to  accent  a  policy  containing  a  certain 

I  Marshall  v.  Emperor  Life  Ass.  Co..  Law  Reports  (1  Q.  B.  Cas.).  35. 

-  Ken.  &  Lou.  Mut.  Ins.  Co.  •:.  Southard,  8  B.  Mon.  (Ky.)  ii>U  :  Merch.  & 
Manuf.  Mut.  Ins.  Co.  v.  Wash.  Mut.  Ins.  Co..  1  Handy  (Ohio),  408 ;  Aurora  Fire 
Ins.  Co.  V.  Johnson,  46  Ind.  315. 

3  Ibid. 

*  Newman  r.  Springfield  Fire  &  Mar.  Ins.  Co.,  17  Minn.  12-5. 

5  Ramsay  Woollen  Cloth  Manufacturing  Co.  r.  Mutual  Fire  Ins.  Co.,  11  U.  C. 
(Q.  B.)  516. 

6  Ferriss  r.  North  American  Fire  Ins.  Co.,  1  Hill  (N.  T.),  71. 
'  Ibid ;  Sterling  v.  Mercantile  Mut.  Ins.  Co.,  32  Pa.  St.  75. 

^  [Insurance  Co.  r.  Hughes,  10  Lea  (Tenn),  401.] 
9  [Wittingham  r.  Thornborough.  2  Vern.  206.] 
1^  [Flynn  c.  Merch.  Mut.  Ins.  Co.,  17  La.  Ann.  135  at  136.] 

II  [Britton  r.  Royal  Ins.  Co.,  4  F.  i  F.  905  at  900 ;  Huchberger  r.  Merchants' 
Ins.  Co.,  4  Biss.  265  at  266.] 

^  [Brugnot  r.  La.  St.  Mar.  &  Fire  Ins.  Co.,  12  La.  326  at  331.] 

1339 


§  591]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXXII. 

condition  whose  breach  shall  invalidate  it,  he  cannot  after  such 
a  breach  sue  on  the  contract,  on  the  failure  of  the  company  to 
pay  the  proceeds  to  him.i  A  conspiracy  to  get  insurance  on 
fictitious  property  will  of  course  if  shown  avoid  the  policy.^ 
An  allegation  of  fraud  in  inducing  the  insured  to  surrender 
his  policy  cannot  be  sustained  where  he  had  full  opportunity 
to  ascertain  the  facts.^  A  company's  refusal  to  insure  docs  not 
make  it  fraud  to  take  a  policy  from  its  agent  a  few  weeks  later.* 
Parol  evidence  is  competent  to  show  fraud  on  the  agent's  part, 
inducing  the  plaintiff  to  insure,  and  keeping  him  in  ignorance 
of  the  conditions  of  the  pohcy.^  One  who  in  fraud  buys  the 
assignment  of  an  insurance  policy  knowing  it  to  be  a  specu- 
lative contract  cannot,  after  failing  to  make  the  company  pay, 
come  into  court  to  recover  the  consideration  he  paid  the  fraud- 
ulent assignor.^  It  makes  no  difference  whether  one  states 
that  which  he  knows  to  be  false  or  asserts  as  truth  that  of  which 
he  has  no  knowledge."  Fraudulent  representations  of  an  agent 
as  to  his  abilities  and  work  in  previous  companies  is  a  good 
defence  to  an  action  by  him  for  his  salary .^  But  where  the 
company  had  examined  the  books  of  the  agent  showing  his  past 
work,  the  jury  is  at  liberty  to  infer  that  the  company  did  not 
act  on  the  agent's  representations,  but  on  the  examination.] 

A  plea  of  false  swearing  relates  to  the  preliminary  proof,  and 
must  show  where,  and  before  whom, the  oath  was  taken,  and  in 
what  particulars  it  is  false.^  [Proof  of  false  swearing  may  be 
given  under  a  plea  of  nil  debet  in  an  action  of  debt  on  a  policy .i<' 
False  swearing  must  be  proved  affirmatively,  and  the  proofs  of 
loss  may  be  a  part  of  such  evidence. ^^    The  plaintiff  may  testify 

1  [Tebbetts  v.  Hamilton  Mut.  Fire  Ins.  Co.,  3  Allen  (Mass.),  569  at  569.] 

2  [Plioenix  Ins.  Co.  i-.  Moog,  78  Ala.  284.] 

3  [Hencken  v.  U.  S.  Life  Ins.  Co.,  11  Daly,  282.] 
*  [Body  1-.  Hartford  Fire  Ins.  Co.,  63  Wis.  157.] 

5  [McKenzie  v.  Planter's  Ins.  Co.,  9  Heisk.  261  at  267.] 

6  [Blattenberger  r.  Holman,  103  Pa.  St.  555,  558  (1883).] 

7  [Evans  v.  Edmonds,  13  C.  B.  777  at  785.] 

8  [Barker  r.  Knickerbocker  Life  Ins.  Co.,  24  Wis.  630.] 

9  Ketchum  r.  Prot.  Ins.  Co.,  1  Allen  (N.  B.),  136 ;  Clay  Fire,  &c.  Ins.  Co.  v. 
Wusterliausen,  75  111.  285. 

w  [Phoenix  Ins.  Co.  v.  Munday,  5  Cold.  547  at  554.] 

11  [Phoenix  Ins.  Co.  v.  Munday,  5  Cold.  (Tenn.)  547  at  552.] 

1340 


CH.  XXXII.]  REMEDIES,   EVIDENCE,   ETC.  [§  591  A 

as  to  how  much  he  tliinks  his  loss  may  be,  and  the  fact  that  it 
is  proved  to  be  one-half  less  is  not  presumptive  evidence  of  false 
swearing.^  A  claim  that  property  lost  is  the  assured's  when 
in  fact  it  belonged  to  other  members  of  the  family,  if  made 
bona  fide,  is  not  '■  false  swearing."  ^  The  fraud  or  false  swear- 
ing pleaded  to  defeat  a  policy  must  be  alleged  to  be  mate- 
rial and  wilful.^] 

[§  591  A.  Ultra  Vires.^  —  A  company  is  not  estopped  from 
setting  up  the  plea  of  ultra  vires  because  its  agent  made  the 
insured  believe  that  it  was  within  the  company's  power. ^ 
If  the  law  prohibits  town  insurance  companies  from  in- 
suring school-houses  without  a  majority  vote  of  the  members, 
a  policy  without  such  vote  is  void,  and  a  policy  issued  on 
a  dwelling-house  becomes  void  if  it  is  turned  into  a  school- 
house  and  no  such  vote  is  obtained.*^  When  a  company  is 
authorized  to  insure  where  the  member  has  a  fee  simple  or 
a  less  estate  specified  in  the  policy,  a  violation  of  this  pro- 
vision by  issuing  a  policy  to  a  husband  on  his  wife's  realty 
stated  to  be  his  in  fee,  makes  the  policy  ultra  vires  and  void 
in  its  inception,  and  no  assignment  or  waiver  can  render 
it  valid.  7  The  "  Hull  and  London  Fire  Insurance  Company  " 
had  general  authority  to  transact  marine  insurance,  but  the 
charter  provided  that  in  every  policy  the  funds  of  the  com- 
pany alone  should  be  liable.  They  started  a  marine  branch 
and  had  their  policies  headed  "H.  &  L.  Marine  Co.,"  but 
there  was  no  stipulation  in  them  that  the  funds  of  the  com- 
pany alone  should  be  liable,  and  therefore  even  bona  fide  ship 
insurers  could  not  recover  on  their  policies  because  they  were 
idtra  vires  the  charter.^  But  a  company  which  knowingly 
issues  a  policy  to  one  under  the  age  required  by  its  by-laws 


1  [linger  v.  People's  Fire  Ins.  Co.,  4  Daly,  96  at  98.] 

2  [Farmers'  Mut.  Fire  Ins.  Co.  v.  Gargett,  42  Mich.  289  at  293] 

8  [Sleeves  v.  Sovereign  Fire  Ins.  Co.,  20  U.  B.  R.  394 ;  Insurance  Co.  v.  Starr, 
71  Tex.  733.] 

*  [See  §  577,  &  ch.  4.] 

5  [Webster  ;■.  Buffalo  Ins.  Co  ,  7  Fed.  Rep.  399;  2  McCrary,  348  (Mo.),  1881.] 

6  [Luthe  V.  Farmers'  Mut.  Fire  Ins.  Co.,  55  Wis.  543.] 

7  [Froehly  v.  North  St.  Life  Ins.  Co.,  32  Mo.  App.  302.] 

8  [Hambro  v.  Hull,  &c.  Ins.  Co.,  3  H.  &  N.  789.] 

1341 


§  592]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXXII. 

cannot  avail  itself  of  such  defence,  i  When  a  charter  of  an 
insurance  company  gives  the  power  of  insuring  to  the  direc- 
tors, and  provides  that  they  divide  all  risks  into  four  classes 
and  assign  each  policy  to  its  proper  class ;  and  where  a  by- 
law defined  the  kind  of  property  to  be  assigned  to  each  class ; 
and  when  with  a  full  knowledge  of  the  facts  the  directors 
insured  A  in  the  third  class  when  he  properly  belonged  in  the 
fourth,  —  it  was  held  that  though  the  act  was  irregular  on  the 
director's  part,  yet  the  policy  was  not  void.^  Defects  which 
make  a  contract  ultra  vires  cannot  be  waived  by  the  officers 
of  the  company.  3  But  a  member  sued  for  an  assessment  can- 
not set  up  the  invalidity  of  the  charter  of  the  company,  or 
the  ultra  vires  character  of  his  contract.*] 

[§  591  B.  New  Trial.  —  If  the  Company  discover  new  evi- 
dence enabling  them  to  prove  that  the  insured  died  from  de- 
lirium tremens,  they  may  maintain  a  bill  in  equity  to  set 
aside  the  judgment  and  obtain  a  new  trial.  ^  Where  the  in- 
sured endeavored  to  prove  a  waiver  by  showing  against  ob- 
jection that  they  had  sent  to  the  company  a  registered  letter 
for  a  premium  instalment  falling  due  after  the  loss,  and  on 
motion  for  a  new  trial  it  appeared  that  the  company  had 
])romptly  returned  the  letter,  but  that  this  fact  was  unknown 
to  the  company's  attorney  at  the  trial,  it  was  held  that  a  new 
trial  should  have  been  granted.  6] 

§  592.  Bankruptcy  and  Insolvency  ;  Conflict  of  Laws.  —  An 
insurance  company  is  a  "business  or  commercial  corpora- 
tion "  within  the  meaning  of  the  bankrupt  laws  of  the  United 
States,  and  if  it  commits  acts  of  bankruptcy,  may  be  de- 
clared bankrupt  like  a  natural  person."  This  case  gave  rise 
to  an  interesting  question  of  jurisdiction.  After  the  act  of 
bankruptcy,  the  company  was  declared  insolvent  under  the 

1  [Gray  v.  National  Ben.  Ass ,  111  Ind.  531.] 

2  [Union  Mut.  Fire  Ins.  Co.  v.  Keyser,  32  N.  H.  313  at  316.] 

3  [Froelily  v.  North  St.  Life  Ins.  Co.,  32  Mo.  App.  302,  312.] 

*  [Freeland  v.  Pa.  Cent.  Ins.  Co.,  94  Pa.  St.  504.] 

5  [Trefz  V.  Knickerbocker  Life  Ins.  Co.,  10  Ins.  L.  J.  590  (N.  J.),  1881.] 

6  [Continental  Ins.  Co.  v.  Hillmer,   18  Ins.  L.  J.  691  (Ivans.),  Jan.  5,  1889.] 

•  Reed  v.  Independent  Ins.  Co.,  Cir.  Ct.  U.  S.  Mass.  Dist.,  1872,  Shepley,  J.. 
1  Ins.  L.  J.  735 ;  Knickerbocker  Ins.  Co.  v.  Comstock,  16  WaU.  (U.  S.)  258. 

1342 


CH.  XXXII.]  REMEDIES,   EVIDENCE,    ETC.  [§  598 

insolvent  laws  of  Massachusetts,  under  proceedings  in  the 
courts  of  that  State,  enjoined  from  further  doing  business, 
and  at  a  subsequent  date  a  receiver  vras  appointed,  and  the 
corporation  itself  adjudged  and  decreed  to  be  dissolved.  On 
a  petition  in  bankruptcy  subsequently,  it  was  claimed  that 
the  corporation  was  defunct,  and  could  not  answer  or  be 
dealt  with.  But  the  court  held  that  the  insolvent  laws  of 
Massachusetts  were  suspended,  after  the  passage  of  the  bank- 
rupt law,  as  to  all  matters  to  which  the  latter  applied,  and 
therefore  the  proceedings  in  insolvency  in  the  courts  of 
Massachusetts  were  ineffectual  and  nugatory;  and  that  irre- 
spective of  those  statutes,  or  of  some  other  statute  authority, 
the  courts  of  Massachusetts  had  no  more  right  to  annul  the 
existence  of  the  corporation  than  they  would  have  to  take  the 
life  of  a  natural  person.  ^  A  mutual  life  insurance  company 
was  also  held  to  be  a  "  business "  corporation  within  the 
meaning  of  that  act  in  the  United  States  District  Court  for 
the  Southern  District  of  New  York.^  [An  assignment  to  a 
receiver  by  order  of  the  court  of  the  domicil  of  the  company 
passes  promissory  notes  of  debtors  residing  in  other  States, 
and  takes  priority  over  an  attachment  subsequently  levied  by 
creditors  in  the  State  of  the  debtors.^] 

§  593.  Bankruptcy  ;  Status  of  the  Company.  —  After  adju- 
dication of  bankruptcy  the  court  has  exclusive  jurisdiction 
over  the  estate  and  assets  of  the  bankrupt  corporation,  and 
is  vested  with  all  the  power  and  control  previously  vested  in 
either  the  chartered  officers  of  the  company  or  stockholders, 
or  both  collectively,  over  the  same,  and  can  make  any  assess- 
ment or  call  necessary  for  the  collection  of  the  assets  as 
fully  as  the  stockholders  or  directors  could  have  done.  And 
if  the  notes  given  by  the  stockholders,  as  and  for  the  capital 
stock,   have  not  been  paid,    any  balance  remaining   unpaid 

1  The  learned  judge  cited,  amongst  otiier  cases,  Folger  v.  Columbian  Ins. 
Co.,  99  Mass.  267;  Hayward  v.  Fulcher,  Sir  William  Jones  (folio),  166;  Dean 
and  Chapter  of  Norwich,  Coke,  part  3,  75  a.  The  real  question,  however,  in  this 
case  was  whether  the  insurance  company  was  within  the  meaning  of  the  Bank- 
rupt Act  of  1867. 

-  In  re  Hercules  Mut.  Life  Ass.  Soc,  1  Ins.  L.  J.  875. 

3  [Taylor  v.  Life  Ass.  of  Amer.,  13  Fed.  Rep.  493  (Tenn.),  1882.f 

VOL.  II.— 41  1343 


594"'  INSUEANCE  :    FIRE,   LIFE,    ACCIDENT,   ETC.       [CH.  XXXII. 


may  be  called  in  by  order  of  court,  notwithstanding,  by  the 
terms  of  the  subscription  and  by  the  certificate  of  stock,  that 
balance  is  to  be  paid  on  the  call  of  the  directors  when  or- 
dered by  the  stockholders.     And  such  call  is  conclusive  as 
to  its  amount  and  propriety,  and  cannot  be  questioned  in  a 
collateral  suit,  or  in  a  suit  on  the  note.     Nor  can  the  defence 
of  false  representation  as  to  the  character  and  prospects  of 
the  company  be  set  up  as  against  the  assignees  who  repre- 
sent the  creditors,  though  that  might  have  been  good  had  it 
been  availed  of  before  the  adjudication.     Nor  can  it  avail 
that  the  directors  voted  to  release  the  stockholders  from  the 
payment  of  any  outstanding  balance  due  on  their  stock  notes, 
and  caused  them  to  be  stamped  unassessable.     Such  a  vote 
is  inoperative  as  to  creditors  and  those  who  insured  in  the 
company  without  knowledge  of  the  fact.     And  the  purchaser 
of  a  certificate,  who  surrenders  it  and  has  one  issued  to  him- 
self, succeeds  to  the  rights  and  the  liabilities  of  the  holder 
of   the  certificate  which   he  purchased,   and  of   an  original 
stockholder,  and  the  acceptance  of  a  partly  unpaid   certifi- 
cate carries  with  it  an  implied  obligation  to  pay  the  balance. 
In  making  the  call  for  an  assessment  it  is  discretionary  with 
the  court  whether  to  give  notice,   and  the  stockholders  are 
so  far  parties  to  the  bankrupt  proceedings  as  to  be  bound 
thereby  without  notice.  ^     But  an  insolvent  company  cannot 
compel  the  payment  of  continued  premiums  for  a  protection 
which  it  cannot  give ;  ^  and  a  renewal  premium  forwarded  to 
the  agent  but  not  paid  over  to  the  company  may  be  recovered 
from  the  agent.  ^ 

§  594.  Bankruptcy  and  Insolvency  ;  Powers  and  Duties  of 
Assignee  and  Receivers  ;  Status  of  Policy-holder.  —  The  bank- 
ruptcy of  an  insurance  company  does  not  necessarily  re- 
lease the  policy-holder  from  the  obligations  of  his  contract ; 
and  whatever  remains  incomplete  at  the  time  of  the  adjudi- 
cation of  bankruptcy  passes  over  to  be  acted   upon  by  the 

1  Upton  V.  Hansbrongh,  U.  S.  Dist.  Ct,  North  Dist.  111.,  January  Terra, 
1873,  5  Chicago  Legal  News,  "242.     An  elaborate  and  well-considered  case. 

2  Farmers',  &c.  Ins.  Co.  v.  Smith,  53  111.  187. 

3  Smith  V.  Binder,  75  111.  492. 

1344 


CH.  XXXII.]  REMEDIES,    ETIDENCE,    ETC.  [§  594 

court  which  represents  the  company  and  succeeds  generally 
to  its  rights.  The  member  of  a  mutual  insurance  company 
may  still  be  liable  to  assessments  on  his  premium  notes,  and 
the  member  of  a  stock  company  to  assessments  on  his  stock. 
The  assignee  has  not  the  original  powers  of  the  company. 
He  is  an  officer  of  the  court  and  a  trustee  of  the  creditors, 
and  cannot  waive  the  performance  of  conditions,  whether 
limiting  time  within  which  action  may  be  brought  or  other- 
wise, which  the  company  might  have  done.  And  it  is  his 
duty,  where  proofs  have  been  furnished  and  losses  adjusted 
before  adjudication,  to  revise  the  same,  if  he  has  reason  to 
believe  there  is  any  equitable  ground  for  such  revision,  and 
he  may  affirm  what  appears  clearly  to  have  been  done  or  ac- 
cepted by  the  company  in  the  way  of  adjustment  or  proof  of 
loss.  But  if  that  which  has  been  done  would  not  have  con- 
cluded the  company,  he  can  give  it  no  additional  force  by  his 
affirmance.  1  Nor  can  the  corporation  or  receiver  pay  losses 
arising  after  injunction  and  sequestration.^  Several  of  the 
States  have  passed  special  statutes  relative  to  the  insolvency 
of  insurance  companies,  differing  in  particulars,  but  substan- 
tially alike.  In  New  York,  the  receiver,  who  is  an  officer 
of  the  court  placed  in  charge  of  the  property,  may  sue  in  his 
own  name.  In  Massachusetts,  the  corporation  is  not  dis- 
solved merely  by  the  insolvency  proceedings,  and  the  receiver 
sues  in  the  name  of  the  company.  In  New  York,  — and  the 
same  is  doubtless  true  of  other  States,  —  the  receiver  takes 
the  place  of  the  directors  in  the  settlement  of  the  affairs  of 
the  company,  under  the  direction  of  the  court,  and  all  his 
acts  must  have  the  sanction  of  the  court.  Both  he  and  the 
creditors  are  under  the  jurisdiction  and  control  of  the  court.  ^ 

1  In  re  Fireman's  Ins.  Co.,  U.  S.  Dist.  Ct.,  North  Dist.  111.,  January,  1873,  5 
Chicago  Legal  News,  253;  Upton  v.  Jackson  (C.  Ct.  Mich.),  4  Ins.  L.J.  189. 
See  also  Com.  v.  Mass.  Mut.  Ins.  Co.,  112  Mass.  116  ;  Com.  v.  Dorcliester  Mat. 
Ins.  Co.,  112  Mass.  142  ;  s.  c.  3  Ins.  L.  J.  1 ;  Michenor  v.  Payson,  C.  Ct.  (Pa.), 
5  id.  116 ;  Upton  v.  Tribilcock,  91  U.  S.  45 ;  s.  c.  5  Ins.  L.  J.  96 ;  Sanger  v.  Up- 
ton, C.  Ct.  (111.),  6  id.  618  ;  Atty.-Gen.  v.  N.  A.  Ins.  Co.  (N.  Y.),  9  id.  849  ;  Upton 
V.  Englehart,  C.  Ct.  (Iowa),  3  id.  743;  Hone  c.  Allen,  1  Sandf.  (N.  Y.)  171,  n. ; 
s.  c.  and  others,  2  Ben.  Fire  Ins.  Cas.  597  et  seq. 

-  Commonwealth  r.  Mass.  Mut.  Ins.  Co.,  nbi  supra. 

3  Rinn  v.  Astor  Fire  Ins.  Co.,  59  N.  Y.  143. 

1345 


§  594]  INSURANCE :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXXII. 

In  making  assessments,  however,  he  must  show  the  existence 
of  the  same  facts  and  circumstances  which  would  authorize 
an  assessment  by  the  directors  if  the  company  were  not  in- 
solvent.    He  derives  no  additional  powers  from  the  fact  of 
insolvency,   and  can  maintain  suits  and  recover  thereon  as 
and  only  as  the  directors  might  have  done.i     Although,  in 
general,  he  has  no  greater  power  than  the  directors  had,  yet 
he  may  call  in  the  unpaid  stock  for  the  benefit  of  creditors, 
to   pay  all   debts   and   legal    liabilities,    if   necessary,  even 
though  the  company,  had  it  not  been  thrown  into  bankruptcy, 
might  have   been  able  under  its  charter  to  collect  only  so 
much  as  might  be  necessary  to  pay  "  losses  "  proper,  as  dis- 
tinguished from  liabilities. 2     Nor,  when  bankruptcy  proceed- 
ings have  commenced,   can  creditors,    in  equity  or  at  law, 
enforce  their  claims  against   the  stockholders  individually. 
Their  remedy,   whether  for  the  payment  of  their  claims  or 
against  unjust  assessments,  is  in  the  bankruptcy  court,  where 
the  estate  of  the  company  is,  and  where  all  questions  between 
the  respective  parties  in  interest  are  to  be  determined. ^     Be- 
ing an  officer  of  court,  he  is  not  suable  at  law  in  any  process, 
judgment  wherein  would  effect  the  custody  of  the  property. 
The  receiver's  possession  is  the  possession  of  the  court,  and 
any  disturbance  of  that  possession  would  be  a  contempt  of  its 
authority.  4     As  we  have   just  seen  that   in  bankruptcy  the 

1  Savage  v.  Medbury,  19  N.  Y.  32  ;  Devendorf  v.  Beardsley,  23  Barb.  (N.  Y.) 
656;  Thomas  v.  Whallon,  31  id.  172;  Shaughnessy  v.  Rensselaer  Ins.  Co.,  21 
id.  605 ;  Sands  v.  Hill,  42  id.  651  ;  Furniss  v.  Sherwood,  3  Sandf .  (N.  Y.  Supe- 
rior Ct.)  521;  Brouwer  i-.  Hill,  1  Sandf.  (N.  Y.  Superior  Ct.)  629;  In  re  Globe 
Ins.  Co.,  6  Paige  (N.  Y.),  Ch.  102. 

2  Payson,  Ass.,  v.  Stoever  (U.  S.  C.  Ct.  Dist.  of  Minn),  2  Ins.  L.  J.  733; 
Ogilvie  V.  Knox  Ins.  Co.,  22  How.  (U.  S.)  380. 

3  Payson,  Ass.,  v.  Stoever,  ubi  supra.  In  this  case,  it  was  held  that  a  stock- 
holder, who  had  ignorantly  subscribed  to  stock  which  was  illegally  issued,  but 
was  afterwards  legalized  by  legislative  enactment,  was  held  to  be  liable  to  as- 
sessment thereon,  it  appearing  that  he  received  dividends,  and  that  at  a  regular 
annual  meeting  of  tlie  stockholders,  at  which  he  might  have  been  present,  it 
was  voted  further  to  increase  the  capital  stock,  although  he  had  in  fact  no  pre- 
vious knowledge  of  the  illegality,  nor  of  the  legislative  action  thereto,  prior  to 
the  suit  brought  to  enforce  the  claim  against  him.  And  see  also  Payson  v.  With- 
ers, U.  S.  C.  Ct.,  Dist.  of  Ind.,  2  Ins.  L.  J.  599  ;  s.  c.  5  Chicago  Legal  News,  445. 

*  Spinning  v.  Ohio  Life,  &c.  Co.,  2  Dist.  Sup.  Ct.  Cincinnati,  336. 

13-46 


CH,  XXXII.]  REMEDIES,    EVIDENCE,   ETC.  [§  594  a 

assignees  have  not  the  full  discretionary  powers  of  the  direc- 
tors, so  in  insolvency  the  receiver,  being  a  trustee,  has  no 
right  to  waive  proofs  of  loss,  and,  upon  the  same  grounds, 
doubtless  no  right  to  waive  the  Statute  of  Limitations,  or 
other  legal  defence.  ^  An  assignment  by  the  act  of  the  parties 
clothes  the  assignee  with  no  powers  not  rightfully  given  by 
the  deed  of  assignment ;  and  this  does  not  include  the  power 
to  make  assessments,  and  the  like  powers  held  by  the  corpo- 
ration. Such  powers  are  not  transferable. '^^  [The  only  in- 
terest in  a  life  policy  that  passes  to  the  assignee  of  a  bankrupt 
is  the  surrender  value  of  the  policy  at  the  time  of  the  bank- 
ruptcy.^ The  right  of  an  insolvent  debtor  in  a  life  policy 
payable  if  he  survives,  at  a  day  certain  after  the  day  of  publi- 
cation of  notice,  passes  to  the  assignee  in  insolvency.*  If  a 
policy  for  five  years  is  issued  on  payment  of  the  first  year's 
premium  and  a  note  payable  in  yearly  instalments  for  the 
rest,  and  the  company  fails  in  a  few  months,  the  note  cannot 
be  enforced,  for  the  consideration  of  it  fails. ^  The  receiver 
of  an  insolvent  company  who  continues  to  use  the  premises 
formerly  occupied  by  the  company  is  liable  for  the  rent.^j 

§  594  a.  Insolvency ;  Distribution  of  Assets  ;  Priority  of 
Claims.  —  [The  receiver  is  entitled  to  compensation  for  labor 
and  expenses,  and  the  rest  of  the  assets  go  to  the  creditors.^] 

1  Evans  v.  Trimountain  Mut.  Fire  Ins.  Co  ,  9  Allen  (Mass.),  329 ;  In  re  Fire- 
man's Ins.  Co.,  ub'i  supra;  MeEvers  v.  Lawrence,  Hoffman  (N.  Y.),  Ch.  172. 

2  Hurlbut  V.  Carter,  21  Barb.  (N.  Y.)  221. 

3  [In  re  MoKinney,  15  Fed.  Rep.  535  (N.  Y.),  1883.] 

4  [Bassett  v.  Parsons,  140  Mass.  169.] 

s  [Home  Ins.  Co.  v.  Daubenspeck,  115  Ind.  306] 

6  [People  V.  Universal  Life  Ins.  Co.,  30  Hun,  142] 

^  [On  the  question  of  compensation  of  receivers  of  msolvent  life  insurance 
companies,  see  act  of  1869,  c.  902,  §  13;  Attorney-General  v.  North  Am.  Life 
Ins.  Co.,  89  N.  Y.  94 ;  People  v.  McCall,  94  N.  Y.  587  ;  Attorney-General  v.  North 
Am.  Life  Ins.  Co.,  26  Hun,  294 ;  In  re  Security  Life  Ins.  &  Annuity  Co.,  31  Hun, 
oG  ;  People  v.  Knickerbocker  Life  Ins.  Co.,  31  Hun,  622;  Attorney  General  v. 
Continental  Life  Ins.  Co.,  .32  Hun,  223;  In  re  Commonwealth  Ins.  Co.,  32  Hun, 
78  ;  Attorney-General  v.  Guardian  Life  Ins.  Co.,  93  N.  Y.  631.  A  referee  ap- 
pointed to  take  proofs  and  report  upon  the  claims  of  a  receiver  for  compensation 
and  expenses,  may  himself  be  compensated  out  of  the  company's  funds,  in  the 
discretion  of  the  court.  Attorney-General  v.  Continental  Life  Ins.  Co.,  93  N.  Y. 
45.     Policy-holders  intervening  to  reduce  the  compensation  claimed  by  the  re- 

1347 


§594 a]      insurance:  fire,  life,  accident,  etc.     [ch.  xxxii. 

The  creditors  of  an  insolvent  company  all  stand  alike,  each 
without  priority  of  claim  over  the  other,  without  reference 
to  the  date  when  the  claims  accrue,  unless  before  the  insol- 
vency there  is  a  lien  on  or  a  specific  appropriation  of  funds 
for  the  payment  of  a  particular  claim,  i  Unless  there  is  such 
an  appropriation  to  pay  a  declared  dividend,  stockholders 
must  forego  it,  and  go  in  with  the  general  creditors.  2  The 
policy-holders  in  an  insolvent  stock  company  are  not  part- 
ners, but  creditors,  with  claims  for  damages  for  a  breach  of 
their  several  contracts.  These  damages  are  the  net  value 
of  the  policies,  without  regard  to  the  health  of  the  holders, 
less  outstanding  premium  notes.  And  it  was  also  held,  in 
the  same  case,  that  unmatured  paid-up  policies  should  fare  no 
better  than  the  others ;  that  death  claims  maturing  prior  to 
the  insolvency  were  entitled  to  no  preference ;  and  that  losses 

ceiver  of  an  insolvent  company  cannot  be  allowed  expenses  and  counsel  fees 
out  of  the  assets.  Attorney-General  v.  North  Am.  Life  Ins.  Co.,  91  N.  Y.  57.  But 
wlien  an  insurance  company  is  served  with  an  order  to  show  cause  why  a  receiver 
should  not  be  appointed,  if  the  officers  have  reasonable  grounds  to  believe  the 
company  solvent,  it  is  their  duty  to  oppose  such  order,  and  reasonable  expenses 
incurred  are  to  be  allowed  them  in  the  discretion  of  the  court,  but  services  of  an 
attorney  to  the  company  after  the  appointment  of  a  receiver  constitute  no  le- 
gal clami  against  the  receiver  or  the  funds  in  his  hands.  Barnes  v.  Newcomb, 
89  N.  Y.  108.  Creditors  of  an  insolvent  company  intervening  in  proceedings 
instituted  by  the  receiver,  cannot  have  their  counsel  fees  out  of  the  assets. 
Attorney-General  v.  Continental  Life  Ins.  Co.,  27  llun,  195.] 

'  [A  lien  or  priority  among  policy-holders  can  only  arise  by  statute  by-law, 
or  contract.  Taylor  v.  Life  Ass.  of  Am.,  13  Fed.  Hep.  493  (Tenn.),  1882.  Claim- 
ants of  unearned  premiums  and  surrender  values  stand  on  an  equality  with  gen- 
eral creditors.  Carr  v.  Union  Mat.  Fire  Ins.  Co.,  33  Mo.  App.  291.  Claims 
founded  on  losses  occurring  before  dissolution  have  no  priority  above  policies 
running  at  that  time.  Kelfe  v.  Columbia  Life  Ins.  Co.,  76  Mo.  594.  Funds 
arising  on  a  general  contract  of  re-insurance  are  to  be  distributed  among  all 
the  creditors  of  the  re-insured  company'  if  it  is  insolvent.  A  particular  con- 
tract of  re-insurance  may  be  made  for  the  indemnity  of  the  individuals  whose 
risks  are  re-insured,  but  if  the  agreement  is  general,  all  the  creditors  come  in 
for  a  share  of  the  proceeds.  Goodrich's  Appeal,  109  Pa.  St.  523.  The  assets 
of  a  mutual  company  are  a  trust  fund  to  pay  mortuary  benefits,  and  where  tliere 
is  sucli  a  purpose  to  which  tliey  may  be  applied,  the  directors  cannot  apply  them 
to  cover  advances  made  by  tliemselves  upon  a  prior  death-claim  for  wliich  they 
might  have  made  an  assessment.  As  to  such  advances  they  come  in  as  ordi- 
nary creditors.     Wilber  v.  Forgeson,  24  Brad.  119.] 

2  Lowene  v.  Am.  Fire  Ins.  Co.,  6  Paige  (N.  Y.),  Ch.  482  ;  DePeyster  v.  Am. 
Fire  Ins.  Co.,  id.  486. 
1348 


CH.  XXXII.]  REMEDIES,    EVIDENCE,   ETC.  [§  594  a 

happening  prior  to  the  expiration  of  the  time  for  the  pre- 
sentation of  claims  were  entitled  to  be  treated  as  matured.  ^ 
[Policy-holders  are  entitled  to  claim  the  surrender  value  of 
their  policies  calculated  according  to  the  American  Tables 
of  Mortality,  of  which  the  courts  will  take  judicial  notice. ^ 
Where  old  policies  have  been  surrendered  and  new  ones  taken 
in  their  places,  if  the  company  becomes  insolvent,  the  hold- 
ers are  to  be  allowed  the  value  of  the  new,  not  of  the  old 
policies.^  Where  a  company  becomes  insolvent  and  during 
the  proceedings  before  the  report  of  the  actuary  is  confirmed 
a  person  insured  dies,  the  beneficiary  is  entitled  to  have  the 
policy  valued,  not  as  a  continuing  insurance,  but  on  the  basis 
of  death.*  But  where  the  death  does  not  occur  until  after 
the  valuation  is  complete  and  confirmed  by  the  court,  the 
policy  will  not  be  revalued.^  Where  after  expiration  of  the 
time  for  presentation  of  claims  against  an  insolvent  company 
a  policy-holder  whose  claim  has  been  presented  and  allowed, 
dies,  the  court  may  direct  a  revaluation  of  the  policy.^  The 
contingent  interests  of  children  to  whom  an  endowment  policy 
is  payable  if  the  insured  die  before  the  endowment  period  is 
out,  become  fixed  by  intervening  insolvency  of  the  company, 
and  are  to  be  calculated  by  the  ordinary  tables."] 

In  a  purely  mutual  company,  however,  claims  founded  on 
policies  matured  before  insolvency  are  to  be  preferred  to 
claims  on  policies  not  matured.  The  termination  of  the  risk 
changes  the  status  of  the  holder  of  the  policy.  Prior  to  the 
change  he  was  entitled,  as  between  himself  and  the  other 
members,  to  his  share  of  the  revenue  fund.  After  the  change 
the  claim  becomes  a  debt  due  from  the  company  to  a  stranger. 


1  People  V.  Securitj',  &c.  Ass.  Co.,  78  N.  Y.  114;  Guy  v.  Globe  Ins.  Co.  (Cir- 
cuit Ct.  Richmond,  Va.),  9  Ins.  L.  J.  467.  See  also  Holdich's  Case,  L.  R.  14 
Eq.  72 ;  s.  c.  3  Big.  Life  &  Ace.  Ins.  Cas.  272,  citing  and  commenting  upon 
Lancaster's  (3  Big.  Life  &  Ace.  Ins.  Cas.  272)  and  Bell's  (L.  R.  9  Eq.  706)  cases. 

2  [McDonnell  v.  Ala.  Gold  Life  Ins.  Co.,  85  Ala.  401.] 

3  [Attorney-General  v.  Continental  Life  Ins.  Co.,  91  N.  Y.  647.] 
*  [People  V.  Knickerbocker  Life  Ins.  Co.,  34  Hun,  476.] 

5  [People  V.  Knickerbocker  Life  Ins.  Co.,  38  Hun,  601.] 

6  [Attorney-General  v.  Continental  Life  Ins.  Co.,  88  N.  Y.  77.] 

7  [Carr  v.  Hamilton,  129  U.  S.  252.J 

1349 


§  594  a]        INSURANCE  :    FIRE,  LIFE,  ACCIDENT,  ETC.       [CH-  XXXII. 

He  stands  towards  the  company  as  an  outside  creditor  of  a 
firm  stands  to  the  firm,  —  to  be  preferred  before  a  member  of 
the  firm.i 

Where  a  dividend  has  been  declared  out  of  a  clear  surplus, 
and  the  checks  therefor  made  out  and  signed,  after  notice  of 
time  and  place  of  payment,  this  is  an  equitable  appropriation 
of  the  funds  to  the  stockholders ;  and  as  against  the  receiver 
and  creditors  they  will  be  entitled  to  the  funds  so  appropri- 
ated, though  insolvency  intervene  before  the  actual  delivery 
of  the  checks.^ 

If  there  is  no  privity  of  contract  between  a  reinsurer  and 
the  original  insured,  the  latter,  in  case  of  the  insolvency  of 
his  insurer,  has  no  better  claim  upon  the  money  paid  by  the 
insurer  than  the  other  creditors.  Whatever  may  be  paid  by 
the  reinsurer  on  his  contract  with  the  reinsured  becomes  a 
common  fund,  for  the  benefit  of  all  the  creditors.^ 

In  Alabama,  foreign  insurance  companies  are  required  to 
make  certain  deposits  with  the  State  treasurer,  for  "  the  pro- 
tection of  the  policy-holders  "  in  that  State.  The  appellants, 
unable  to  pay  their  losses,  made  a  general  assignment,  and 
gave  notice  to  policy-holders  to  return  their  policies  for  can- 
cellation, when  they  would  receive  certificates  for  unearned 
premiums,  which  they  could  present  to  the  assignee  for  set- 
tlement. The  defendant,  a  resident  agent  of  the  company, 
without  any  special  authority  from  the  company,  cancelled 
all  the  policies  issued  by  him,  reinsuring  some,  and  paying 
out  of  his  own  pocket  the  unearned  premiums  to  others,  with 
the  understanding  that  he  should  be  reimbursed  out  of  the 
proceeds  of  the  deposited  security.  He  then  brought  his  bill 
in  equity  to  subject  the  deposited  bonds  to  the  reimbursement 
of  these  claims,  and  also  to  recover  a  balance  of  his  personal 
account.     It  was  held  that,  though  the  agent  could  not  cancel 

1  Mayer  v.  Attorney-General  (N.  J.),  9  Ins.  L.  J.  671,  referring  to  and  distin- 
guishing the  case  of  the  Security  Company,  supra.  See  also  Commonwealth  v. 
Mass.  Mut.  Ins.  Co.,  supra ;  Vanatta  v.  N.  J.  Mut.  Life  Ins.  Co  ,  31  N.  J.  (Eq.) 
15,  Runyon,  Chancellor. 

2  Le  Roy  v.  Globe  Ins.  Co.,  2  Edw.  (N.  Y.)  Ch.  657. 

'•>  Herckenrath   v.  Am.  Mut   Ins.  Co.,  3  Barb.  (N.  Y.)  Ch.  63 ;  Carrington  v. 
Com.  Fire  &  Mar.  Ins.  Co  ,  1  Bosw.  (N.  Y.)  152. 
1350 


CH.  XXXII.]  REMEDIES,    EVIDENCE,   ETC.  [§  595 

the  policies  by  virtue  of  his  general  authority  to  act  for  the 
interest  of  the  company,  yet  the  transaction  between  him 
and  the  policy-holders  subrogated  him  to  their  rights  against 
the  deposit,  as  to  the  claims  of  the  policy-holders  transferred 
to  him,  but  not  as  to  his  personal  account.  ^ 

§  595.  Bankruptcy  and  Insolvency  ;  Set-off.  —  In  general,  a 
set-off  of  a  liquidated  debt  due  the  corporation  is  allowable 
against  an  unliquidated  debt  due  from  them;  and  this  ex- 
tends to  all  mutual  credits  arising  ex  contractu  between  the 
original  parties. ^  When  an  insurance  company  becomes  in- 
solvent, the  court  will  sustain  the  claim  of  holders  of  a  policy 
under  which  they  are  entitled  to  recover  for  a  loss,  to  have 
a  note  given  by  them  prior  to  the  insolvency,  and  purchased 
by  the  insurance  company,  applied  in  part  payment  of  the 
loss,  although  the  note  has  been  sold,  if  the  sale  be  subse- 
quent to  the  insolvency  and  to  the  happening  of  the  loss.^ 
So  where  the  insurance  company  had  loaned  money  directly 
to  the  assured,  who  afterwards  sustained  a  loss,  it  was  held 
that  the  loan  might  be  set  off  in  the  adjustment  of  the  claim 
for  the  loss.^  If,  however,  the  assured  has  before  the  loss 
assigned  his  policy  with  the  assent  of  the  insurer,  and  after 
the  loss  surrenders  the  policy  and  takes  a  negotiable  certifi- 
cate of  the  amount  of  the  loss,  which  is  indorsed  to  the  as- 
signee of  the  policy  in  lieu  thereof,   the   original   insured 

1  United  States  Fire  &  Mar.  Ins.  Co.  v.  Tardy  (Ala.),  2  Ins.  L.  J.  673. 

2  Holbrook  v.  American  Fire  Ins.  Co.,  6  Paige  (N.  Y.),  Cli.  220. 

8  Commonwealth  v.  Shoe  &  Leather  Dealers'  Ins.  Co.,  112  Mass.  131.  In 
Straus  V.  Eagle  Insurance  Company,  5  Ohio  St.  59,  it  was  held  that  insurers 
having  no  right  to  invest  their  money  in  promissory  notes  could  not  set  off  the 
notes  of  a  policy-holder  against  his  claim  for  a  loss.  But  in  Hovey  v.  Home 
Insurance  Company,  C.  Ct.  (Ohio),  3  Ins.  L.  J.  815,  the  court,  after  a  careful 
review  of  the  cases,  were  evidently  not  satisfied  with  this  doctrine,  and  held 
that  reinsurers,  on  the  insolvency  of  the  reinsured  company,  might  set  off  at 
their  face  value  policies  which  they  had  bouglit  at  a  discount  against  the  claims 
of  the  assignee  of  tlie  insolvent  company  for  loss. 

*  Receivers  of  Globe  Ins.  Co.,  2  Edw.  (N.  Y.)  Ch.  625;  Osgood  v.  De  Groot, 
36  N.  Y.  348.  [When  the  holder  of  a  life  policy  borrows  money  from  tlie  in- 
surer it  will  he  prima  facie  presumed  that  he  does  so  on  faith  of  the  insurance, 
which  possibly  may  meet  his  obligation,  and  if  the  company  becomes  insol- 
vent the  debt  would  be  set  off  against  the  amount  due  on  the  policy.  Carr  v, 
Hamilton,  129  U.  S.  252.] 

1351 


§  595]  INSURANCE  :    FIRE,    LIFE,    ACCIDENT,    ETC.       [CH.  XXXIT. 

cannot  set  off  the  amount  due  for  such  loss  against  a  debt 
due  from  him  to  the  insurer ;  but  he  must  pay  such  debt  in 
full,  and  take  a  dividend  on  his  loss,  if  the  company  is  in- 
solvent. ^  In  Drake  v.  Rollo,  Assignee,^  it  was  held  that 
where  a  person  borrowed  money  of  an  insurance  company, 
payable  partly  in  three  and  partly  in  five  years,  and  before 
the  payment  the  company  became  insolvent  and  was  adjudi- 
cated a  bankrupt,  he  can,  under  the  twentieth  section  of  the 
bankrupt  law,  providing  that  mutual  debts  and  credits  may 
be  set  off,  set  off  the  debt  for  claims  he  has  for  loss  on  poli- 
cies against  the  company,  though  the  effect  would  be  to  give 
him  a  preference  over  other  creditors.  The  rights  of  the  par- 
ties are  to  be  determined  by  the  state  of  facts  at  the  time  of 
the  loss.  And  if  in  such  case  the  money  borrowed  is  not  due 
when  the  loss  becomes  payable,  and  the  company  is  bankrupt 
and  insolvent,  the  borrower  may  maintain  his  bill  in  equity 
against  the  company  or  its  assignee  to  enforce  the  set-off. 
If,  however,  the  claim  against  the  company  for  loss  be  pro- 
cured with  full  knowledge  of  their  insolvency,  though  prior 
to  any  legal  declaration  of  the  fact,  it  cannot  be  set  off,  as 
this  would  be  a  perversion  of  the  statute  for  the  benefit  of 
one  creditor  to  the  prejudice  of  another,  and  against  its 
spirit.  If  a  court  of  equity  could  not  interpose  in  such  a 
case,  though  it  be  not  one  of  the  claims  excepted  from  the 
right  of  set-off,  a  person  might  borrow  the  whole  capital  of  an 
insurance  company,  and  on  learning  of  its  insolvency,  in- 
stead of  paying  the  debt,  might  use  a  part  of  it  in  buying  up 
the  depreciated  claims  against  the  company  to  the  amount  of 
his  debt,  and  keep  the  rest  in  his  pocket.  ^  [When  the  pol- 
icy insured  A.  "for  whom  it  might  concern,"  an  indorsement 
thereon  showing  that  A.,  B.,  and  C.  were  the  assured,  it  was 
held  that  all  might  join  in  an  action,  and  that  the  company 
could  not  set  off  against  B.  and  C.  a  debt  due  them  from  A.^'\ 

1  Swords  I'.  Blake,  3  Edw.  (N.  Y.)  Ch.  112. 

2  U.  S.  C.  ex.,  North.  Dist.  111.,  6  Chicago  Legal  News,  9. 

3  Hitchcock  I'.  Rollo,  Ass.,  id.,  disapproving  In  re  The  City  Bank  of  Gur- 
ney,  4  Legal  News,  81  U.  S.  Dist.  Ct.  Cal. ;  Smith  v.  Hill,  8  Gray  (Mass.),  672. 

*  [Williams  v.  Ocean  Ins.  Co.,  2  Met.  303  at  30G-307.] 
1352 


CH.  XXXII.]  REMEDIES,    EVIDENCE,    ETC.  [§  596 

§  596.  Rule  as  to  Set-off  when  Company  is  solvent  different 
from  the  Rule  when  Company  is  insolvent.  —  The  right  of  set- 
off is  affected  by  the  question  whether  the  company  is  solvent 
or  insolvent.  Thus,  where  the  insured  still  owes  an  unpaid 
balance  of  his  subscription  or  stock  note,  this  balance  is  a 
fund  in  trust  for  the  benefit  of  creditors,  and  a  claim  for  loss 
cannot  be  set  off  against  it  so  long  as  the  losses  are  unpaid 
in  full.  In  a  solvent  company,  able  to  pay  all  its  losses,  the 
claims  might  be  deemed  mutual,  and  subject  to  set-off,  each 
against  the  other.  But  insolvency  changes  the  rule.^  Nor 
are  holders  of  claims  for  losses  entitled  in  mutual  insurance 
companies  to  set  off  their  claims  in  actions  on  their  premium 
notes.  They  must  pay  those  notes  to  the  amount  required, 
and  then,  if  the  assets  prove  insufficient  to  pay  the  whole 
amount  of  the  losses,  they  can  only  receive  the  same  percent- 
age of  their  losses  that  the  other  members  receive ;  otherwise, 
the  holder  of  a  claim  offsetting  the  whole  or  a  portion  of  it 
against  the  company's  claim  on  his  premium  note  would 
receive  more  than  his  just  proportion  of  loss.^  Nor  can  a 
claim  for  loss  assigned  to  the  maker  of  a  premium  note  be 
set  off  in  an  action  on  the  premium  note,  except  to  the 
amount  to  which  he  would  be  entitled  as  a  dividend  on  the 
claim.  3  In  payment  of  losses,  the  insurers  are  entitled  to 
set  off  all  sums  due  on  the  premium  note,  and  for  the  claim- 
ant's just  proportion  of  losses  up  to  the  time  of  payment  of 
the  loss;  or,  if  the  company  is  trusteed,  up  to  the  time 
of  the  service  of  process.*  [When  a  company  goes  into  in- 
solvency the  amount  due  on  an  endowment  policy  should  be 
set  off  against  a  mortgage  debt  due  the  company  from  the 
holder  of  the  policy.^     But  one  who  is  indebted  to  an  insol- 

1  Scammon  v.  Kimball,  5  Biss.  (U.  S.  C.  Ct.)  431 ;  Jenkins  v.  Armour  (U.  S. 
C.  Ct.),  14  N.  B.  R.  276  ;  Sawyer  v.  Hoag,  17  Wall.  (U.  S.)  610. 

2  Lawrence  v.  Nelson,  4  Bosw.  (N.  Y.  Superior  Ct.)  240;  s.  c.  affirmed,  21 
N.  Y.  158;  Hillier  v.  AUegliany  County  Mut.  Ins.  Co.,  3  Barr  (Pa.),  470.  And 
see  also  Lawrence  v.  McCready,  6  Bosw.  (N.  Y.)  329. 

8  Long  V.  Penn  Ins.  Co.,  6  Pa.  St.  421. 

*  Swamscot  Mach.  Co.  v.  Partridge,  5  Fost.  (N.  H.)  369;  Nevins  v.  Rocking- 
ham Fire  Ins.  Co.,  id.  22. 

5  [Carr  v.  Hamilton,  129  U.  S.  252.] 

1353 


§  597]  INSURANCE  :    FIRE,   LIFE,   ACCIDENT,   ETC.       [CH.  XXXII. 

vent  company  cannot  set  off  the  reserve  value  of  an  endow- 
ment policy  held  by  him,  payable  to  his  wife  in  case  of  his 
death  before  a  time  named  or  to  him  if  then  living,  i] 

[§  597.  Cessation  of  Business  ;  Selling  out  to  Another  Com- 
pany. —  Where  a  life  company  has  practically  ceased  to  do 
business,  equity  will  entertain  a  bill  by  the  policy-holders  to 
enforce  the  termination  of  their  contracts,  and  the  payment 
of  their  present  value. ^  Unless  prevented  by  an  express  con- 
tract an  insurance  company  may  transfer  its  funds  to  another 
company  who  take  all  liabilities.^  And  payment  of  premi- 
ums to  the  new  company  releases  the  old  one  on  the  policy.* 
Where  the  receiver  of  an  insolvent  company  (N. )  enters  into  a 
contract  with  the  C.  Company  by  which  C.  agrees  to  assume 
the  liabilities  of  N.,  and  some  of  N. 's  policy-holders  sur- 
rendered  them  to  C,  receiving  its  policies  in  exchange,  it  was 
held  that  C.  did  not  by  such  surrender  become  a  policy-holder 
in  the  N.  Company,  and  could  not  claim  a  share  in  the  dis- 
tribution of  its  funds.  Policy-holders  in  N.  who  paid  pre- 
miums to  C.  but  did  not  surrender  their  policies  were  held 
entitled  to  a  share  in  the  assets  of  N.^J 

1  [Newcomb  v.  Almy,  96  N.  Y.  308] 

2  [Inpersoll  v.  Mo.  Val.  Life  Ins.  Co.,  37  Fed.  Rep.  530  (Kans.),  1889.] 
8  [King  V.  Ace.  Life  Fund,  &c.,  3  C.  B.  n.  s.  151  at  162.] 

4  [Re  Nat.  Prot.  Life  Ass.  Soc.,9  Law  Rep.  Eq.  Cas.  306  at  315 ;  Re  Internat. 
Life  Ass.  See.  &  Hercules  Soc,  9  Law  Rep.  Eq.  Cas.  316  at  324 ;  Re  Times 
Life  Ass.  &  Guarantee  Soc,  9  Law  Rep.  Ch.  Ap.  381  at  396.] 

5  [Reese  v.  Smyth,  95  N.  Y.  645.] 

1354 


INDEX. 

[the  references  are  to  the  sections.] 


A. 

>  ^NDONMENT,  notice  of,  need  not  be  given  to  reinsurer,  11  (Zj). 
rule  as  to,  not  applicable  in  fire  insurance,  421  a. 
ABSOLUTE   FUNDS,  what,  549  a. 

ACCEPTANCE   of  application   imports   agreement  to  issue  a  policy, 
43,  44. 
once  accepted  not  to  be  arbitrarily  rejected,  54  C. 

of  contract,  what  constitutes,  53. 

subject  to  approval,  57,  58. 
ACCIDENT.     See  Insurance,  1. 

insurance  ticket,  70. 

agents  of  accident  companies,  155. 

definition  of,  514. 

from  injury  causing  death,  514. 

from  sprain,  514. 

from  strain  or  sprain,  514. 

accidental  means,  515  a. 

by  gymnastic  exercise,  515  a. 

by  overdose  of  opium,  515  a. 

external  sign  of,  516. 

by  outward  and  visible  means,  .516. 

by  external  and  material  cause,  518. 

obvious  risk,  530. 

in  violating  law,  530. 

rupture  from  jumping,  515,  515  a. 

drowning,  516,  517. 

secondary  cause  of,  516,  518. 

cause  of,  arising  within  the  system,  518. 

sunstroke,  519. 

to  carriages,  538. 

robbery,  520. 

notice  of,  539. 

railway,  521. 

1355 


INDEX. 
[The  references  are  to  the  sections.^ 

ACCIDENT  —  continued. 

total  disability  from,  522,  523. 

by  conveyance,  travelling,  alighting,  on  foot,  limit  of  journey,  negli- 
gence, 524,  525,  528,  530. 

negligence,  wilful  exposure,  530. 

condition  to  be  careful,  531. 

increase  of  risk,  change  of  occupation,  532,  533. 

extent  of  risk,  534. 

form  and  completion  of  contract  in,  537. 

amount  of  loss,  insurable  interest,  585. 
ACCUMULATION  of  hazards  is  fatal,  237. 
ACKNOWLEDGMENT  of  notice,  371. 
ACT   OF   GOD,  whether  it  excuses  default,  335,  352. 
ACTION  by  original  assured  directly  against  reinsurer,  12,  note. 

in  case  of  double  insurance  the  insured  may  sue  one  company  or  all, 
13,  and  note. 

may  be  brought,  on  the  memorandum,  if  no  policy  has  been  issued, 
22  A. 

right  of,  suspended  by  war,  36,  37,  39,  39  A,  41. 

parties  to,  where  there  is  change  of  interest,  281,  445-447. 

when  it  may  be  brought,  476,  478. 

right  to  remove,  578. 
ADDITIONAL   USE  avoids  policy,  237. 

ADJUSTMENT.     See  Loss. 

equitable,  after  forfeiture,  572,  693. 
by  general  agent,  138. 
after  forfeiture,  496. 

ADMINISTRATOR,  insurable  interest  of,  80,  91. 

claims  to  proceeds  of  life  policy  as  against  creditor,  390. 
on  fire  policy,  as  against  heirs,  445. 

AGE,  representation  as  to,  188  A,  305. 

AGENCY,  how  affected  by  war.     See  analysis,  chap.  iii.  6. 

proof  of,  126,  138,  138  A. 
AGENT.     See  general  analysis,  chap,  vii;  see  also  Signature;  Coun- 
tersignature; Insured  Mutual  Companies. 

authority  to  issue  policy  need  not  be  proved  by  insured,  16. 

to  make  subsequent  oral  agreement  modifying  policy  inferred  from 
course  of  dealing,  24  A. 

held  not  to  cover  a  parol  insurance  intended  to  be  final  and  not  look- 
ing to  a  policy,  23  D. 

powers  of,  how  affected  by  late  civil  war,  40. 

provision  that  no  agent  can  bind  company  by  agreement,  62. 

agreement  with,  to  renew,  70  B. 

knowledge  of  removal  of  property  at  time  of   renewal  estops  com- 
pany, 70  a. 

rights,  powers,  and  duties  generally,  118,  155. 

1356 


INDEX. 
[The  references  are  to  the  sections.] 

AGENT  —  continued. 

powers  ill  soliciting  risks,  119, 
powers  in  taking  application,  120. 
in  receiving  premiums,  121, 
of  the  insured,  122,  124. 
how  far  person  referred  to  is,  123, 
is  responsible  for  negligence,  124. 
must  be  disinterested,  125. 
authority  of,  what  it  appears  to  be,  125. 
general  and  local,  125, 
of  stock  and  mutual  companies,  127, 
may  bind  the  company  by  parol  contract,  24,  127. 
general,  of  stock  company,  129. 
may  insure  property  out  of  his  disti  ict,  130, 
may  bind  company  by  expression  of  opinion,  131. 
and  by  his  mistake,  131,  143. 

knowledge  of,  imputable  to  principal,  131,  132,  143,  152. 
representations  and  torts  of,  133. 
authority  of,  as  to  premiums,  134,  135, 
may  waive  forfeiture,  136. 

limitation  of  authority  of,  by  terms  of  policy,  137. 
authority  after  negotiations  are  concluded,  138. 
of  mutual  insurance  company,  139,  145,  149. 
of  company,  whether  agent  of  applicant,  140. 
estoppel  and  waiver  by  act  of,  141,  143,  150, 
knowledge  and  mistakes  those  of  principal,  142. 
general,  with  unlimited  powers,  151, 
notice  to,  notice  to  principal,  when,  152,  153. 
sub  and  clerks,  154. 
of  accident  insurance  company,  155. 
concealment  by,  imputable  to  principal,  213. 
by  the  life  insured,  214. 
waiver  of  forfeiture  by,  498-500, 
acting  in  violation  of  instructions,  509. 
collusion  between,  and  insured,  513. 
claim  of,  for  commissions,  576. 
of  company, 
V.  the  company, 

discretion  in  cancellation  as  to  time,  67  L. 

cannot  delegate  discretion,  67  L. 

responsible   to   company   for   giving   notice   of  cancellation   to 
broker  instead  of  assured,  67  L. 
custom  to  do  so  will  not  protect  him,  67  L, 

commissions  only  on  premiums  earned,  67  L. 
neglect  of, 

not  prejudice  assured,  67. 
mistake  of, 

in  notice  of  cancellation  as  to  date  not  material,  68. 

1357 


INDEX. 
[The  references  are  to  the  section8.i 

AGENT  —  continued. 
of  assured, 

power  to  cancel  policy,  67  B. 

to  procure  insurance  not  necessarily  authorized  to  cancel,  67  B. 
or  to  receive  notice  of  cancellation,  67  G,  67  H. 
broker,  67  H,  67  I,  67  L. 

AGREEMENT  for  insurance,  condition  as  to  prepayment  of  premium 
not  implied,  22. 
so  as  to  indorsements,  23. 
terms  of,  when  not  specified,  23. 
when  complete,  43. 
to  insure  aud  policy  distinguished,  22,  23,  45. 

ALEATORY  CONTRACT  defined,  5. 

ALIENATION,  264-282. 
1.  defined,  264. 

temporary,  101,  265. 
entry  for  foreclosure  not,  269. 
by  mortgagor,  effect  of ,  276. 
clauses  in  policies,  282  a. 
conditional  sale,  not,  272. 
by  levy  of  execution,  274. 

Change  of  title  by  sale,  gift,  marriage  settlement,  devise,  any  way 
but  by  descent,  266. 
is  an  alienation,  and  avoids  the  policy  unless  the  insurers  consent 
to  it  expressly,  or  by  implication  from  usage  and  the  nature  of 
the  case,  as  with  a  stock  of  goods ;  see  265,  278. 
absolute  alienation  suspends  policy,  and  destroys  it  if  title  is  out  of 
the  insured  at  time  of  loss,  whether  there  is  an  express  stipula- 
tion to  that  effect  or  not,  264. 
a  provision  that  the  policy  shall  be  "void"  for  alienation  means 

voidable,  264. 
even  descent  is  fatal  if  the  policy  is  to  be  void  for  change  of  title 
"  by  operation  of  law,"  266. 
if  the  alienation  is  only  executory,  or  is  without  authority,  or  in  any 
way  incomplete  or  a  failure,  the  policy  is  not  affected,  267  ;  see 
268-269  a. 
so  long  as  a  scintilla  of  interest  remains  in  the  assured  the  policy  is 
good,  268. 
unless  the  legal  estate  is  retained  on  purpose  to  defeat  the  condi- 
tions, 267. 
executory  agreement  not,  267. 

unconditional  delivery  of  personal  property  is  an  alienation,  268. 
the  object  of  provision  against  transfer  is  to  prevent  diminution  of 
the  interest  which  tends  to  prevent  the  insured  from  carelessness 
or  fraud,  273. 
any  change  that  substantially  increases  the  motive  to  burn  the  prop- 
erty is  a  violation  of  the  provision,  273. 

1358 


INDEX. 
[The  references  are  to  the  sections.] 
ALIENATION  —  continued. 

a  change  that  increases  the  assured's  motive  for  vigilance  does  not 
avoid  the  policy  though  contrary  to  its  letter,  275. 
an  alienation    by  a  mortgagor  after  assignment  of  the  policy  with 
consent  of  the  insurers  does  not  avoid  the  contract,  276. 
2.  A  mortgage  before  complete  and  valid  foreclosure,  whether  on  real. 
269,  or  personal,  270,  estate,  is  not  an  alienation,  269,  note,  269 
at  end,  and  276  C.      Contra,  Indiana  and  Michigan,  269. 
mere  entry  or  commencement  of  foreclosure  proceedings  not  fatal 
276  C,  269  a. 
unless  expressly  so  agreed,  269  a,  276  C. 
and  even  then  knowledge  of  the  agent  may  estop  the  company, 

and  entry  of  foreclosure  between  the  application  and  the  issue  of 
the  policy  may  not  be  covered  by  its  terms,  276  C. 
foreclosure  sale  under  valid  mortgage  is  an  alienation,  273. 

not  so  under  an  invalid  mortgage,  269  a. 
if  the  period  of  redemption  expires,  consent  of  the  mortgagee  next 

day  to  extend  it  cannot  save  the  policy,  2713  C. 
fire  before  foreclosure  sale,  though  on  same  day,  company  liable 

276  C.  .7  r     J  , 

pending  foreclosure,  insurance  in  favor  of  mortgagee  and  assigns, 

company  bound,  276  C. 
foreclosure  sale  without  deed  or  report  of  sale,  not  a  transfer,  276  C. 
"judgment  in  foreclosure"  to  avoid  must  be  one  that  of  itself 

effects  a  transfer,  276  C. 
mortgage  held  an  "alteration  of  ownership"  and  an  "alienation  in 

part,"  271. 

3.  Conditional  sale  no  alienation,  nor,  in  equity,  is  an  absolute  sale  if 

intended  only  as  security  for  debt,  272  ;  and  .see  264. 
it  is  not  necessary  to  have  a  defeasance  dehors  the  deed  recorded,  272. 

unless  it  is  re(iuired  by  statute,  272. 
conveyance  and  reconveyance  on  trust  for  assured,  not  an  aliena- 
tion, neither  is  a  lease,  272. 
transfer  from  husband  to  wife  through  B.  not  fatal,  273  ;  contra,  273. 

4.  Partners.     Sale  or  mortgage  or  other  transactions  between  partners  or 

joint  owners  not  an  alienation,  accordmg  to  the  best  view,  279- 
281  ;   contra,  280. 
no  new  interest  or  element  of  carelessness  is  introduced,  279. 
but  when  this  is  done,  as  by  taking  in  a  new  partner,  the  policy  is 

avoided,  279. 
a  renewal  after  the  change  is  good,  however,  although  the  company 

did  not  know  of  it,  279. 
in  such  cases  there  is  apt  to  be  trouble  about  the  proper  parties  to 
the  action,  and  it  is  best  on  change  of  partnership  property  to 
assign  the  policy  with  assent  of  the  insurers,  281. 
transfer  between  co-tenants  not  fatal,  280;  contra,  280. 
levy  of  execution,  274. 
VOL.  11.-42  1359 


INDEX. 
[The  references  are  to  the  sections.] 

ALIENATION  —  continued. 

5.  alienation  must  be  by  the  one  having  the  insured  interest,  267,  end, 

and  276. 
transfer  of  one  of  several  distinct  parcels,  278. 
"  change  of  possession." 

change  of  tenants  not,  273  A. 
nor  possession  under  a  revocable  license,  273  A. 
refers  to  "right  of  possession,"  273  A. 
a  contract  to  sell,  though  with  delivery  and  part  payment,  no  aliena- 
tion, 267,  note,  276  B,  and  contra,  267,  note, 
sale,  see  next  two  heads. 

6.  Fatal  Cases: 

transfer  in  bankruptcy  on  insolvency,  264,  276  A. 

sale  on  credit,  276  A. 

sale  and  mortgage  back,  though  vendor  keeps  possession,  276  A. 

deed  absolute  and  return  deed  giving  life-right  of  occupancy  to 

vendor,  276  A. 
sale  to  mortgagee,  276  A. 

7.  Cases  not  fatal:  • 

trust-deed,  276  B,  or  deed  with  trust  back,  272, 

a  lease,  272,  276  B. 

selling  off  a  stock  of  goods,  265,  278. 

sale  by  trustee  to  himself  or  for  his  benefit,  276  B. 

sale  after  cause  of  loss  though  before  actual  loss,  276  B. 

sale  of  part  interest,  276  B. 

sale  of  land  under  insured  buildings.  276  B. 

ultra  vires  sale  by  school  committee,  276  B. 

sham  sale  to  cheat  creditors,  276  B. 

foreclosure  ;  see  276  C,  and  above  under  "  Mortgage." 

8.  Entire  Contract.     Where  the  premium  is  entire,  alienation  or  other 

breach  of  condition  in  respect  to  a  part  of  the  property  vitiates 

the  contract  as  to  all,  277. 
other  cases  hold  however  that  a  misrepresentation,  sale,  or  other 

breach  of  condition  affecting  only  a  part  of  the  property  merely 

avoids  the  policy  pro  tanto,  278 
true  test,  see  277,  first  note, 
if  each  has  its  specific  premium  the  policy  really  includes  several 

contracts,  and  the  avoidance  of  one  may  not  affect  the  others,  277. 
and  the  same  rule  should  apply  where  the  premium  is  apportionable 

on  a  clear  and  just  principle,  277,  note. 
if  the  assured  has  acted  in  good  faith  he  should  not  lose  his  whole 

insurance  by  a  breach  as  to  part,  unless  such  is  the  clear  intent  of 

the  agreement,  or  a  just  division  of  the  contract  is  impossible. 

9.  Waiver,  282-282  B. 

assent  to  conveyance  cures  all  preceding,  282,  but  not  subsequent 

transfers,  282  A. 
in  general,  assent  of  agent  sufficient,  282  A. 

not  if  policy  requires  indorsement,  282  A;  contra,  282  A. 

1360 


INDEX. 
[The  references  are  to  the  sections.] 

ALIENATION  —  continued. 

payment  of  dividend  to  partner  after  transfer  to  him  is  a,  282  A. 
consent  to  corresponding  assignment  of  policy  is  a,  282  A. 
but  indorsement  "  payable  to"  not,  282  A. 
unless  with  knowledge  of  the  facts,  282  A. 
levy  waived,  282  A. 
and  sale  of  land  under  house,  282  A. 
knowledge  of  the  agent  and  his  omission  of  proper  indorsement 

estops  company  in  case  of  ignorant  applicant,  282  B. 
parol  evidence  that  policy  was  to  be  drawn  to  cover  intended  trans- 
fer not  admissible;  suit  should  be  for  reformation,  282  B,  New 
York. 
ALTERATION,  known  to  assured  before  completion  of  the  contract  and 
not  disclosed  is  fatal,  43  G. 
in  machinery  not  a  forfeiture,  178. 
of  circumstances  pending  negotiations,  190. 
increasing  and  decreasing  risk,  222-230. 
in  surrounding  circumstances,  244. 
extent  permissible,  224. 
materiality  and  extent  of,  223,  224. 
by  strangers,  227. 
at  risk  of  insured,  227. 
in  modes  of  use,  230. 
of  ownership,  271. 

an  alteration  may  or  may  not  be  material,  e.  g.  the  substitution  of 
slate  for  shingles  would  not  increase  the  risk,  222,  while  adding  a 
story  to  a  house  would,  257. 
property  removed  ceases  to  be  insured  until  replaced,  222 ;  see  also 

188  A. 
unless  the  change  is  so  slight  as  to  be  unimportant,  as  from  first  floor 

to  basement,  222. 
materiality  of,  223 ;  see  also  225,  230,  261. 

repairs  necessary  to  the  use  of  the  i)roperty,  and  acts   of  ordinary 
ownership  such  as  are  sanctioned  by  usage  do  not  violate  the  con- 
dition against  alteration  or  increase  of  risk,  224. 
the   materiality  of  an  alteration   may  be  taken  out  of   the  region 

of  debate  by  agreement  of  the  parties,  223. 
substantial  fid Jilmenl  of  the  warranty  sufficient,  223. 
the  opening  of  a  new  door,  making  a  new  closet,  putting  in  a  brick 
floor,  or  an  iron  grate,  changes  tlie  identity  of  the  property,  chamjes 
the  risk  but  does  not  materially  increase  the  risk,  224. 
if  part  of  the  change  increases  and  another  part  decreases  risk  the 

jury  may  strike  the  balance,  226. 
a  material  alteration  by  a  tenant  or  agent  without  knowledge  of  the 
insured  is  fatal  unless  the  terms  of  the  policy  otherwise  express,  as 
where  the  increase  is  to  be  by  "means  within  the  control  of  the 
assured,"  227. 
"premises"  means  building,  228;  see  also,  243,  239  B. 

1361 


INDEX. 
[The  references  are  to  the  sections.] 

ALTERATION  —  continued. 

"  alteration  at  risk  of  insured,"  229. 

a  statement  of  present  use  not  a  warranty  of  its  continuance,  231 ; 

see  also,  247,  248,  250-252,  157,  191. 
an  enlarged  use  for  a  permitted  purpose  does  not  avoid,  231. 
AMALGAMATION   OF   COMPANIES.     See  Consolidation. 
AMBIGUITY,  in  answers,  166. 

AMOUNT   OF   RECOVERY  from  reinsurer,  11,  11  (z),  12,  note. 
ANSWER,  question  and,  conclusive  as  to  materiality,  185. 
to  special  and  general  questions  distinguished,  300. 
equivocal,  212. 
APPLICATION,  what,  29. 

when  part  of  the  policy,  29,  29  A,  29  C,  31,  159. 
statutes  requiring  annexation  of,  to  policy,  29  C. 
diagram  on  back  of,  held  not  part  of,  on  facts,  29  A. 
only  a  proposal  not  a  contract,  43  II. 

delay  in  acting  on  it  will  not  turn  it  into  a  contract,  43  H. 
acceptance  of,  implies  agreement  to  issue  policy,  43,  44. 
once  accepted  cannot  be  arbitrarily  rejected,  54  C. 
agent's  knowledge  of  error  in,  142  F;  133,    133   A;    133  B;   144, 
141,  &c. 
see  chap.  vii.  anal.  4,  5. 
none  is  necessary,  167. 
may  modify  policy,  168,  169. 
oral  statements  subsequent  to,  192. 
as  evidence,  579. 
APPORTIONMENT,  of  insurance  in  first  policy,  destroyed  by  renewal 
in  gross,  70  a,  note, 
of  loss,  427. 
APPROVAL  of  application,  57,  58. 

as  a  condition  precedent  to  a  completed  contract,  43  F,  54-54  C. 
notice  of  disapproval,  69. 
ARBITRATION,  condition  as  to,  before  suit  on  original  policy  no  effect 
on  reinsurance,  12  B. 
between  a  reinsurer  who  is  liable  to  the  assured  and  other  reinsurers, 

distributing  the  loss  does  not  affect  the  assured,  12  note, 
agreement  to  refer  generally  invalid,  492. 
agreement  to  refer  special  matter  valid,  493. 
when  provided  for  in  charter,  494. 
condition  precedent,  when,  495. 

upon  the  written  request  of  either  party,  493  A  (see  295,  end). 
equitable  adjustment  after  forfeiture,  496. 
discretion  of  directors,  496. 
fraud,  496  a. 

company  may  sometimes  deny  liability  after  award,  496  a. 
waiver  or  estoppel  by  refusal  to  pay  any  sura,  or  proceeding  to  re- 
pair, or  bad  faith,  496  B. 

1362 


INDEX. 
[The  references  are  to  the  sections.] 

ARBITRATION  —  continued. 

award  void  if  arbitrators  exceed  their  powers,  or  do  not  conform  to 

conditions,  496  B. 
arbitration  upheld  as  an  appraisement,  496  B. 

if  arbitrators  first  selected  fail,   a  new  selection  should  be  made, 
496  B. 
ASHES,  representations  as  to  care  of,  255. 

ASSENT  to  assignment,  386,  377,  379,  378,  378  A,  382-385  A,  387. 
See  Assignment. 

to  contract.     See  Consummation. 
ASSESSMENT.     See  Mutual  Insurance,  2. 

bond  to  pay,  not  necessary  to  complete  contract,  43  C. 

cannot  be  escaped  by  member  of  insolvent  company  by  cancellation 
of  his  policy,  67  A. 
otherwise  cancellation  ends  liability  for  future,  69  B. 

condition  allowing  cancellation  for  nonpayment  of,  means  legal  as- 
sessment, 67. 

of  deposit  note  not  an  incumbrance,  291,  292. 

right  of,  strictly  construed,  557. 

slight  errors  in,  do  not  invahdate,  558. 

may  include  what,  559. 

set-off  against,  559. 

in  cases  of  insolvency,  559. 

classification  of  risks  and  funds,  560. 

notice  of,  562. 
ASSIGNEE,  insurable  interest  of,  110. 

rights  under  policy,  378,  379. 
ASSIGNMENT.     See  Assignment  after  Loss  and  Assignment  be- 
fore Loss. 

of  policy  and  transfer  of  property,  72. 

agent  cannot  consent  to  assignment  of  his  own  policy,  137. 

mere  soliciting  agent  cannot  assent  to,  138. 

of  policy,  at  common  law,  377. 

modes  and  effect  of,  378. 

what  is,  and  what  is  not,  379,  389,  395. 

in  whole  or  in  part,  380,  399. 

of  interest  in  policy,  381. 

of  interest  of  the  assured,  381  a. 

by  consent,  382. 

assent  to,  and  approval  of,  383,  385. 

by  insurer  binds  reinsurer,  12  B. 

waiver  of  forfeiture  by,  383,  384. 

assent  to,  procured  by  fraud,  invalid,  385,  397. 

vitiated  by  fraud  or  undue  influence,  385,  397. 

condition  against,  does  not  apply  after  loss,  386. 

nor  to  an  assignment  in  bankruptcy,  386. 

arbitrary  refusal  of  assent  to,  387. 

limitation  as  to  time,  387. 

1363 


INDEX. 

[The  references  are  to  the  sections.] 

ASSIGNMENT  —  continued. 

of  life  policy,  more  favored  than  fire,  388. 
requisites  to,  valid,  389. 
of  life  policy  by  wife,  effect  of,  391. 
delivery  and  possession  of  policy  evidence  of,  395. 
notice  of,  396. 

to  party  without  interest,  void,  398. 
of  part,  invalid,  399. 
ASSIGNMENT   AFTER   LOSS  — 
is  only  an  assignment  of  a  debt,  and 
is  always  good  in  equity,  subject  to  claims  in  set-off,  &c,,  against  the 

assignor  before  notice,  386. 
the  assignee  stands  in  the  shoes  of  the  assignor  as  to  breach  of  con- 
dition also,  386. 
of  the  ivhole  amount  is  good  without  acceptance,  386. 
is  not  a  violation  of  the  clause  against  transfer,  although  it  reads 

"  before  or  after  loss,"  386. 
nor  within  condition  requiring  assent,  386. 
a  prohibition  of,  is  illegal,  386. 
specific  performance  of,  386. 

good  without  record  or  delivery  against  garnishment,  386. 
ASSIGNMENT   BEFORE   LOSS. 
1.  Insurance  other  than  Life. 

the  common  law  would  not  permit  the  assignment  of  a  chose  in 

action;  equity  however  upheld  the  transaction,  377. 
if  the  debtor  assents  to  the  assignment  and  agrees  to  pay  the 

assignee,  a  new  contract  arises,  377. 
the  peculiar  nature  of  insurance  brings  an  element  into  the 
problem  of  transfer  not  existing  in  most  cases.  A  policy  in 
a  contract  of  indemnity  for  the  loss  of  a  valuable  interest,  and 
subject  to  avoidance  by  the  violation  of  any  one  of  numerous 
conditions. 

(1)  Now  if  the  policy  is  assigned  without  a  transfer  of  the  in- 
terest it  protects,  it  is  clear  that,  even  though  the  company 
may  assent,  there  is  no  complete  transfer,  as  in  case  of  the 
assignment  of  a  note,  379. 

the  assignor  is  still  the  person  assured,  for  he  is  the  one  who 

possesses  the  insurable  interest,  378. 
the  "  assignment  "  so  called  is  a    mere   designation  of  the 

payee.     He   may  have  an  interest   in  the  property  or  not, 

but  he  has  not  the  interest  that  was  insured,  382,  378  A. 
as  between  the  parties  to  the  assignment,  however,  it  creates 

an  equitable  lien  on  the  funds,  380. 
although  the  transfer  is  only  as  collateral,  before  loss,  and  to 

one  without  interest,  386. 

(2)  If  the  interest  insured,  as  well  as  the  policy,  is  ti'ansferred 
to  the  assii^nee^  with  assent  of  the  company,  a  new  contract 
is  formed  with  the  assignee,  378,  378  A. 

1364 


INDEX. 
[The  references  are  to  the  sections.] 

ASSIGNMENT   BEFORE    LOSS  — continued. 

and  any  subsequent  breach  of  condition  on  the  part  of  the 

assignor  will  not  aft'ect  the  assignee,  378,  IJTb  A. 

and  he  can  sue  in  his  own  name,  o8l.     See  also  o83-38t. 

it  has  even  been  held  that  an  assignment  as  collateral,  witli 
assent,  to  one  waiving  a  lien  on  the  goods,  will  not  be  af- 
fected by  fraud  of  the  assignor,  378  A. 

in  marine  insurance  custom  allows  the  transfer  of  a  policy 
■with  the  subject-matter  without  special  assent  of  the  com- 
pany, 377. 

2,  Life  Insurance. 

a  man  may  take  out  a  policy  on  his  own  life,  and  make  it  pay- 
able to  any  person  he  chooses  as  beneficiary,  112. 
there  is,  however,  a  strong  dispute  on  this  question  of  assign- 
ment to  one  without  interest  in  the  "life,"  some  authorities 
maintaining  that  assignment  to  one  without  interest  is 
"  open  to  all  the  objections  that  can  be  raised  against  the 
original  taking  out  of  insurance  by  one  with  uo  interest," 
398,  and  note. 
if  the  transfer  is  to  one  with  an  interest,  398,  and  is  free  from 

fraud,  397,  it  is  good,  388. 
if  the  company  waives  the  want  of  interest,  the  assignor  can- 
not object,  398  A;  but  an  heir  may  object  that  the  assign- 
ment is  invalid  in  form,  399  B. 
What  is  .an  assignment?  379,  395. 

a  transfer  that  will  be  upheld  and  will  carry  rights  to  the  trans- 
feree is  not  always  held  to  be  a  transfer  that  will  avoid  the 
policy  under  the  clause  against  assignment,  379. 
an  intent  to  transfer  is  not  an  assignment,  379  note. 
a  part  transfer  as  collateral  not  fatal,  379  note. 
a  provision  against  assignment  as  collateral  means  ivithout  trans- 
ferring the  property,  379  note, 
assignment  of  all  property  to  creditors  does  not  carry  a  policy, 
379,  391  B,  386. 

contra,  379  note. 
indorsement  "  pay  to  A.  B."  not  a  fatal  assignment,  379  note. 
3.  Consent,  382-385,  385  A.,  387. 
in  writing.     Indorsement. 

attesting  by  agent  sufficient,  385  A. 
paper  attached  by  wafer  sufficient  indorsement,  385  A. 
assent  to  assignment  of  policy  after  transfer  of  property  suf- 
ficient, 385  A. 
oral  promise  to  indorse  not  enforceable  after  loss,  where  in- 
sured neglected  to  take  policy  for  indorsement  before  loss, 
385  A. 
receipt  as  assessments  from  assignee  no  waiver  of  condition 
as  to  written  assent,  385  A. 

1365 


INDEX. 
[The  references  are  to  the  sections.] 

ASSIGNMENT   BEFORE   LOSS  —  continued. 

consent  of  no  avail  if  facts  are  withheld  that  might  have 

prevented  assent,  385  A. 
company  cannot  arbitrarily  refuse,  contrary  to  the  spirit  of 
the  policy,  387. 
4.  General. 

Assignment  in  whole  or  part,  380. 

assignment  as  collateral  is  fatal  if  policy  provides  against 

assignment  in  whole  or  any  interest  under  it,  380. 
the   intent  to  transfer  the  whole  chose  must  be  manifested 
by  action  appropriate  to  the  circumstances,  i.  e.,  delivery 
of  the  document  securing  it,  to  the  assignee  or  to  some 
one  for  him  if  it  is  possible,  389. 
assignment  of  part  without  assent  invalid,  399. 
disposition  of  proceeds,  creditoi's,  children,  wife,  heirs,  admin- 
istrator, conflict  of  claims,  390. 
assignment  by  married   woman,  rights  of   children,   391.     See 

also  392. 
if  the  interest  of  the  insured  is  transferred  to  C,  and  then 
the  policy  to  B.,  the  latter  cannot  recover,  even  though  the 
company  consented,  and  B.  was  a  mortgagee ;  his  own  in- 
terest was  not  insured  by  the  consent,  and  the  old  interest 
back  of  the  policy  was  divorced  from  it,  378  note, 
so  an  assignment  after  the  assignor's  lease  has  expired  will  not 

bind  the  company  to  pay  the  assignee,  378  note 
a  defective  assignment  may  take  effect  as  a  designation  to  pay, 

378  note, 
possession,  delivery,  &c.,  395. 

delivery  to  another  for  the  donee  is  sufficient,  378  note, 
when  the  "  life  "  may  assign,  391. 
husband  and  wife,  391  A.,  390-394. 
creditors,  391  B,  390-394. 
beneficiaries,  390-394,  and  next  chapter. 
in  whose  name  suit  is  to  be  brought,  393,  381,  378. 

one  may  have  the  right  to  sue,  but  not  to  use  proceeds,  393. 
a  policy  may  be  drawn  payable  to  A.  or  his  assignees,  399  A« 
assignee  causing  death,  399  A. 
notice  of  transfer,  396  (life). 

one  may  be  held  as  a  trustee  in  respect  to  a  policy,  393,  399  A. 
assignment  as  collateral  gives  equitable  lien  on  proceeds  with- 
out regard  to  assent,  380,  386. 
assignor  of  collateral  must  pay  premiums,  399  A. 

they  may  be  added  to  mortgage,  399  A. 
assignee  in  bankruptcy  can  recover  from  the  bankrupt  only  the 
value  of  the  policy,  and  not  what  the  company  may  have  paid 
him,  399  B. 
fraud,  385,  397. 
violation  of  conditions  by  assignor,  378  A.,  379,  381,  386,  452  D. 

136G 


INDEX. 

[The  references  are  to  the  sections.] 

ASSIGNMENT    BEFORE    LOSS  — continued. 

measure  of  damages  he  must  pay  assignee,  399  B. 

damages  for  breach  of  agreement  to  assign,  ;]99  B. 

bequest,  devise,  donatio  causa  mortis,  &c.,  o99  C,  392. 

transfer  of  assured's  interest,  381,  381  a. 
ASSIGNOR,  defaults  of,  imputable  to  assignee,  379. 
ASSURED,  mistake  as  to  identity  of,  not  fatal,  43  D. 

agent  of.     See  Agent  and  Agents. 
ATTACHMENT,  may  be  an  incumbrance,  291. 
ATTENDANT  medical,  304. 
ATTENDING   PHYSICIAN,  467. 
AUTHORITY.     See  Agent,  7. 

AVERAGE,  general,  rule  as  to,  not  applicable  in  fire  insurance,  421  a, 

438. 

AWARD.     See  Arbitration. 


B. 

BAILEE,  insurable  interest  of,  80,  81,  95. 
BANKRUPT  has  insurable  interest,  when,  187. 

BANKRUPTCY  AND  INSOLVENCY,  does  not  deprive  wife  and  chil- 
dren of  proceeds  of  policy,  451. 

conflict  of  laws.     Assignment  in  domicil  takes  precedence  of  attach- 
ment in  another  State,  592. 

status  of  the  company  and  powers  of  court,  593. 

powers  and  duties  of  assignees  and  receivers,  594. 
interest  that  passes  to  receiver,  594. 
status  of  the  policy  holder,  594. 

distribution  of  assets,  594  a. 

priority  of  claims,  594  a. 

the  measure  of  a  policy  holder's  claim,  594  a. 

death  after  insolvency,  594  a. 

paid-up  policies,  594  a. 

compensation  of  receiver,  594  a. 

set-off,  595,  59n. 

rule  on  this  subject  as  affected  by  insolvency,  596. 

cessation  of  business,  597. 

selling  out  to  another  company,  597. 
BARRATRY,  411  A. 
BAWDY   HOUSE,  245. 

BELIEF,  expression  of,  no  warranty,  161,  188  D,  296. 
BELLIGERENT   FORCES,  death  by,  332. 
BELLIGERENTS,  power  to  contract,  36-41. 

1367 


INDEX. 
[The  references  are  to  the  sections.] 

BENEFICIARIES. 

1.  General. 

insurable  interest  of,  112,  113. 

consent  of,  necessary  to  a  valid  cancellation,  67,  67  C. 

indorsement  "  loss  payable  to  B."  is  equivalent  to  an  assignment 

with  assent,  399  D. 
if  A.  agrees  to  insure  for  B.'s  benefit,  equity  will  protect  B.  to 

the  extent  of  his  interest,  and  alter  notice  the  company  will 

pay  A.  at  its  peril,  399  D. 
two  or  more  named  as  beneficiaries  take  equally,  399  D. 
one  of  several  may  assign  to  extent  of  his  interest,  399  D. 
right  of  action,  399  D. 

2.  Designation. 

in  the  absence  of  provision  to  the  contrary,  any  person  may  be 
named  as  beneficiary  whether  interested  in  the  life  or 
not,  399  E. 
although  the  charter  describes  the  company  to  be  for  the 
benefit  of  widows  and  orphans,  399  E. 
a  policy  for  the  benefit  of  one  not  a  relative  nor  interested  in  the 
life  is  not  against  »mW(c  policy,  399  E. 

contra,  399  E. ;  and  see  Mich,  case,  399  F. 
and  if  it  were,  only  the  insurer  could  object,  399  E. 
sometimes  express  permission  is  given  to  designate  any  person 

whatever,  399  E. 
if  the  charter  and  by-laws  limit  the  right  of  designation,  or  express 
the  method  of  doing  it,  the  provision  must  be  conformed 
to,  399  F. 
in  some  cases,  however,  only  the  company  can  object,  399  F. 
subsequent  marriage  revokes  designation  ('?),  399  H. 
if  the  insured  makes  no  successful  designation,  the  fund  goes  to 
fulfil  the  Jirst  purpose   named   in  the   charter   (widow), 
399 F,  390. 
if  no  specific  purpose  is  so  named,  the  fund  belongs  to  the 
company,  399  F. 
courts  are  liberal  in  upholding  a  designation,  390,  399  I,  399  O. 
administrators  of  assignee  and  of  creditor,  390. 
child,  399  F.,  390,  dying  in  life  of  father,  399  N. 

under  the  words  "  my  wife  Mary  and  children,"  a  child 
by  former  wife  takes,  399  G. 
but  not  jNIary's  child  by  another,  399  G. 
"  child  "  will  not  include  grandchild,  399  G. 

contra,  399  G. 
except  to  keep  funds  from  escheating  to  company,  399  G. 
may  mean  adopted  child,  399  G. 
dependants,  399  E. 

family,  399  N,  may  include  housekeeper,  399  F. 
"  friends,"  invalid  designation,  399  H. 
grandchild,  399  E,  399  G. 

1368 


INDEX. 
[The  references  are  to  the  sections.] 

BENEFICIARIES  —  continued. 

heirs,  399  H. 

mother,  399  H. 

uncle,  399  H. 

widow,  399  F,  899  H. 

wife,  399  M,  390,  391,  dying  in  life  of  husband,  399  N. 
Form  of  designation. 

by  indorsement  required  by  charter,  399  F. 

by  will,  399  J,  399  F,  399  O. 

bv  entry  on  records,  399  F,  399  I. 

the  substance  will  be  looked  to,  399  I. 

and  a  parol  designation  may  be  sustained,  399  I. 

but  not  to  show  that  the  declarant  meant  to  keep  the  benefit  for 
himself,  399  I. 

a  transfer  to  the  wife  recorded  is  the  same  as  an  original  desig- 
nation, 399  I. 

direction  on  back  of  policy  sufficient,  399 1. 

error  in  naming  not  material  if  not  misleading,  399  K. 
Possession  of  policy  and  receipt  of  a  relative  may  be  a  defence  to 
company  against  beneficiary  if  so  provided,  399  K. 

3.  The   Interest   of   the   beneficiary  is   a   vested   one  the   moment  the 

policy  is  issued,  unless  the  agreement  contains  a  provision 
inconsistent  with  such  a  construction,  and  neither  the  person 
procuring  the  insurance  nor  the  company,  nor  both,  can  by 
deed,  will,  or  other  act  divert  that  interest  (390,  391,  392, 
399  L,  399  P,  399  Q;  contra,  slight  authority,  391). 

except  by  breach  of  condition  without  collusion,  399  L. 

nor  change  it  without  consent  of  the  beneficiary,  at  least  so  long 
as  he  lives,  399  L. 

some  cases  hold  the  interest  is  his  not  only  irrevocably  for  his 
life,  but  in  such  sense  as  to  pass  to  his  heirs  or  representatives, 
though  he  die  before  the  assured,  390. 

admissions  of  the  assured  are  not  those  of  the  beneficiary,  399  L. 

only  the  beneficiary  can  surrender  the  policy,  or  put  a  charge  on 
it,  390,  399  P. 

the  beneficiary  holds  against  creditors  of  the  assured,  390. 

the  company  cannot  set  up  the  rights  of  creditors,  390. 

where  the  contract  expressly  permits  change  of  beneficiary,  there 
is  no  vested  interest  until  the  death  of  the  assured,  399  M. 

4.  Death  of  beneficiary  before  the  assured,  399  N;  (see  also  391). 

revokes  appointment,  and  a  new  one  may  be  made,  399  N. 

unless  the  contract  gives  the  benefit  to  the  heirs  or  representa- 
tives of  the  first  beneficiary,  399  N. 

or  otherwise  provides  for  the  contingency,  399  N". 

share  of  tlie  deceased  goes  to  other  beneficiaries,  399  N. 

the  terms  of  the  contract  govern,  399  N. 

if  the  beneficiary  is  dead  at  the  issue  of  the  policy,  the  appoint- 
ment is  a  nullity,  399  N. 

1369 


INDEX. 
[The  references  are  to  the  sections.] 

BENEFICIARIES  —  continued. 

5.  Chauge  of  beneficiary,  399  O;   (see  also  390.) 

retaiuiug  possession  of  thie  policy  is  evidence  that  the  trust  was 
revocable,  399  O. 

unless  the  assured  is  one  of  the  contingent  beneficiaries ;  then 
his  keeping  it  is  natural,  399  Q. 

the  method  prescribed  by  the  charter  or  the  policy  must  be  fol- 
lowed, 399  O. 

but  the  courts  will  not  let  tliird  persons  take  advantage  of  slight 
informalities  (Iowa  contra),  399  O. 

equity  will  relieve  where  the  assured  has  done  all  he  could,  399  O. 

and  will  even  complete  the  chauge  after  his  death,  399  O. 

the  company  may  waive  defects,  and  their  own  neglect  to  com- 
plete the  formalities  will  not  protect  them,  399  O. 

•where  the  reason  for  naming  the  first  beneficiary  has  ceased,  399  O. 

■where  the  certificate  demanded  by  the  company  was  lost,  399  O. 

the  rule  requiring  surrender  of  the  certificate  does  not  apply 
when  it  is  lost,  399  O. 

6.  Surrender  of  the  policy  without  assent  of  the  beneficiary,  and  even 

non-payment  of  the  premiums  after  such  surrender,  cannot 
affect  the  beneficiary  where  he  has  a  vested  interest,  and  he 
can  follow  a  policy  substituted  for  the  old  one,  399  P. 

7.  Husband  and  Wife,  399  Q;  see  also  390,  391,  391  A,  394. 

assignment  of  policy  by  wife,  399  Q  ;  see  also  390,  391. 

N.  Y.  laws,  399  Q. 

receiving  part  of  fund  from  assignee  a  ratification,  399  Q. 

ratification  by  wife  of  policy  taken  in  her  name  by  husband 

without  authority,  394. 
Georgia,  399  Q. 
Tennessee,  391. 
BENEVOLENT  ASSOCIATIONS,  when  insurance  companies,  550  a. 
BENZINE,  included  in  stock  of  county  store,  233,  note. 
BEQUEST,  of  policy,  392,  399  C. 
BETROTHED,   insurable  interest  in   life  of  person  to  whom   she  is 

engaged,  107. 
BILL  IN  EQUITY,  to  reform  policy.     See  Equity. 
BINDING  BOOK,  44,  59. 
BLANKS  may  be  left  in  policy  for  name  of  insured  and  filled  any  time, 

27. 
BLOOD-SPITTING,  298. 

"  BOARD  "  understood  to  be  "  Brick  "  no  contract,  43  F. 
BOND,  for  support,  not  an  incumbrance,  292. 
contra,  292,  note, 
nor  bond  to  convey,  292, 
BROKER,  as  agent  to  receive  notice  of  cancellation,  67  H,  67  I,  67  L. 
how  far  agent,  123,  124  A. 
to  procure  assurance  is  agent  of  assured,  213. 

1370 


INDEX. 
[The  references  are  to  the  sections.] 

BROKER  —  continued. 

but  cannot  receive  notice  of  cancellation  for  assured,  67  H,  (57  L. 
unless  usage  so  determines,  67,  07  I,  fi7  L. 
or  the  policy  so  declares  (?),  67  I,  67  II. 
BRONCHITIS,  chronic,  representation  as  to,  298. 
BROTHER,  sister's  interest  in  life  of,  103. 
BUILDING,  description  of,  as  brick,  262. 

what  it  includes,  420. 
BURNING,  threats  of,  or  attempts  at,  208,  209. 

wilful,  evidence  of,  583. 
BY-LAWS.     See  Charter. 

and  charter,  effect  of,  on  rights  of  parties,  62-64. 

how  far  may  be  waived  by  officers  of  company,  146-147. 


c. 

CANCELLATION  — 

requires  agreement,  reserved  right,  or  some  fact  on  which  equity  can 
act,  67,  67  A,  67  M. 
abandonment  by  the  assured  not  assented  to,  no  effect,  67. 

1.  By  agreement  distinct  from  the  policy 

a  compromise  involving  surrender  and  cancellation   terminates 

the  contract,  67  A. 
a  receipt  acknowledging,  may  be  rebutted  if  without  considera- 
tion, 67  A. 
member  of  a  mutual  company  cannot  escape  assessments  by  can- 
cellation after  the  company  is  insolvent,  67  A. 
may  be  affected  by  agent  of  assured,  67  B. 

partner's  assent  to,  conclusive  on  firm,  67  B. 
agent  cannot  keep  such  policy  alive  for  himself,  67  B. 
an  agent  to  procure  insurance  does   not   necessarily  have 
authority  to  consent  to  cancellation,  67  B. 
assent  of  beneficiary  necessary,  67,  67  C. 

2.  Under  conditions  named  in  the  contract, 

construction  of  these  is  strict,  67,  69. 
the  right  must  be  exercised  before  loss,  67. 
by  bringing  suit,  67. 
Notice : 

must  be  reasonable,  67  D,  67  L. 

must  be  unconditional  demand,  not  a  mere  expression  of 
desire,  67  D. 

must  be  in  present  tense,  67,  67  D. 

length  of  time  before  cancellation,  68. 

to  the  company's  agent  to  cancel  is  operative  as  soon  as  the 
assured  knows  of  it,  67  E. 

1371 


INDEX. 
[The  references  are  to  the  sections.] 

CANCELLATION  —  continued. 

and  a  subsequent  agreement  with  the  agent  to  continue  the 

policy  is  void,  67  E. 
by  mail,  67. 
by  bringing  suit,  67. 
mistake  in,  not  fatal,  68. 

3.  To  whom  notice  must  be  given, 

assured  or  his  authorized  agent,  67  F. 

finding  notice  among  assured's  papers  after  his  death  not  suffi- 
cient, 67  F. 
notice  to  general  agent  of  assured  sufficient,  67  F. 

although  same  person  was  agent  for  company,  67  F. 
notice  to  special  agent  for  procuring  the  insurance  not  good,  67  G. 

e.  g.  broker,  67  H,  67  L. 
unless  custom  makes  broker  agent  to  receive  notice,  67,  67  I  ; 
see  67  L. 
or  the  policy  declares  he  shall  be  deemed  the  agent  of  as- 
sured (?),  671,  67  H. 
to  one  of   two  persons  severally  interested  does  not   affect  the 
other,  67. 

4.  Return  of  the  unearned  premium  is  also  usually  a  condition  of  can- 

cellation, 67,  67  J. 
if  a  premium  was  paid   to  the  company,  actual  tender  of   the 

return  premium  is  necessarj^,  67  J. 
except  where  the  cancellation  is  by  agreement,  67  K. 
a  credit  unassented  to  is  insufficient,  67  J. 
but  if  no  premium  was  paid,   as  where   credit   was    given,  no 

return  is  necessary,  67  K. 
if  only  a  note  was  given  the  return  premium  is  a  credit  on  it, 

67  K. 
agent  retaining  premium  after  notice  of  disapproval,  with  assent 
of  assured,  will  not  save  the  insurance,  69. 
For  non-payment  of  premium  must  be  before  tender  of  the  premium; 

Canada  statute,  67. 
For  refusal  to  pay  assessment,  means  legal  assessment. 

5.  The  company  versux  its  agent,  67. 

where  the  time  to  be  allowed  the  assured  to  get  new  insurance 

is  left  to  the  agent  and  he  allows  three  days,  there  is  no  such 

abuse  of  discretion  as  will  make  him  liable  to  the  company, 

67  L. 

but  delay  of  five  days  in  communicating   with   assured,   agent 

responsible,  67  L. 
agent  cannot  delegate  discretion  of  cancellation,  67  L. 
agent  is  responsible  to  company  if  he  gives  notice  to  broker, 
instead  of  assured,  and  .so  fails  to  cancel,  67  L. 
and  evidence  of  a  custom  to  do  so,  will  not  be  received  in 

his  favor,  67  L. 
agent  has  commission  only  on  premiums  earned,  67  L. 

1372 


INDEX. 
[The  references  are  to  the  sections.] 

CANCELLATION  —  continued. 

6.  Of  policy  will  be  decreed  in  equity, 

wliere  the  assured  had  no  interest,  67  M. 

where  the  policy  was  obtained  by  fraud,  67  M.^ 

but  not  for  intemperance,  07  M.,  the  assured  may  reform. 

7.  Mistake  of  agent  in  notice  in  designating  date  of  cancellatiou  not 

material,  68. 
neglect  of  agent  not  prejudice  assured,  67. 

cancellation  of  interim  receipt,  or  contract,  subject  to  approval, 
69. 
agreement  with  agent  after  notice  of  disapproval  to  the  as- 
sured, will  not  save  the  contract,  though  the  agent  retains 
the  premium,  69. 
an  agreement  without  consideration,  subsequent  to  delivery 
of  a  policy,  will  not  turn  it  into  a  contract,  taking  effect 
only  on  approval,  69. 
by  general  agent,  138. 
effect  of,  on  premium  note,  .555. 
right  of,  strictly  construed,  573,  574. 

not  obtainable  by  one  who  has  allowed  another  to  take  out  a  policy 
on  his  life,  566  C. 
CAPTOR  has  insurable  interest,  80. 
CARE  of  premises  insured,  representation  as  to,  250-255. 
CARPENTERS,  repairs  by,  240. 
CARRIER,  insurable  interest  of,  80,  94,  94  A. 

right  of  subrogation.     See  Subrogation,  3. 
CASUALTY  of  war,  death  by,  396. 
CAUSE,   PROXIMATE,  of  death,  301. 

of  loss  by  fire,  403,  412,  415,  416,  418,  419,  459. 
of  loss  by  explosion,  413. 
of  loss  by  collision,  416,  417. 
CERTAINTY  necessary  in  terms  of  insurance  and  renewal,  chap,  iii.,  and 

70  B. 
CERTIFICATE  of  magistrate,  necessary  when,  in  preliminary  proof,  466. 

of  secretary,  evidence  of  contract,  24. 
CESTUI   QUE    TRUST,  insurable  interest,  82. 
CHANCERY.     See  Equity. 
CHANGE.     See  Alteuation. 

of  circumstances,  &c.,  during  negotiations,  190,  218. 

after  contract,  157,  191,  208,  231,  244,  247,  248,  250-252. 
of  beneficiary.     See  Benkficiary,  5. 
CHARTER  AND  BY-LAWS,  effect  of,  on  rights  of  parties,  66. 

though  only  mentioning  written  contracts  may  not  exclude  parol,  15. 
even  though  charter  prohibits  parol  contracts  they  may  not  be  void, 

15,  23,  23  D. 
formalities  omitted,  lo,  16,  17,  23,  23  D. 

1373 


INDEX. 
[The  references  are  to  the  sections.] 

CHARTER   AND   BY-LAWS  — conti7iued. 

requiring  wiitten  policy   does  not  affect  the  usual  preliminary  oral 

agreements,  23  D. 
ought  not  to  be  deemed  known  to  the  general  public,  23  D. 
effect  of,  on  completion  of  the  contract,  62-64  A. 
violation  of,  by  over  insurance  not  fatal,  376. 
effect  upon  method  of  designating  beneficiary,  399  F. 
CHILD,  insurable  interest  in  life  of  parent,  106,  107. 
rights  in  life  policy  of  parent,  391,  302,  393. 
as  beneficiary,  390,  399  F,  399  G,  399  N. 
CIVIL  COMMOTION,  loss  by,  433. 
CLASSIFICATION,  of  risks,  232,  560. 

of  funds,  560. 
CLERKS  AND  SUB-AGENTS,  powers  of,  154. 
COLD  is  not  sickness,  178. 

COLLATERAL,  assignment  as,  380,386,  399  A. 
COLLISION,  loss  by,  417. 
COMMISSION,  goods  held  on,  421,  424. 

COMMISSIONS,  only  on  premiums  earned,  not  on  what  is  returned  in 
case  of  cancellation,  67  L. 
right  of  agents  to,  576. 
COMMISSION  MERCHANT,  insurable  interest  of,  95  A. 
COMMON  CARRIER  has  insurable  interest,  80. 
COMPANY.     See  Insurer. 

must  be  designated  or  no  contract  is  made,  43  F. 
COMPANY  V.  AGENT. 

Company  may   recover  difference   between  premium  charged,  and 
what  ought  to  have  been  charged  if  agent  had  disclosed  facts, 
138  B. 
agent  no  claim  because  his  term  of  office  is  broken  by  insolvency  of 

company,  138  B. 
agent  exonerated  by  honestly  adopting  one  of  two  possible  inter- 
pretations of  an  order  from  company,  138  B. 
Cessation  of  agency  : 

when  company  goes  out  of  business,  138  C. 

proofs  sent  to  one  who  has  ceased  to  be  agent  good  if  assured  no 

notice,  138  C. 
promise  to  renew  by  such  agent  only  makes  him  personally  lia- 
ble, 138  C. 
annual  license  to  company  in  name  of  agent  gives  him  no  right 
to  hold  to  end  of  year,  138  C. 
Agent's  authority  may  be  limited  by  the  terms  of  the  application  and 
the  policy,  137.     See  140. 
COMPLETION  OF  CONTRACT.     See  Consummation. 
COMPROMISE, 

involving  surrender  and  cancellation,  67  A. 

1374 


INDEX. 
[The  references  are  to  the  sections.) 

CONCEALMENT,  by  reinsured,  11  (z). 
of  the  cliaracter  of  the  assured,  ll(z)- 
of  double  insurance.  11  (z). 

disclosure  ia  general  terms  not  enough,  the  information  must  be  spe- 
cific, ll(z). 
dissent,  ll(z) 

1.  Effect  of  change  of  circumstances  pending  negotiations,  and   after, 

190,  191. 
defined,  200. 

when  fact  is  unknown,  201,  202. 
or  not  believed  to  be  material,  202. 
general  statement  of  facts  sufficient,  209. 
what  facts  must  be  disclosed,  208,  215.  364. 
answers  to  equivocal  interrogatories,  210-212. 
of  symptoms  of  disease,  or  habits  tending  to  shorten  life,  295-300. 
the  burden  of  proof  as  to  mateiiality  is  on  the  company,  and  the 
question  is  for  the  jury,  200. 
expert  may  be  asked  if  the  fact  would  increase  the  premium, 
200,  note. 
if  truth  and  fulness  are  warranted  the  questions  of  intent,  inadver- 
tence or  ignorance  do  not  arise,  201,  206. 
the  knowledge  of  his  agent  of  a  fact  unknown  to  the  insured 

has  been  imputed  to  him  to  avoid  such  a  policy,  201,  206. 
where  the  agent  does  not  act  in  the  transaction  to  which  the 
notice  relates  his  knowledge  is  not  imputed  to  the  principal, 
122,  note, 
the  better  opinion  does  not  hold  the  insured  for  lack  of  stating 
what  he  without  fault  does  not  know,  or  what  he  has  a  right 
to  believe   immaterial,   presuming  him  to  know  and  believe 
what   men  of  ordinary  intelligence  know  and  believe  under 
similar  circumstances,  203. 
knowledge  of  the  insured  a  question  for  the  jury,  202. 
cases  harmonized  on  their  facts,  203,  205. 

2.  Facts  known  to  the  insurer  or  his  agent  or  which  ought  to  be  known  to 

him,  and  facts  which  lessen  or  do  not  increase  the  risk  and  re- 
motely connected  details  not  inquired  about,  need  not  be 
stated,  207.     See  also  215  B. 

if  inquiry  is  made,  concealment  is  fatal  though  the  fact  is  not 
material,  207. 

the  knowledge  of  the  company  must  be  as  definite  as  that  of  the 
assured  to  excuse  non-disclosure,  207. 

if  a  fact  concealed  comes  to  company's  knowledge  before  issue  of 
policy  it  is  bound  by  the  issue,  207. 

if  no  inquiries  are  made  the  insured's  intent  is  an  essential  ques- 
tion, 207. 

less  strictness  in  fire  than  in  marine  insurance,  207. 
threats  of  burning  or  attempts  to  set  on  fire  the  house  insured,  or  a 
neighboring  one,  must  be  disclosed,  208. 
VOL.  II.  -  43  1375 


INDEX. 
[The  references  are  to  the  sections.] 

CONCEALMEXT  —  continued. 

informing  the  agent  is  sufficient  if  no  questions  are  asked  in  the 

application,  208. 
facts  occurring  after  issue  of  a  policy,  208. 
a  general  statement  of  the  facts  sufficient  to  put  the  insurers  on 

inquiry  is  enough,  209. 
mere   idle  talk  not  worthy  of  the  regard  of  a  prudent  person 

need  not  be  communicated,  209. 

3.  When  there  is  room  for  opinion,  an  honest  view  such  as  a  man  of 

ordinary  prudence  and  intelligence  would  take  under  the  cir- 
cumstances, though  an  erroneous  one  as  it  may  afterward 
prove,  is  no  misrepresentation,  especially  if  the  company's 
agent  arrived  at  a  similar  judgment,  210,  211. 
as  "What  houses  endanger  the  one  insured?"  or  "Is  there  a 
livery-stable  in  vicinity  ?  "  or  "  Have  you  had  any  serious  ill- 
ness? "  or  "one  tending  to  shorten  life  ?  "  210,  211. 
an  equivocal  answer,  or  statement  of  only  part  of  the  truth  may  be  a 

concealment,  210,  212. 
agent's  concealment  imputed  to  principal,  213. 

but  one  simply  referred  to  by  the  insured,  who  merely  states  his 
belief  in  their  truth,  cannot  prejudice  him  by  misrepresenta- 
tions or  concealment  unknown  to  him,  213. 
broker  to  procure  is  agent  of  assured;  one  insurance  agent  going 
to  another  of  his  own  notion,  not,  213. 
Where  A.  insures  the  life  of  B.,  statements  concerning  his  health 
by  the  person  whose  life  is  insured  (B.)  may  be  admissible  as  a 
part  of  the  res  geslce,  214. 
ordinary  diligence  in  sending  information  is  all   that  is  required, 
though  a  special  message  might  have  saved  the  company,  215  D. 

4.  Matters  not  material,  unless  made  so  by  agreement  or  inquiry,  207, 

21.5  C,  364. 
prior  insurance,  207. 

threat  of  burning  some  months  before  during  election  excite- 
ment, 208. 

idle  talk.  209. 
character  of  tenants,  207. 

or  of  adjoining  buildings,  207. 
erection  of  new  building,  207. 
personal  dislike  to  insured,  207,  215  B. 
pending  litigation,  207. 

how  building  is  heated  or  lighted,  207,  215  B. 
void  tax  title,  207. 
damaged  goods  on  board,  207. 
minor  details,  207.  » 

matters  open  to  general  observation,  208. 
insured's  opinion  as  to  derangement  of  functions,  215. 
incumbrance  in  case  of  insurance  in  stock  company,  215. 
insured  insolvent,  215  B. 

1376 


INDEX. 
[The  references  are  to  the  sections.] 

CONCEALMENT  —  continued. 

risk  in  same  block  declined,  215  B. 

agreement  between  mortgagor  and  mortgagee  as  to  payment  of 

premium,  215  B. 
brick  oven,  215  C. 
fact  decreasing  risk,  215  C. 
sensations,  apprehensions,  215  C. 
opinions,  210,  211. 

disclosure  of  fact  in  reference  to  which  there  is  a  warranty,  is 
unnecessary,  215  C. 
Material  facts  : 

threats  of  burning  in  general  or  attempts  to  set  the  house  or  a 
neighboring  one  on  fire,  208  ;  but  see  207. 
idle  talk  not  material,  209. 
single  woman  had  child  year  or  two  before  (?)  215. 
pregnancy,  215. 

incumbrance  in  case  of  mutual  insurance,  215. 
prior  applications,  215,  but  see  188  C. 
warehouse  erected  within  forty-one  feet,  215  A. 
benzine  in  adjoining  building,  where  policy  prohibits,  215  A. 
probable  loss  of  vessel,  215  A. 
Materiality  a  quest  ion  for  jury: 

carpenter  work  going  on,  207. 
double  occupancy  of  house,  207. 
assured  in  prison,  215. 
insane  twenty  years  before,  215. 
release  of  carrier  from  liability,  215  A. 
in  France,  where  concealment  not  sufficient  to  avoid  policy  the  com- 
pany may  deduct   the  additional   premium  that  would  have  been 
charged  if  the  truth  had  been  known,  215  B. 
CONCUSSION,  loss  by,  411. 
CONDITION.     See  Arbitration  ;  Limitation. 
how  affected  by  war;  see  analysis  chap.  iii.  5. 
as  to  prepayment  of  premium,  when  not  implied,  22. 
as  to  indorsements,  when  not  implied,  23. 
of  cancellation,  see  chap.  v.  anal.  2  et  seq. 
surrender  on,  incomplete  till  condition  is  fulfilled,  69  B. 
precedent,  what  amounts  to,  161,  188,  note,  495. 
to  be  careful,  531. 

working  forfeiture  construed  strictly,  162,  170,  171,  175. 
statutory  modifications  of,  180  a. 
reasonable,  what,  180  a. 
presumption  of  knowledge  of,  216. 

breach  of  condition  renders  the  contract  voidable  not  void,  216,  365. 
two  classes  of   stipulations,  those  relating  t6  matters  prior  to  loss 
and  determining  the  risk,   and   those  relating  to  matters   arising 
after  the  loss,  and  relating  to  its  establishment,  adjustment,  and 
recovery,  217. 

1377 


INDEX. 
[The  references  are  to  the  sections.] 

CONDITION  —  continued. 
Watchman,  250-252. 

no  implied  obligation  to  keep  watch  in  a  vacant  house,  248. 
absence  of  watch  at  meals,  251. 
one  who  sleeps  not  a  "  watchman,"  252. 

warranty  of  "  watchman  on  premises  "  is  fulfilled  if  he  is  on  ad- 
joining premises  in  better  position  to  watch  than  if  in  the  mill, 
252. 
working  of  mills,  hours    of  running,    253.     "Constantly  worked" 
means  during  ordinary  hours,  253.     "  Worked  by  day,"  no 
breach  if  engine  works  at  night,  253. 
stoppage  for  repairs,  253. 
condition  a<;ainst  ceasing  operations  not  broken  by  stop  because  of 
epidemic,  or  permitted  repairs,  nor  by  suspension  of  part  of 
the  business,  unless  the  condition  expressly  and  undoubtedly 
includes  such  stoppage,  253  A. 
agent's  knowledge  before  issue  of  policy  that  a  factory  or  dis- 
tillery is  run  at  night,  &c.,  estops  the  company  to  set  up  the 
condition  against  such  running,  253  B.    {Contra,  Massachu.setts 
and  probably  some  other  States  ,  see  145  et  se<].) 
but  agent's  knowledge  of,  or  even  company's  verbal  assent  to,  an 
intention  to  do  an  act  in  the  future,  will  not  estop  it.  253  B. 
"  mill  examined  after  work."     At  what  time  work  ceases  question 

for  jury,  254. 
warming ,  care  of  stoves ;  ashes  to  be  put  on  brick  not  wood  ;  iron 

shutters,  255. 
covenant  to  keep  books  in  safe  at  night  means  after  business  hours, 
^63  A. 
adjuster  may  waive  the  covenant,  263  A. 
agreement  to  keep  stock  up,  failure  not  fatal  if  stock  gets  below  the 

insurance,  for  the  company  is  benefited,  2G3  A. 
agreement  not  to  question  application  after  death  excludes  evidence 

of  fraud,  or  misrepresentation,  263  A. 
policy  to  be  void  if  building  falls,  not  void  by  part  falling,  263  A. 
substantial  compliance  with  conditions  is  sufficient,  263  B. 
company  estopped  if  performance  is  prevented  by  itself,  263  B. 
failure  of  collateral  agreement  to  give  company  all  his  insurance,  not 

fatal  unless  so  expressed,  263  B. 
condition  valid  though  ill  worded,  263  B. 

no  expert  evidence  as  to  matter  of  common  experience,  263  C. 
custom  will  not  determine  question  of  increase  of  risk,  263  C. 
burden  of  proving  breach  is  on  company,  263  C. 
in  Canada  standard  conditions  are  fixed  by  statute,  263  D. 
the   Massachusetts    Public    Statutes   provide   a  very  good    standard 
policy.     Such  statute   conditions   may  however  be  varied  by  the 
parties,  263  E. 
CONDITIONS  PRECEDENT.     See  Coxsumm.\tion 
CONDITIONAL  sale  no  alienation,  272. 

1378 


INDEX. 

[The  references  are  to  the  sections.] 

CONSENT  of  directors  to  other  insurance,  how  signified,  371. 

CONSIGNEE,  has  insurable  interest,  80,  95  A. 
has  ckxim  for  loss,  521,  520. 

CONSOLIDATION, 

new  company  taking  all  risks  of  an  old  one,  12. 

CONSTRUCTION.     See  chap.  viii.  anal.  3,  4. 
liberal  to  secure  indemnity,  2. 
what  law  governs,  66,  66  A. 

of  right  to  cancel  by  notice  is  generally  strict,  67,  69. 
rules  of,  172-180. 

favorable  to  object  of  contract,  174. 
of  language  against  those  using  it,  175. 
of  condition  against  other  insurance,  367. 

CONSUMMATION  OF  THE  CONTRACT, 

1.  the  minds  of  the  parties  must  meet  on  the  terms  and  all  conditions 

precedent  be  fulfilled,  43-43  H,  44-45  a,  50-52. 
terras  may  be  fixed  by  past  dealings,  43  B. 

the  contract  may  be  complete  without  payment  of  premium  or  giving 
bond  to  pay  assessments,  43  C. 
and  in  spite  of  mistake  in  the  name  of  vessel,  43  D. 
or  error  of  agent  as  to  identity  of  insured,  43  D. 

or  by  charging  less  premium  than  he  ought,  43  E. 
an  agreement  to  give  policy  on  a  contingency  is  good,  43  E. 

2.  when  contract  not  complete,  43  F. 

bad  writing,  "  board  "  looks  like  "  brick  "  and  so  taken,  43  F. 
apportionment  of  insurance  indeterminate,  43  F. 
amount  of  premium  not  fixed,  43  F. 
no  designation  of  the  company,  43  F. 

or  of  the  property,  43  F. 
necessary  approval  not  given,  43  F,  54,  54  C. 
a  loss  or  alteration   known   to  insured  before  completion,  is  fatal, 

43  G. 
the  application  is  only  a  proposal,  43  H. 

delay  in  acting  on  it  will  not  turn  it  into  a  contract,  43  H. 
accepted  application  or  a  renewal  receipt  implies  agreement  to  issue 

policy,  43,  44. 
witness  must  state  facts,  not  his  opinion  that  the  contract  was  com- 
plete, 43  A. 
binding  book,  44. 

policy  issued  after  loss  in  pursuance  of  an  agreement  before  loss,  is 
good,  45,  45  a. 
the  unpaid  premium  is  a  credit  on  the  amount  recoverable  on 
such  policy,  45  a. 
negotiations  by  mail,  46-49. 
8.  acceptance  what  constitutes,  53. 

approval,  and  agreements  subject  to,  54-54  C. 
approval,  meaning  of,  54  A. 

1379 


INDEX. 

[The  references  are  to  the  sections.] 

CONSUMMATION    OF    THE    CONTRACT  —  continued. 
notice  of  disapproval,  54  B 

an  applicafciou  ouce  approved  by  the  company  cannot  be  arbitrarily 
rejected  afterward,  54  C- 

4.  policy  held  for  payment  of  premium  on  approval  of  applicant,  55. 

neither  illness  or  death  excuses  the  agent  in  not  delivering  on 

tender  of  preiniuia,  55. 
delivery  and  payment  of  premium  as  conditions  precedent,  43,  55  A, 

56-58,  60. 
what  constitutes  delivery,  60. 
manual  possession  only  prima  facie  evidence,  56. 
delivery  not  essential  unless  so  agreed,  55  A. 
if  neither  delivery  nor  prepayment /)r»;wyac/e  no  contract,  56. 
but  delivery  and  prepayment  together  are  not  conclusive   that 

there  is  a  contract,  56 
if  there  is  a  condition  for  prepayment  of  the  premium,  delivery 

does  not  waive  it,  56 
neglect   of  the   agent  preventing  completion  makes   the   company 

responsible,  58,  64. 
interim  receipts,  59. 

5.  obligations  are  mutual,  61. 

if  one  may  demand  a  policy,  the  other  may  demand  a  premium. 

effect  of  charter  and  by-lav\'s,  62-64  A. 

See  chap.  iv.  anal.  5,  and  chap.  ii.  anal.  1. 

countersip;nature  as  a  condition  precedent,  65. 

place  of  contract,  66,  66  A. 
CONSUMPTION,  statement  about,  295,  297,  298. 
CONTRACT,  of  reinsurance.     See  Reinsurance. 

for  a  year,  not  within  Statute  of  Frauds,  13. 

form  of,  14,  27,  28,  44. 

oral,  valid,  when,  14  et  seq.     See  Pahol  Contract. 

non-compliance  with  statutory  requisitions  as  to  form  not  fatal,  15-20. 

provisions  in  charter  as  to  form  directory,  15,  16,  17. 

certificate  of  secretary,  evidence  of,  24. 

oral  agreement  to  extend,  valid,  24. 

stamp  acts,  effect  of,  25. 

consummation  and  completion  of,  43-65.     See  Consummation. 

terms  of,  fixed  by  past  dealings,  43  B. 

to  give  policy  on  a  contingency  good,  43  E. 

with  agent  after  absolute  delivery  of  policy  will  not  turn  it  into  an 
agreement  on  approval,  69,  no  consideration. 

after  notice  of  disapproval  will  not  save  the  insurance,  though  the 
agent  retains  the  premium,  69. 

completion  of,  after  loss,  44,  45  a. 

completion  of,  by  correspondence,  46-49. 

none,  unless  all  the  terms  agreed  upon,  50-52. 

acceptance  of  terms  of,  49,  53,  57,  58. 

negotiation  of,  through  agents,  54. 

1380 


INDEX. 
[The  references  are  to  the  sections.] 

CONTRACT  —  continued. 

prima  facie  incomplete,  when,  56. 
effect  of  provisions  of  charter  and  policy  on,  62-64. 
place  of,  66,  66  A. 

existing,  not  affected  by  division  of  state,  66  A. 
cancellation  of,  67-69. 
subject-matter  of,  71-117. 
what  constitutes  part  of,  158,  161. 

of  insurance  interpreted  by  same  rules  as  other  contracts',  172. 
liberally  construed  in  favor  of  its  object,  174. 
most  strongly  construed  in  favor  of  insured,  175,  176. 
written  words  in,  prevail  over  printed,  177. 
when  entire,  avoided  by  breach  of  condition  as  to  part,  277. 
waiver  of  agreement  for,  492. 
CONTRACTOR,  insurable  interest  of,  93,  95  A,  109. 
CONTRIBUTION  to  loss  by  several  insurers,  13,  434-440. 

where  there  is  double  insurance  a  company  paying  more  than  its 
share  of  the  loss  is  entitled  to  have  the  rest  contribute,  13,  and 
note, 
where  several  insurers  protect  the  same  interest  in  the  same  property, 
as  there  is  only  one  loss  and  can  be  but  one  indenmity,  they  must 
share  proportionally  up  to  the  limit  of  liability,  434. 
if  one  company  has  restricted  its  liability  and  another  has  not,  the 
latter  may  have  to  pay  more  than  its  proportional  share  according 
to  the  rates  specified  for  apportionment  in  the  policies,  435,  438. 
double  insurance,  435. 
identity  of  risk,  435.     See  also  436  a,  437. 
floating  policy,  specific  insurance,  436-436  a. 
average,  438. 
reinsurance,  439. 

void  policy,  439. 
generally  a  life  may  be  insured    any  number  of  times,  but  where 
the  interest  in  it  has  an  ascertainable  value  the  above  rules  ap- 
ply, 440. 
life  and  accident  insurance  combined,  441. 

payment  of  life  policy  in  mistaken  belief  of  death  may  be  recov- 
ered, 442. 
fraudulent  overvaluation  of  property  is  a  complete  defence,  443. 
lost   policy.     No  bond  of   indemnity  can  be  required  by  the  com- 
pany, 444. 
CONTRIBUTORY   NEGLIGENCE,  530,  538. 
CONVEYANCE,  public,  what  is  travelling  by,  524-529. 
COPARTNER,  interest  of,  insurable,  99. 
CORRESPONDENCE,  negotiations  by,  46-49.    / 
COSTS  of  suit  against  reinsured  borne  by  reinsurer  after  notice  unless 

unreasonable,  11  (z^). 
COTENANTS,  transfer  between,  as  an  alienation,  280. 

1381 


INDEX. 
[The  references  are  to  the  sections.] 

COUGH,  statements  about,  297. 

COUNTERSIGNATURE  by  agent,  as  a  condition  precedent,  65. 

by  secretary  required  by  ctiarter,  15,  and  notes  2  and  7. 

may  be  waived,  65. 

determines  place  of  contract,  66. 
COUNTRY   STORE,  "  goods  usually  kept  in."     See  Risk,  2. 
COURSE   OF   DEALING  may  show  authority  of  agent  to  make  subse- 
quent oral  contract  modifying  policy,  24  A. 

may  show  that  credit  for  the  premium  was  given,  27. 

may  fix  terms  of  contract,  43  B. 
CREDITOR  interested  in  life  of  debtor,  8,  83,  95,  102  A,  108, 

when  debt  is  tliat  of  an  infant,  103. 

or  is  barred  by  Statute  of  Limitations,  103. 

claims  to  proceeds  of  life  policy  as  against  administrator,  390,  398. 

claim  to  proceeds  of  fire  policy,  449. 

right  of  subrogation,  456,  4-52  A. 
CREDITORS,  extent  of  a  creditor's  claim  on  the  proceeds  of  insurance 
made  to  secure  the  debt,  459  A. 

creditors  v.  beneficiaries,  459  B. 

statutes,  459  C. 

creditor  may  recover  though  the  debt  is  paid,  459  D. 

creditor  to  whom  policy  payable  as  his  interest  may  appear  has  no 
right  of  action  on  the  policy,  459  D. 

creditor  not  a  "  dependant,"  459  D. 

homestead  exempt,  and  so  are  proceeds,  459  D. 

proceeds  of  other  exempt  property  not  so,  459  D. 

ordinary  life  policy  vests  in  heirs,  not  subject  to  debts.     Endow- 
ment policy  otherwise,  459  D. 

insolvency,  459  E. 

garnishment,  459  F. 

proofs  if  not  waived  must  be  furnished  by  insured  or  by  credi- 
tor, before  the  latter  can  trustee  the  company,  459  G. 
when  creditor  cannot  garnishee,  459. 
CURTESY,  tenant  by,  how  he  should  state  title,  287,  289. 

if  contingent  not  an  incumbrance,  292. 
CUSTOM.     See  Usage. 

in  aid  of  interpretation,  179,  180. 

as  to  payment  of  premium,  356. 

evidence  of,  582. 
CY  PRiJS  PERFORMANCE,  357. 


D. 

DAMAGES,  for  refusal  to  renew  policy,  429. 

for  failure  to  keep  original  policy  alive,  reinsurer  may  be  liable,  12, 
note. 

See  Loss;  Measure  of  Damages;  Rebuilding. 

1382 


INDEX. 

[The  references  are  to  the  sections.] 

DAYS   OF   GRACE,  for  payment  of  premium,  346,  353-357. 

usage  as  to  allowing,  346. 
DEALINGS.     See  Coukse  of  Dealing. 
DEATH,  by  intemperance,  301. 

by  one's  own  hand,  307,  311,  313-319.     See  Suicide. 
in  consequence  of  a  duel,  311. 
in  violation  of  law,  327,  327  A,  328,  329,  331. 
by  the  hands  of  justice,  326. 

by  violence  in  every  form,  covered  by  policy,  330. 
in  military  service,  by  casualty  of  war,  or  belligerent  forces,  332-334. 
proof  of,  465. 

time  of,  how  reckoned,  400. 
representations  of,  575, 
evidence  of,  585. 
of  beneficiary,  effect  of,  399  N. 
DEBT,  of  infant,  insurable,  108. 

barred  by  statute,  insurable,  108. 
DEBTOR,  interested  in  proceeds  of  insurance  by  creditor,  when  he  pays 
the  premium,  8. 
insurable  interest  in  property  attached,  95. 
right  of  subrogation,  456. 
DECLARATION.     See  Pleading. 
what,  29. 

must  set  out  oral  agreement  subsequent  to  policy  if  relied  on,  24  A. 
DE  FACTO.     See  Officers. 
DEFINITION  of  insurance,  1. 
DELAY.     See  Laches. 

in  acting  on  an  application  does  not  turn  it  into  a  contract,  43  H. 
DELEGATION.     See  Agents,  Sub-Agents,  &c. 

of  discretion  given  agent,  67  L. 
DELIRIUM   TREMENS,  299. 

DELIVERY   OF   POLICY  as  an  element  incompleting  the  contract  of 
insurance.     See  Consummation,  4. 
not  necessary,  55  A,  62. 

policy  good  from  time  left  with  agent  for,  62. 

does   not  waive   prepayment  of   the   premium  according  to  condi- 
tion, 56. 
re-delivery  of  surrendered  policy  by  agent  after  he  knows  of  a  loss, 

note  9,  69  B. 
what  constitutes,  56,  60. 
in  case  of  assignment,  378,  note,  395. 
DEPOSIT   NOTE^.     See  Premium  Note. 
DESCRIPTION,  when  representation,  256. 
when  warranty,  247,  257. 

of  surroundings,  boundaries,  buildings,  258-261. 
usage  as  evidence  of  truth  of,  262. 
of  person,  259. 

1383 


INDEX. 

[The  references  are  to  the  sections.] 

DESIGN,  loss  by,  407. 

DESIGNATION  of  beneficiary.     See  Beneficiary,  2. 

DIRECTLY,  defined,  53. 

DIRECTORS,  liable  to  stockholders  for  negligence,  17. 

liability  of,  for  not  making  assessments,  504. 

liable  to  insured  for  misrepresentation,  570- 
DISABILITY,  to  contract,  36,  37. 

of  belligerents,  36,  37 

total,  522,  523. 
DISCOVERY,  bill  for,  566  C. 

DISCRETION  of  agent  in  cancellation  as  to  time  to  be  allowed  assured, 
67  L. 

cannot  be  delegated,  67  L. 

DISEASE.     See  Health. 
local,  296. 

representations  as  to,  297,  298. 
subject  to  or  afflicted  with,  297. 
requiring  confinement,  297. 
chronic,  585. 
DISSEISOR,  insurable  interest  of,  81. 

DISSOLUTION  of  company  by  sale  to  another  company  which  rein- 
sures all  risks.  12. 
surplus  in  treasury  of  a  mutual  company  goes  to  all  policy-holders 
past  and  present  who  helped  to  create  it,  12  C. 
DISTANCE  from  other  buildings,  284. 
DIVIDEND,  when,  payment  of  premium,  345  a. 

in  mutual  insurance.  571,  572. 
DIVISION    OF    STATE  does  not  affect  existing  contracts,  66  A. 
DO^IICIL,  as  affecting  the  insurance  of  the  lives  and  property  of  public 

enemies,  see  chap.  iii.  anal  4, 
DONOR,  no  insurable  interest,  76  A. 

DOUBLE   INSURANCE,  13,  440.     See  Other  Insurance. 
means  more  than  one  insurance  of  the  same  interest,  13. 

insurance  by  shipper  and  carrier  of  same  goods,  not  double,  13, 
note, 
insured  can  recover  no  more  than  his  loss,  13. 
liability  of  insurers  proportional,  13. 

one  paying  more  than  his  share  may  call  on  the  others  for  contribu- 
tion, 13. 
insured  may  elect  whether  to  sue  one  company  for  the  whole,  or  each 

company  for  its  share  of  the  loss,  13,  and  note, 
concealment  of,  by  reinsured,  fatal,  11  (z). 
DRINKING.     See  Intemperance. 
DROWNING,  death  by,  516-517. 
1384 


INDEX. 

[The  references  are  to  the  sections.] 

DRUNKENNESS.     See  Habits. 

is  a  breach  of  the  warranty,  "  no  habit  obviously  tending  to  shorten 
life,"  296. 
DUTIES   AND   IMPOSTS,  whether  included  in  loss,  421 
DWELLING-HOUSE,  what,  2i7. 

occupancy  of,  247,  248. 
DYSPEPSIA,  295. 


E. 

EARNINGS,  future,  insurable  interest  in,  104. 

EMPLOYER   AND   EMPLOYEE,  insurable  interest  of,  104,  109  c, 

ENCUMBRANCE,  known  to  agent,  133  A. 

what  is,  and  what  is  not,  290-294. 
ENDORSEMENTS  on  application  and  policy,  effect  of,  29  A. 
ENDOWMENT    POLICY,  the  words  "  non-forfeiture  endowment  pol- 
icy "  in  the  margin,  held  not  a  part  of  the  policy,  29  A. 

non-forfeitable,  when,  344  ft, 

loss  under,  452. 
ENEMY,  property  and  life  of,  when  insurable,  37,  37  (s),  42  (s). 
ENGINE  running  at  night  is  not  running  the  mill,  178. 
ENTIRE    CONTRACT,  what,  277,  278. 

how  affected  by  alienation  of  part  of  the  subject-matter,  277-278. 
ENTHIE,  unconditional,  &c.,  owner.     See  Title,  4. 
ENTRY  for  foreclosure,  whether  alienation,  269,  269  a. 
EQUITABLE    ADJUSTMENT  after  forfeiture,  572. 
EQUITABLE    TITLE  gives  insurable  interest,  84. 
EQUITY,  will  decree  cancellation,  67  M. 

will  reform  policy,  when,  565. 

will  decree  loss,  when,  506. 

will  revive  policy,  when,  568. 

will  compel  delivery  up  of  policy  obtained  by  fraud,  when,  573. 
EQUIVOCAL,  statements,  193,  210,  212,  250-256, 
ERROR  of  agent,  see  chap.  vii.  anal.  3. 
ESTOPPEL.     See  Relinquishment,  W^aiver,  &c. 

by  knowledge  of  agent  of  removal  of  property,  70  a. 

by  retaining  overpayment,  70  C. 

reviving  dead  policy,  70  C. 

by  act  of  agent,  141-146,  497,  500,  .509,  513. 

by  knowledge  of  untruth  of  statement,  143,  263,  500,  294  E. 
See  Agent,  and  Incumbrance,  6. 

in  matters  of  description,  263. 

where  facts  arise  pending  negotiations,  .501. 

where  facts  arise  during  the  currency  of  the  policy,  502. 

defined,  502. 

1385 


INDEX. 

[The  references  are  to  the  sections.] 

ESTOPPEL  —  continued. 

if  act  required  is  known  to  be  impossible,  503. 
whei'e  facts  arise  after  loss,  505. 
what  acts  or  omissions  amount  to,  505. 
none,  if  facts  are  not  known,  506. 
none,  where  insured  is  not  prejudiced,  507. 
whether  silence  amounts  to,  508. 
where  act  is  prohibited  by  charter,  510. 
by  notice  from  stranger,  512. 
EVIDENCE  of  completion  of  contract.     See  Consummation,  4. 

custom  competent  as  to  nature  of  parol  agreement  as  a  final  insur- 
ance or  for  a  policy,  23  B. 
of  general  agency,  126. 
of  usage,  173,  179,  262.     See  below, 
statements  at  medical  examination,  303. 
of  payment  of  premium,  359. 
of  other  insurance,  372  F. 
of  filing  preliminary  proof,  472. 
burden  of  proof,  579. 

insurable  interest,  579. 
title,  579. 
neutrality,  579. 

former  transactions,  579. 
identity  of  premises,  579. 
misrepresentation  of  "  life  "  in  former  transaction  of  his  own  cannot 
affect  creditor's  policy,  579. 
proofs  as  evidence,  579. 
application,  579. 

other  similar  occasions,  579. 
admissions  of  adjuster,  579. 
physician's  privilege  waived,  579. 
wrong  admission  of  evidence  not  cured  by  telling  jury  to  disregard 

it,  579. 
declarations  of  the  "life  "  not  admissible  against  the  beneficiary  un- 
less part  of  res  gestce,  579  A. 
parol  evidence  of  what  passed  at  insurance,  579  B. 
of  error  in  policy,  as  to  date  or  amount,  579  B. 
of  meaning  of  "  epidemic,"  579  B. 
of  meaning  of  "rags,"  "old  metals."     Usage,  579  B. 
that  assignment  was  as  collateral,  579  B. 

circular  saying  that  30  days  grace  would  be  given  on  premiums, 
inadmissible,  579  B. 
expert  testimony,  580,  581. 
custom  and  usage,  582. 

particular  custom  must  be  known  to  insured,  582. 
general  custom  as  to  charge  more  on  unoccupied  houses,  is  inad- 
missible on  question  of  increase  of  risk,  582. 
so  general  custom  to  give  30  days  grace  on  premiums,  582 

1386 


INDEX. 
[The  references  are  to  the  pactions.] 

EVIDENCE  —  continued. 
wilful  burning,  583. 

a  preponderance  of  evidence  enough,  583. 
contra,  a  few  cases,  583. 
every  circumstance  that  can  throw  light  on  motive  is  evidence,  583. 

plaintiff's  good  character  admissible,  583. 
issue  of  policy,  584. 

signing  application,  584. 
receipt  of  premium,  584. 
organization  of  company,  584. 
disease,  585. 

health,  585. 
death,  585. 
effect  of  misrepresentation  a  question  of  law,  586. 
suicide,  587. 
belief,  587. 
character,  587. 
fraud,  587. 

value  of  neighboring  property,  587. 
variance,  587  A. 
court  and  jury,  587  B. 
EXAMINATION,  of  premises,  after  work,  276. 

on  oath,  as  part  of  preliminary  proof,  what,  and  when,  466,  476. 
when  option  of,  permitted,  but  not  exercised,  502  a. 
EXCUSE  for  non-payment  of  premium.     See  Premium,  9. 
for  overvaluation,  373  A,  373  B. 
for  failing  to  sue  in  time  limited,  484-488. 
EXECUTION,  levy  of,  as  an  alienation,  274. 

sale  or  seizure  on,  is  an  incumbrance,  291. 
EXECUTOR  has  insurable  interest,  80. 
EXPECTED   PROFITS  insurable,  79. 
EXPERT,  testimony  of,  580,  581. 
EXPLOSION,  loss  by,  413-416. 
of  gunpowder,  413. 
of  steam,  415. 
of  gas,  416. 
definition  of,  508. 


FACTOR,  insurable  interest  of,  80,  95  A. 

FALSE    PRETENCE,  when  misrepresentation,  197. 

FALSE   SWEARING,  what,  477. 

FAMILY  as  beneficiary,  399  F,  399  N. 

FAMILY  PHYSICIAN,  who  is,  304. 

name  of,  to  be  given  in  preliminary  proof,  when,  467. 

1387 


INDEX. 
[The  references  are  to  the  sections.] 

FATHER,  interest  in  life  of  child,  104-107. 
FEE-SIMPLE,  289. 

FEME    SOLE,  under  contract  of  marriage,  insurable  interest  of,  107. 
FIRE,  what  is  loss  by,  402,  406,  412,  413. 

FIRE  INSURANCE,  attempted  distinction  between  fire  and  life  insur- 
ance, 7. 
a  valuable  interest  must  exist  in  each,  7 
FIREWORKS,  when   included   in   ri.sk,  233,    233,   note,   239   B.      See 

Risk,  2. 
FITS,  subject  to  or  affected  with,  297. 

fainting,  not  epileptic,  297. 
FIXTURES,  420. 

FLOATING  POLICY,  loss  under,  436,  436  a. 

FORECLOSURE  OF  MORTGAGE   as  an   alienation.     See   Aliena- 
tion, 2. 
FOREIGN  COMPANIES,  remedies  by  and  against,  577. 
policies  of,  valid,  when,  577. 
right  to  remove  action,  578. 
retaliatory  legislation  against,  578  a. 
state  of,  evidence  of,  585. 
FORFEITURE.     See  Alienation,   Condition,   Incumbrance,   Pre- 
mium, Title,  11. 
not  favored,  170,  367. 
equitable  adjustment  after,  572. 
equitable  relief  against,  56G  C. 
surrender  after,  no  return  of  premium,  69  B. 
FORM.     See  Policy. 
FORTHWITH,  meaning  of,  462. 
FRAUD,  and  misconduct,  loss  from,  407,  410,411. 
and  false  swearing,  what,  477. 
in  arbitration,  496  a. 

equity  will  cancel  policy  obtained  by,  67  M. 
FRAUDS,   STATUTE  OF,  policy  of  reinsurance  not  within,  13. 

policy  for  a  year,  not  within,  18. 
FRAUDULENT  CONVEYANCE,  title  by,  insurable  interest,  86. 
FRAUDULENT  REPRESENTATIONS.     See  Representations. 
FRIENDS  as  beneficiaries,  399  H. 


G. 


GAMING  POLICY,  void,  74. 
GARNISHMENT  of  company,  459,  459  F,  459  G. 
GAS,  loss  by  explosion  of,  416, 
GASOLENE,  agent  knows  of  its  keeping,  133  A. 
when  included  in  risk,  239  A.     See  Risk,  2. 

1388 


INDEX. 
[The  references  are  to  the  sections.! 

GENERAL  AGENT.     See  Agent,  7 
GOOD  HEALTH,  warranty  of,  295. 
GOODS  IN  TRUST,  and  on  commission,  421,  424. 
GOUT,  295,  297. 
GRACE,  days  of,  424-429. 
GRANDCHILD,  as  beneficiary,  399  E,  399  G. 
GROCERIES,  stock  of,  420. 
GUARANTEE  INSURANCE,  540-547  a. 
of  fidelity  of  servant,  511  a. 
warranty  and  i-epresentation  in,  542-543  a. 

against  carelessness,  dishonesty,  &c.,  is  a  contract  of  suretyship,  540. 
the   insurers   will  be   subrogated   to   the  rights  of  the  insui-ed 

against  the  person  in  fault,  540. 
services  of  insured  to  this  end,  540. 
warranties,  representations,  form,  540. 
only  a  percentage  of  loss  paid,  540. 
advantages  of  such  insurance,  541. 
its  union  with  life  insurance,  541, 
diligence  of  clerk,  541  a. 

condition  that  employer  shall  prosecute,  541  a. 
statement  in  application  that  clerk's  accounts  would  be  examined 
by  finance  committee  every  fortnight  not  a  guarantee,  542 ;  see 
543. 
misrepresentation  as  to  the  amount  of  money  to  be  in  employee's 

hands  fatal,  543. 
representation  of  a  third  person  not  a  warranty,  543. 
Insurance  against  loss  in  trade  by  bankruptcy  of  purchasers,  544. 
"         of  the  prompt  payment  of  a  note,  545. 
•'         against  the  birth  of  issue,  546. 
"        of  rents,  titles,  and  lives  of  cattle,  and  insurance  against 

theft,  547. 
"         against  hail,  547,  547  a. 
"         due  at  marriage,  547  B. 
GUARANTOR,  insurable  interest  of,  82,  97. 
GUNPOWDER.     See  Risk,  2. 
loss  by,  413. 

H. 

HABITS      See  Health. 

representation  as  to,  299,  300. 

of  intemperance,  299,  300-302. 

of  opium  eating,  299. 
HAIL,  insurance  against,  547  a. 
HAZARDOUS.     See  Risk,  2. 

articles,  232,  235. 

trades,  236. 

use  and  trades,  236,  237. 

1389 


INDEX. 
[The  references  are  to  the  sections.] 

HEALTH,  condition  of,  known  to  agent,  133  A. 

1.  "  Good  health  "  and  "  sound  health  "  mean  reasonable,  not  perfect 

health,  295. 

a  healthy  life  is  one  insurable  at  ordinary  rates.  Freedom  from 
serious  disease  is  sufficient,  295 

slight  dyspepsia  no  breach  of  the  warranty,  but  Bright's  disease 
or  drunkenness  fatal,  295. 

tendency  to  shorten  life  means  substantial  tendency  ;  all  disor- 
ders do  so  in  some  degree,  295. 

wound  affecting  bladder,  spasms,  gout,  dyspepsia,  295. 

consumption,  295. 

honest  answers  liberally  construed,  295 
"tendency  to  shorten  life  ;  "  drunkenness  a  breach  of  the  warranty 

"  no  habit  obviously  tending  to  shorten  life,"  296. 
serious  illness  or  injury  is  one  that  permanently  impairs  the  consti- 
tution and  increases  the  risk,  296. 

no  absolute  test  is  possible,  296 

it  has  been  said  that  an  honest  belief  in  the  truth  of  the  answer  is 
all  that  is  required;  but  there  is  authority  that  due  care  must 
be  exercised  in  forming  the  belief  (see  also  next  section),  29G 

failure  to  speak  of  illnesses  so  slight  as  to  be  beyond  the  reason- 
able contemplation  of  the  parties,  is  of  no  effect,  296. 

"  hereditary  disease,"  "local  disease,"  "  disease  requiring  con- 
finement," 296. 

malaria,  rupture,  tubercles,  sunstroke,  pneumonia,  296. 

company  must  show  not  only  insanity  in  ancestor,  but  also  that 
it  is  hereditary,  296. 
the  insured  must  answer  in  good  faith  and  according  to  the  knowl- 
edge he  has,  or  as  an  ordinarily  intelligent  man  should  have, 
about  himself,  297. 

knowledge  of  the  life-subject  is  imputable  to  the  assured  if  he 
undertake  for  the  truth  of  the  "  life's  "  statements,  297. 

fits,  gout,  vertigo,  297. 
false  answer  to  a  specific  question  avoids  the  policy,  though  the  matter 
was  not  material,  otherwise  with  a  mere  want  of  fulness,  oOO 
"  afilicted  with  disease."    Consumption,  spitting  of  blood,  &c.,  298. 
fits,  diseases  of  liver  or  throat,  298. 

2.  If  death  by  intemperance  is  to  avoid  the  contract,  the  death  must  be 

traced  clearly  to  intemperance  as  Me  jorox/rna^e  cause,  301. 

neither  intemperance  combined  with  other  causes,  nor  as  a  pre- 
disposing cause,  will  avoid  the  policy,  301 . 

if  delirium  tremens  with  care  and  skill  might  not  have  been  mor- 
tal, but  by  overdoses  of  morphine  the  man  died,  intemperance 
is  not  the  proximate  cause  of  death,  301 

if  excess  of  liquor  not  taken  by  medical  advice  impairs  tlie  health 
or  causes  death  though  without  delirium,  the  policy  is  void, 
though  the  insured  was  not  habitually  intemperate,  or  had 
even  been  habitually  temperate  up  to  the  fatal  debauch,  301. 

1390 


INDEX. 

[The  references  are  to  the  sections  ] 

HEALTH  —  continued. 
3.  Medical  Examination. 

statements  in  regard  to  applicant's  wealth,  &c  ,  made  at  such 

examination  may  be  material,  303. 
if  examiner  misleads  assured  into  making  a  wrong  answer,  or 
writes  a-  false  one  without  assured's  knowledge,  the  company- 
is  estopped,  303. 
the  applicant  is  not  bound  by  the  doctor's  opinions,  303. 
if  the  company  issues  a  policy  knowing  the  examiner  is  the  bene- 
ficiary, he  will  not  have  to  prove  the  transaction  fair  and  iust 
303.  ^ 

"family  physician,"  "  medical  attendance,"  &c.,  304. 

a  warranty  that  insured  had  not  consulted  a  physician  is  broken 
by  a  consultation,  though  only  for  a  cold,  304. 
HEALTHY  LIFE,  warranty  of,  295. 
HEAT,  loss  by,  402. 
HEIRS  as  beneficiaries,  399  H. 
HIRER,  insurable  interest  of,  82. 
HOLDER  OF  NOTE,  insurable  interest,  97. 
HOUSE  or  building,  embraces  what,  420. 
HUSBAND,  insurable  interest  of,  in  property  of  wife,  81. 
insurable  interest  of,  in  life  of  wife,  107,  107  C. 
right  of,  to  assign  or  devise  proceeds  of  policy  for  benefit  of  children 

391-394. 
transfer  from  husband  to  wife  as  an  alienation,  273. 
no  right  to  call  wife's  property  "  his,"  289.     See  294  E. 
HUSBAND  AND  WIFE  as  beneficiaries.     See  Beneficiary,  7. 


I. 

IDENTITY,  of  interest,  366,  436,  436  a. 
of  risk,  437. 

IGNITION,  whether  necessary  to  constitute  loss  by  fire,  402. 

ILLEGAL  PRACTICES,  risk  from,  405. 

ILLNESS,  serious,  296 

IMPLIED  WARRANTY.     See  Warranty. 

INCENDIARISM,  of  third  person,  407  A. 

INCUMBRANCE.     See  Title. 

1.  the  object  of  inquiring  about  incumbrances  is  to  aid  in  determining 
the  motive  of  the  assured  to  preserve  the  property,  and  in  case  of 
mutual  companies  to  know  the  value  of  their  lien  for  premiums 
290. 
the  same  thing  may  be  an  incumbrance  or  not  according  to  circum- 
stances and  the  disposition  of  the  court,  291-294. 

VOL.  II.  _  u,  139X 


INDEX. 
[The  references  are  to  the  sections.] 

INCUMBRANCE  —  continued. 

and  the  language  of  the  policy  may  make  it  void,  only  for  bur- 
dens put  on  the  property  by  consent  of  the  assured,  292,  end, 
292  A  (as  where  the  condition  runs  against  incumbrances 
"without  consent  of  the  company,"  for  the  assured  could  not 
get  assent  for  a  lien  put  on  by  some  one  else,  perhaps  without 
his  knowledge,  292). 

or  it  may  be  void  for  any  burden  though  placed  by  the  law,  and 
even  unknown  to  the  assured,  291  A. 

an  "  incumbrance  on  the  property"  means  on  the  whole  prop- 
erty insured,  and  an  incumbrance  on  part  of  it  will  not  be 
fatal,  291  (strict  construction), 
what  is  an  incumbrance,  291,  291  A. 

2.  What  is  not,  292,  292  A. 

assessment  of  deposit  note  (?),  291,  292. 

attachment  may  be,  291. 

bond  for  support  not,  292 ;  contra,  292,  note. 

nor  bond  to  convey  where  the  time  named  has  passed,  292. 

curtesy,  if  contingent,  not,  292. 

power,  if  contingent,  not,  292. 

judgment,  see  Lien. 

lease  for  years  not,  292  A. 

lien  may  be,  291  ;  or  not,  292,  292  A. 

for  taxes  may  be,  291 ;  or  not,  292  A. 
not,  if  assessment  is  illegal,  292  A. 

for  purchase-money  may  be,  291;  or  not,  292. 

of  a  judgment  may  be,  291,  291  A;  or  not,  292. 

not  if  paid  though  undischarged  of  record,  291,  note. 

by  collateral  deposit  of  deeds,  291. 

mechanics'  lien  may  be,  291. 
mortgage  is,  291,  292  B. 

though  fraudulent  and  unrecorded,  291. 

so  partner's  mortgage  to  outsider,  291  A. 

but  not  if  paid,  though  undischarged  of  record,  292. 

the  presumption  is  that  a  mortgage  is  not  paid,  294. 

nor  if  barred  by  statute  of  limitations,  292. 

house   on   blocks   held    incumbered   by  mortgage  on  land, 
294  F. 
sale  on  execution  is,  291. 
seizure  on  execution  is,  291. 

but  not  levy  of  goods  left  with  debtor,  291,  note, 
tax  title  that  is  a  constructive  trust  not,  292. 

3.  Misrepresentation  or  concealment  of  an  incumbrance  will  be  fatal 

when  the  application  questions,  or  the  policy  or  the  organic 
law  rerjuires  disclosure  292  B. 
a  requirement  in  the  by-laws  not  a  part  of  the  policy,  and  un- 
known to  the  assured,  would  not  probably  be  sufficient;  see 
294  a. 

1392 


INDEX. 
[The  references  are  to  the  sectious.] 

INCUMBRANCE  —  continued. 

where  the  questions  asked  are  fairly  and  honestly  answered  by 
the  assured,  a  condition  as  to  disclosure  in  the   after-coming 
policy  ought  not  to  affect  him;  see  292  A;  123  Pa.  St. 
where  the  assured   says  there  is  no  incumbrance,  which  is  true, 
but  he  believes  there  is,  not  knowing  that  a  mortgage  has  been 
paid,  his  bad  faith  avoids  the  policy,  292  B.     Tke  moral  haz- 
ard is  the  same  as  If  the  mortgage  was  good, 
materiality  for  jury,  292  B. 
misstatements  as  to   incumbrances  on  other  land  not  material 

292  B. 
if  the  representation  is  substantially  true  and  in  good  faith,  tak- 
ing into  account  all  the  equities  and  even   parol   agreements 
void  under  the  Statute  of  Frauds,  the  policy  will  be  upheld, 
292  B.     A  stranger  to  the  agreement  cannot  raise  such  a  plea, 
stating  that  there  is  an  incumbrance  without  the  amount,  suffi- 
cient, 292  B. 
omission  not  fatal  if  all  company's  questions  are  truly  answered, 
292  B. 
4.   Subsequent  incumbrance,  294. 

if  paid  before  loss  policy  good,  294. 
paying  off  old  incumbrance  and  a  new  one  arising,  294,  end. 

if  the  total   incumbrance  is  le.ss  than  at  the  time  of  insurance 

the  policy  ought  not  to  be  void,  unless  the  express  provisions 

are  inconsistent  with  any  other  construction,  294,  end,  and 

291  A. 

if  the  policy  permits  incumbrance   only  to  a  certain   amount, 

going  beyond  it  is  fatal,  291  A. 

5.  Notice  of  incumbrance  : 

must  be  given  if  required,  294  a. 

delay  of  fifty  days  unreasonable,  294  a. 

indorsement  "  loss  payable  to  mortgagee,"  is  notice,  294  a. 

putting  in  mail  is  prima  facie,  294  a. 

provision  for,  in  by-laws  alone  not  sufficient,  294  a. 

6.  Waiver  (and  estoppel)  : 

of  statement  of  title, 

by  insurance  "  as  interest  may  appear,"  294  C. 
by  soliciting  agent,  294  C. 
of  condition  as  to  sole  ownership, 

cannot  make  policy  cover  goods  of  strangers,  294  C. 
of  incumbrance, 

by  indorsing  policy  payable  to  moi-tgagee,  294  C. 
assent  to  substituted  mortgage  waives  old  one,  294  C. 
neglect  of  agent  to  ask  any  question  about  incumbrance 
estops  company  in  case  of  one  ignorant  of  English  ;  signing 
application  agent  said  was  all  right,  294  C ;  in  general, 
such  neglect  is  not  a  waiver  of  the  "  sole,"  &c.,  condition 
in  the  policy,  294  G. 

1393 


INDEX. 
[The  references  are  to  the  sections.] 

INCUMBRANCE  —  continued. 

if  answer  or  omission  is  bona  fide  made  by  advice  of  agent,  com- 
pany estopped  to  object  to  it,  291  h. 
if  the  description  is  inconsistent  with  absolute  ownership,  or 
shows  that  required  facts  are  omitted,  or  in  any  way  the  com- 
pany has  notice,  issue  of  a  policy  is  a  waiver,  '294  D,  294  h. 
by  adjustment  of  loss  by  agent  with  knowledge  of  facts,  294  b. 
or  neglect  to  endorse  or  make  proper  statement,  294  b. 
knowledge  of  the  agent  at  the  time  of  insurance  or  before  issue 
of  a  policy  that  there  is  a  lien  or  mortgage  or  other  incum- 
brance, or  that  the  insured   is  not  the   sole  owner,  &c.,  is 
a  waiver,  if   the  assured  acted  in  good  faith,  although  the 
policy  declares  that  there  shall  be  no  waiver  except  in  writ- 
ing, and  sole  ownership,  &c  ,  is  warranted,  294  E. 
but  otherwise  if  the  assured  actually  knows  of  the  warranty  or 

erroneous  information  that  goes  to  the  company,  294  E. 
and  failure  at  trial  to  prove  the  truth  of  the  facts  stated  to 
the  agent  is  fatal,  294  E. 
contra,  it  has  been  held  that  one  signing  a  document  must  know 

its  contents,  294  F. 
and  if  policy  says  "  no  waiver  by  agent "  there  can  be  none,  294  F. 
no  waiver  or  estoppel  — 

by  admission  of  a  director  or  by  vote  of  directors  authorizing 
settlement,  if  assured  has  not  changed  his  position  in  conse- 
sequence,  294  (1. 
by  sending  adjuster  before  company  knows  facts,  294  G. 
by  a  verbal  agreement  (before  policy,  but  left  out  of  it)  to  allow 
insured  to  mortgage,  294  G. 
INDEBTEDNESS  to  company,  what,  344  c. 
INDEMNITY,  insurance  is  a  contract  of,  2,  115,  116. 

life  insurance  the  same,  though  some  cases  contra,  7,  8. 
reinsurance  a  contract  of,  and  no  more,  11. 
INDORSEMENTS,  waived  on  agreement  to  insure,  23. 
INDORSER,  insurable  interest  of,  82. 
INFANT,  not  bound  by  his  contract  of  insurance,  35  A. 

debt  of,  gives  insurable  interest,  108. 
INFORMALITY  not  necessarily  fatal  to  policy,  15,  17,  23,  23  D. 
seal,  16,  17,  27. 

policy,  issued  without  order  of  directors  is  good,  17. 
INJUNCTION,  5GG,  566  A.     See  Remedies. 

against  suit  at  law,  573. 
INJURY,  serious,  296. 
causing  death,  514. 
by  accident,  notice  of,  539. 
INNKEEPER,  insurable  interest  of,  80. 

INQUIRY,  conclusive  as  to  materiality  of  subject  of,  185-186. 
INSANE  suicide.     See  Suicide. 

1394 


INDEX. 
[The  references  are  to  the  sections.] 

INSANITY,  company  must  show  it  is  hereditary,  296. 
not  presumed  I'rom  suicide,  319. 
impulsive,  o20. 
must  be  proved  by  party  vpho  alleges,  325. 

INSOLVENCY  of  reinsured  no  defence  for  reinsurer,  ll(z),  11  A. 

even  where  he  is  liable  only  in  same  time  and  manner  as  the  re- 
insured, ll(z). 
nor  does  it  give  the  original  assured  any  direct  claim  against  the 
reinsurer,  12. 
in  fact,  prevents  member  of  mutual  company  from  cancelling  his 

policy,  67  A. 
no  defence  against  premium  note,  555. 
assessments  in  case  of,  559. 
status  of  company  and  insured  under,  590-592. 

INSOLVENT,  insurable  interest  of,  81,  92,  note. 
INSURABLE   INTEREST.     See  Interest. 

1.  Necessity  of,  74.     If  none  Equity  will  cancel  the  policy,  67  M. 

wager  policies  (i.e.  policies  without  interest)  not  now  sustained,  75. 
but  reprobated,  75  A. 
"  interest  or  no  interest,"  75. 

a  policy  that  is  to  "  be  proof  of  interest "  is  a  wager,  75. 
bets  on  sex,  75  A. 
on  life,  75  B. 
on  marriage,  75  B. 

policy  of  ^3000  to  cover  a  debt  of  |70,  75  B,  108. 
policy  taken  out  by  a  man  on  his  own  life,  payable  to  any 
one  he  may  desire,  is  not  a  wager,  75  B. 

2.  What  constitutes.     See  chap.  vi.  anal.  2.  2. 

"  interest  "  does  not  imply  "  property  "  in  the  thing  insured, 

74,  note, 
interest  in  a  life  need  not  be  capable  of   pecuniary  estimate, 

102  A. 
strong  ties  of  blood,  102  A. 
marriage,  102  A. 

any  reasonable  probability  of  present  or  future  pecuniary  advan- 
tage is  enough,  76. 
that  one  may  suffer  loss  of  something  they  have  some  claim  to 

look  for  in  the  natural  course  of  things  is  sufficient,  80. 
contingent  right  sufficient,  77. 
profits  or  advantages  that  would  come  in  the  ordinary  course  of 

things  may  be  insured,  76,  79,  80. 
but  a  mere  Jwpe  without  a  scintilla  of  present  interest  is   not 

enough.     One  has  no  right  to  indemnity  because  he  does  not 

receive  a  gift  he  expects,  78. 
a  present  interest  in  the  property  or  enterprise  out  of  which  llie  profit 

is  to  come  is  necessary,  77. 
and  when  the  interest  in  the  goods  ceases  the  policy  decays,  79. 

1395 


INDEX, 

[The  references  are  to  the  sections.] 

INSURABLE    INTEREST  —  continued. 

any  benefit  reasonably  certain  to  come  from  the  continued  exis- 
tence of  the  property  or  life  is  sufficient,  80,  (life)  102  A. 
liability  for  loss  of  the  property  if  destroyed  is  sufficient,  com- 
mon carrier,  &c.,  83,  94,  94  A,  95. 
even  though  a  debt  is  that  of  an  infant  or  the  Statute  of 
Limitations  has  run  on  it  the  creditor  may  insure  it,  108. 
interest  of  an  insurer,  98. 
possession  under  a  claim  of  ownership  sufficient,  80,  84,  87  A. 
possession  under  contract  of  purchase,  87. 

possession  under  contract  that  may  ripen  into  ownership  is  suffi- 
cient, whetlier  purchase-money  is  paid  or  not,  87  A. 
possession  under  contract  of   purchase  is  sufficient  though   the 
vendee  is  in  default,  and  even  after  an  agreement  to  rescind 
the  contract  of  purchase,  87  A. 
defect  in  title  will  not  avail  the  company,  87  A. 
possession  under  a  deed  voidable  for  fraud  is  sufficient,  87  A. 

or  voidable  for  want  of  title  in  grantor,  87  A. 
equitable  title  sufficient.  8(j. 

3.  What  is  not  an  insurable  interest.     (See  wager  policies  above,  in  1.) 

in  life.     (See  below  at  the  end  of  5.) 
in  property 

unlawful  enterprise,  71. 
lotteries,  71. 
prohibited  voyage,  71. 
goods  intended  for  illegal  sale,  71. 
mere  hope,  78. 
expectation  of  a  gift,  78. 
donor  or  voluntary  contributor  no  insurable  interest  in  the 

object,  76  A. 
voluntary  repairs  on  vessel  give  none,  76  A. 
no  insurance  of  bills  payable  on  a  contingency,  76  A. 
posse.s.sion  under  a  married  woman's  agreement  to  convey  is 
not  sufficient  to  create  an  insurable   interest   in  a  State 
where  such  agreement  is  void,  87  A. 
possession  by  vendor  after  delivery  of  goods  not  sufficient,  97. 
a  claim  of  title  under  a  fictitious  deed,  without  actual  pos- 
session, is  not  sufficient,  87  A. 
mere  intrusion  on  land,  89. 

right  under  contract  not  enforceable  is  not  insurable,  96. 
vendee's  interest    under  a  contract  void    by  statute  of 

frauds,  96. 
verbal  contract  for  purchase  of  real  estate,  96. 
mortgage  by  one  having  no  right  to  give  it,  96. 

4.  Who  may  have  an  insurable  interest. 

In  property  : 

any  one  who  is  charged  with  the  protection  of  the  property, 
80. 

1396 


INDEX. 

[The  references  are  to  the  sections.] 

INSURABLE    11:JTEKEST  —  continued. 

or  has  a  right  to  protect  it,  80. 

or  will  receive  a  benefit  from  its  continued  existence,  80. 

or  be  liable  to  loss  by  its  destruction,  83,  94,  94  A,  95. 

son  none  in  father's  property,  76  A. 

administrators,  80. 

bailee,  80,  81,  95. 

a  bailee  if  interested  or  responsible  for  loss  may  insure 
in  his  own  name,  and  if  not  he  may  still  insure  for 
whom  it  may  concern,  95  A. 
bailee  will  hold  the  funds  in  trust  for  owner,  95  A. 
builder  under  contract,  93,  95  A. 
captors,  80. 
cestui  que  ti-ust,  82. 
common  carriers,  80,  94,  94  A. 

though  using  vessel  of  another,  94  A. 
commission  merchant,  95  A. 
consignees,  80,  95  A. 
contractor,  93,  95  A,  109. 
creditor,  83,  95,  108. 
debtor  in  property  attached,  95. 
disseizor  has,  81. 
executors,  80, 
factor,  80,  95  A. 
guarantor,  82,  97. 
hirer,  82. 
holder  of  note,  97. 
husband  in  wife's  property,  81. 
husband  in  homestead,  81. 
indorser,  82. 
innkeeper,  80. 
insolvent  has,  even  in  goods  concealed  from  creditors,  81, 

92,  note, 
intruder,  89. 

landlord  in  goods  of  tenant  liable  to  distress  for  rent,  84. 
lessee,  84. 
lessor,  84,  85. 
master  of  ship,  94  A. 
mortgagee,  80,  82,  83,  96. 

mortgagor  has,  though  property  mortgaged  to  full  value,  if 
he  is  liable  for  the  debt,  even  after  he  has  sold  the  equity 
of  redemption,  82. 
forfeiture  of  the  pi-operty  for  violation  of  law  or  unlawful 

foreclosure  will  not  avail  the  company,  82,  note, 
one  having  a  lien  for  advances  or  otherwise,  82,  93. 
one  having  a  claim  in  the  nature  of  a  lien,  93. 
one  having  an  equitable  lien  with  possession,  93  A. 

1397 


INDEX. 

[The  references  are  to  the  sections.] 

INSURABLE   INTEREST  —  twi^nuef/. 

one  having  an  equitable  interest,  86,  93  A. 

one  having  possession  under  claim  of  title,  87,  87  A. 

part-owner  responsible  for  whole,  94  A. 

pledgee,  80,  82,  93  A. 

pledgor,  82. 

railroad  liable  for  destruction  by  sparks,  94. 

stockholder,  90. 

surety,  82. 

tenant  in  common,  81. 

trustee,  80,  83,  111. 

vendee  in  possession,  83  a,  87,  88,  96. 

vendor  before  delivery  or  complete  sale  has,  83  a,  88,  97. 

vendor  may  insure  in  name  of  vendee  though  the  goods  are 

not  separated,  83  a,  note, 
warehouseman,  80,  95  A. 
wharfinger,  80,  95  A. 
5.  In  life  : 

betrothed  girl  in  life  of  future  husband,  107  a. 
creditor  may  insure  life  of  debtor,  102  A,  108,  109. 
only  entitled  to  indemnity,  108. 
but  he  has  been  allowed  to  hold  tlie  excess,  108. 
has  interest  even  when  debtor  is  an  infant,  108. 
or  Statute  of  Limitations  has  run  against  the  debt,  108. 
insurance  far  beyond  the  debt  will  be  void,  108. 
employee  in  employer's  life,  109  c. 
father,  in  life  of  son  or  daughter,  104-107. 
husband  in  wife's  life,  107,  107  C. 
master  in  sei'vant's  life,  109  c. 
mother  in  life  of  son,  107  (t). 

one  having  reasonable  expectation  of    pecuniary   advantage 
from  the  continuance  of  the  life,  102  A. 
as  in  case  of  one  contracting  to  do  work,  109  b. 
parent  in  life  of  child,  102  A,  103-107. 
partner  in  copartner,  109  a. 
sister  in  brother  (i/i  loco  parentis),  103-107. 
surety,  102  A. 
trustee,  111. 

wife  in  life  of  husband,  107  b. 
one  related  by  strong  ties  of  blood,  102  A-107. 
relationship  not  sufficient. 

brother  in  life  of  brother  as  such,  no,  107  (s). 
daughter  in  life  of  mother,  no,  103  A. 
granddaughter  in  life  of  grandfather,  no,  103  A. 
nephew  in  uncle,  no,  107  (s). 

in  aunt,  no,  103  A. 
son-in-law  in  life  of  mother-in-law,  no,  103  A. 

1398 


INDEX. 

[The  references  are  to  the  sections.] 

INSURABLE   mTEREST  —  continued. 

6.  Duration  : 

general  rule,  an  interest  at  time  of  insurance  and  at  loss  both 

necessary,  100,  100  A. 
cessation  of  interest  before  loss  generally  destroys  the  right  of 
recovery,  79,  100,  100  A. 
but  there  may  be  cases  where  the  company  should  be  held, 

100  A. 
this  is  especially  likely  to  happen  in  case  of  life  insurance, 
as  where  a  creditor  insures  the  life  of  the  debtor,  and  the 
debt  is  paid  before  the  debtor  dies,  100  A,  108,  115-117. 
English   rule.      See  115-116,   lOS,    100  A;    and   also   chap.    vi. 

anal.  6. 
in  Massachusetts,  if  the  interest  in  the  insured  life  terminates 
after  payment  of   two  annual  premiums,  the  policy  becomes 
payable  at  a  fair  surrender  value.     Public  Statutes,  719. 
interest  acquired  after  insurance,  but  before  loss,  should  sustain 
policy  if  company  treats  it  as  valid  after  knowing  facts,  100  A, 
authority  conti-a,  100  A. 
subsequently  acquired  goods,  may  certainly  be  covered,  100,  101. 

7.  Continuity  of  interest  is  not  necessary.     In  the  absence  of  express 

stipulation  an  interruption  that  ends  before  loss  is  not  fatal,  101. 

8.  Miscellaneous  : 

insurance  of  good  and  bad  interests  or  interest,  and  no  interest, 
in  same  policy  good  pro  tanto,  74. 
unless  the  contract  is  expressly  or  by  its  nature  entire,  74. 
insurable  interest  a  question  of  law,  on  the  facts  proved,  76,  note, 
company's  knowledge  of  no  interest  immaterial,  81,  note, 
assignee  of  life  policy,  110. 

beneficiarv,  112;  his  name  must  appear  on  the  policy  in  Eng- 
land, 113. 
one  without  interest  cannot  take  out  a  policy  on  the  life  of 
another,  but  a  man  may  take  out  a  policy  on  his  own  life 
and  make  it  payable  to  w'hom  he  pleases,  or  assign  it  to 
any  one,  110,  notes,  112;  contra,  110,  notes, 
life  policy  uxualbj  a  valued  one,  114. 
INSURANCE.      See  Fire  Ixsuraxce,  Life  Ixsuraxce. 

(For  Accident  Insurance  see  below,  at  division  2  of  the  treatment  of 
this  head.     See  also  Accidext.) 
1 .  General  : 
defined,  1. 

contract  of  indemnity,  2,  7,  8,  11,  114. 
to  what  ai)plied,  2,  71-73,  544-547  a. 
nature  of  the  contract,  3,  7. 
a  conditional  contract;  when  no  risk  attaches  no  premium  is  earned,  4- 

Italian  writers  contra,  4, 
an  aleatory  contract,  5. 
a  personal  contract,  6. 

1399 


INDEX. 

[The  references  are  to  the  sections.] 

INSURANCE  —  continued. 

does  not  run  with  the  subject-matter,  unless  so  agreed  in  the  policy, 

6,  72. 
attempted  distinction  between  life  and  other  insurances,  7. 
a  valuable  interest  must  always  exist,  7-8. 
contract  of  indemnity,  as  between  debtor  and  creditor,  8. 
reinsurance,  9-12  C.     See  Reinsurance. 
other,  over,  and  double,  9-13,  364-376. 
double,  wiiat,  13. 

guarantee.     See  Guarantee  Insurance. 
may  be  by  parol,  \\  et  seq. 
who  may  insure,  27,  35,  35  A. 
in  general,  35. 
infants,  35  A. 
unlicensed  merchant,  35  A. 
enemies.     See  War. 
how  affected  by  war.     See  War. 
consummation  of  the  contract,  43-65. 
terms  fixed  by  past  dealings,  43  B. 
when  not  complete.     See  Con.summation,  2. 
accident,  ticket,  70.     See  Accident. 
ticket,  70. 
illegal,  71. 

what  may  be  subject-matter  of,  72-118. 
modes  of  life,  109. 
insurable  interest  in,  202-227. 
proceeds  of,  who  may  sue  for,  383. 
assignment  of  policy  of,  388. 
right  of  creditor  in  proceeds  of,  390. 
right  of  wife  to  assign  policy  of,  391. 
proceeds  of,  to  whom  they  belong,  393. 
right  of  wife  and  children  in  proceeds  of,  393. 
time  of,  400. 
specific,  436. 
guarantee,  540. 
solvency,  514,  545. 
against  birth  of  issue,  546. 

of  rents,  titles,  against  theft,  storms,  and  upon  the  lives  of  cattle,  547, 
547  a. 
2.  Accident.     See  Accident. 

definition  of  accident,  514.     (See  also  519,  520,  and  notes.     The  idea 
of  the  first  case  in  515  is  not  sustainable.) 
pitchfork  slipping  out  of  worker's  hand  and  injuring  his  bowels 
is  an  accident,  so  sprain  by  lifting  heavy  weights,  514. 
rupture  caused  by  voluntarily  jumping  from  cars  held  not  an  acci- 
dent  515. 
rupture  of  blood-vessel  by  striking  Indian  clubs  against  a  stove,  acci- 
dent, 515  a. 

1400 


INDEX. 

[The  references  are  to  the  sections.] 


INSURANCE  —  con^mwef/.  .,     ,  ,  ■,•        .      • 

death  by  drowning  may  or  may  not  be  accidental,  accordmg  to  cir- 
cumstances, 516;   see  also  517,  518,  518  A. 
"  outward  and  visible  means,"  516,  517. 
if  a  wound  causing  a  fall  into  water  and  consequent  drowning,  there 

is  an  accidental  death.     Drowning,  517. 
"  External,  Violent,  and  Accidental"  means,  517  A. 
exertion  of  holding  a  runaway  horse.     Charbon  poison,  517  A. 
"  cause  of  death  arising  within  the  system,"  518. 
disease,  epileptic  fit,  and  drowning,  company  liable,  518  A. 
death  by  poison,  518  B. 
sunstroke   not   accident  (?),  519.     Some   violence,    casualty,    or   vi. 

major  must  be  involved  (V),  519.     See  529. 
death  by  robbers  probably  accidental,  520.  „  .^^  . 

"  intentional  injuries  inflicted  by  assured  or  others,    o20  A.   _ 
a  railway  accident  is  one  occurring  in  the  course  of,  and  arismg  out 

of,  the  fact  of  a  railway  journey,  521.^ 
total  disability  for  usual  occupation,  522-523. 
act  not  incident  to  the  occupation  described  m  the  policy,  52d  A. 
death  from  fits  plus  accident,  accident  plus  a  cold,  523  A. 
"  inhalino-  eras  "  held  to  mean  only  voluntary  inhaling,  523  A. 
condition°that  death  must  occur  within  ninety  days  after  the  acci- 
dent, 523  A. 
travelling,  521. 

on  foot,  .524,  528,  529. 
conveyance,  524,  525,  526,  528,  529. 
engineer,  526,  527. 
alighting,  524,  525. 

getting  on  a  moving  train,  524  A,  529. 
standing  on  car  platform,  524  A. 
limit  of  journey,  525. 
negligence,  524  A,  525,  530. 
condition  to  be  careful,  531. 
■wilful  exposure,  530. 

voluntary  exposure  to  unnecessary  danger,  531  A. 
obvious  risk,  530. 
violation  of  law,  530. 
intoxication,  531. 
increase  of  risk,  532. 
change  of  occupation,  532. 
classification  of  risk,  533. 
extent  of  risk,  534. 

insurable  interest,  535.     Amount  of  loss,  535. 
notice  of  death  or  injury,  536. 
preliminary  proof,  .536  (see  also  530).^^ 
form  and  completion  of  the  contract,  537. 
accidents  to  carriages,  538. 
INSURED,  must  have  an  interest,  74. 


INDEX. 

[The  references  are  to  the  sections.] 

IXSCRED  —  continued. 
ageuts  of, 

principal  bound  by  acts  of  his  agent,  122. 

if  same  person  is  agent  of  insured  and  the  company,  no- 
tice of  cancellation  to  him  is  good,  122. 
one  recovering  insurance  money  may  show,  when  sued  for  it,  that 

he  was  the  agent  of  one  who  had  an  insurable  interest,  122. 
persons  referred  to  by  the  applicant  become  his  agents  for  the 

purposes  covered  by  the  reference  doctors,  broiler,  123. 
responsible  for  ordinary  care.     One  having  general  authority  to 
insui'e  for  another  may  not  choose  a  mutual  compan}',  124. 
effecting  insurance  with  irresponsible  persons  is  negligence, 
124. 
measure  of  damages  in  such  case,  124. 
that  agency  gratuitous  no  defence,  124. 
assured  may  ratify  contracts  made  for  his  benefit  but  witli- 
out  authority,  122  A. 
full  knowledge  of  facts  necessary  to  valid  ratification, 

122  A. 
constructive  knowledge  sometimes  held  sufficient,  122  A. 
acceptance  of  policy  ratifies  agent's  act  in  giving  a  pre- 
mium note,  122  A. 
agent  to  procure  insurance  no  power  to  cancel,  138. 

INSURER,  subrogation  of,  to  rights  of  assured  against  third  parties.    See 
Subrogation. 

INTEMPP2RAXCE,  equity  will  not  caucel  policy  because  of,  for  insured 
may  reform,  67  ^I. 
habits  of,  296,  299,  300. 
death  by,  301,  418. 
"  tends  to  shorten  life,"  296. 
proximate  cause  of  death,  301,  419. 

INTEREST.     See  Insurable  Intkrest. 
of  beneficiary.      See  Benkficiauy,  3. 
insurable,  e.ssential  to  the  contract,  7t 
amount  of,  how  fixed,  and  when,  7. 
whether  e-^sential  at  time  of  loss,  8,  9,  115,  117. 
of  assured  known  to  agent,  133  A. 
what  constitutes.  71-109,  548,  581,  671. 
must  be  lawful,  74,  75. 
in  expected  profits,  79. 
who  may  have,  80 

of  executors  and  administrators,  80,  91. 
of  trustees,  80. 
of  sheriffs,  80. 
of  consignees,  80. 
of  common  carriei-s,  80. 
of  supercargoes,  80. 

1402 


INDEX. 
[The  references  are  to  the  sections.! 

INTEREST  —  continued. 
of  captors,  80. 

ceases  by  stoppage  in  transihi,  80. 
of  pledgees,  innkeepers,  &c.,  81. 
whether  mere  posse.ssion  gives,  81. 
divers  interests  in  same  subject-matter,  81. 
of  tenants  by  curtesy  and  dower,  81. 
of  assignee  of  bond,  for  deed  of  real  estate,  81. 
of  disseisor,  82. 

of  mortgagee  and  mortgagor,  pledgor,  guarantor,  82. 
of  mortgagee  and  creditor,  83,  95. 
of  vendor  and  vendee,  83  a. 
of  lessor  and  lessee,  84. 
of  donor  inter  vivos,  8.5. 
of  stockholder  in  corporate  property,  85. 
under  equitable  title,  8G-88. 
of  fraudulent  grantee,  88. 
of  intruder,  89. 
of  bankrupt,  92. 
of  insolvent,  92. 
of  mechanic,  for  lien,  93. 
of  parties  liable  for  loss,  94. 
of  debtor  in  property  attached,  95. 
of  bailee  of  attached  property,  surety,  95= 
of  vendor  and  vendee,  96,  97. 
of  holder  of  promissory  note,  97. 
of  reinsurer,  98. 
of  copartners,  99. 
duration  of,  100. 
continuity  of,  101. 
in  life  insurance,  102,  127. 
of  sister  iu  life  of  brother,  103. 
of  child  in  life  of  parent,  103. 
of  father  in  life  of  son,  104-109. 
oi  feme  s^ole  under  contract  of  marriage,  107. 
of  married  sister  in  life  of  brother,  107. 
of  nephew  in  life  of  uncle,  107. 
of  mistress  and  betrothed,  107  a,  107  h. 
of  vyife  in  life  of  husband,  107  h. 
of  creditor  in  life  of  debtor,  108. 
of  partner  in  life  of  copartner,  109. 
of  employer  in  life  of  employee,  109. 
of  contractors,   109. 
valuation  of,  109. 

of  employee  \\\  life  of  employer,  109. 
of  assignee,  110. 
of  trustee,  111. 
of  payee  or  beneficiary,  112,  113. 

1403 


INDEX. 
[The  references  are  to  the  sections.] 

INTEREST  —  continued. 

ownersliip,  title,  265. 

absolute,  1288. 

■when  recoverable,  448. 

as  damage,s,  530,  705. 

every  cue  has,  in  his  own  life,  535. 

in  accident  insurance,  585. 
INTEREST   POLICY,  what,  30,  31. 
INTERIM   RECEIPT,  57-59. 

contract  without  seal  good  as  an,  17. 

notice  to  cancel.  69. 
INTERPLEADER,  566  c. 
INTERPRETATION.     See  chap.  viii.  anal.  4. 

rules  of.     See  Construction. 

what  law  governs,  66,  66  A. 

usage  in  aid  of,  173-179. 
INTERROGATORY,  equivocal,  210,  211. 
INTRUDER  has  no  insurable  interest,  89. 


J. 

JOINT   INSURANCE,  several  persons  may  take  out  a  policy  together 

on  the  same  or  different  property,  35  A. 
JOINT    OWNERS,  change  of  title  among,  280. 
JUSTICE,  death  by  the  hands  of.     See  Death. 


K. 


KEEPING,  means  habitual  keeping,  241.     See  243. 

of  prohibited  goods,  239-243,  245. 

illegal,  246. 
KEROSENE,  when  allowed,  239  A.     See  Risk,  2. 
KNOWLEDGE  of  agent  imputable  to  principal,  131,  132. 

of  condition,  when  presumed,  216. 


L. 


LACHES,  566  B,  .566  C.     See  Remedies,  1. 
LAMPS  "  to  be  filled  by  daylight,"  239  A. 
LANDLORD,  in  goods  of  tenant,  84. 
LAPSED    POLICY,  effect  on  premium  note,  556. 

suit  to  revive,  568. 
LAW,  death  in  violation  of.     See  Death. 
1404 


INDEX. 
[The  references  are  to  the  sections.] 

LEASE,  no  alienation,  265,  272,  276  B. 

not  an  incuinbrciiice,  292  A. 
LESSEE,  insurable  interest  of,  84,  288. 

claim  of,  for  loss,  424,  450,  456,  456  a. 
LESSOR,  insurable  interest  of,  84. 

claim  for  loss,  424,  450,  456. 
LIABILITY 

of  reinsurer  co-extensive  with  that  of  insurer,  11  (z). 
measure  of,  11  A. 

not  affected  by  insolvency  of  insurer,  11  A,  11  (z),  12. 
"liable  in  same  time  and  manner  as  reinsured,"  has  no  refer- 
ence to  insolvency,  11  (z). 
to  assured,  12,  note.  i* 

not  affected  by  arbitration  with  other  reinsurers,  12,  note, 
for  damages  incurred  by  insurer  failing  to  keep  the  policy  alive, 
12,  note. 
pro  rata  in  reinsurance,  11  (z). 

in  double  insurance,  13 
for  loss  of  goods  constitutes  an  insurable  interest,  83,  94,  94  A,  95. 
general  denial  of,  waiver  of  preliminary  proof,  when,  469. 
LICENSE  to  travel  or  reside  abroad,  332-338. 

an  unlicensed  trader  cannot  recover  on  a  policy  on  his  business,  35  A. 

LIEN,  mechanic's,  insurable,  93,  288. 
so  equitable  lien,  93  A. 
lien  for  advances,  82,  93. 

may  be  an  incumbrance,  291,  or  not,  292,  292  A. 
for  taxes  may  be,  291,  or  not,  292  A. 

not  if  assessment  is  illegal,  292  A 
for  purchase-money  may  be,  291,  or  not,  292 
of  a  judgment  may  be,  291,  291  A,  or  not,  292. 

not  if  paid,  though  undischarged  of  record,  291,  note, 
by  collateral  deposit  of  deeds,  291. 
mechanic's  lien  may  be,  291. 
of  mutual  insurance  companies,  548. 
LIFE    INSURANCE.     See   Insurance. 
involves  the  principle  of  indemnity,  7-8. 
an  attempted  distinction  of,  from  fire  insurance,  &c.,  7. 
every  contract  of  insurance  must  be  based  on  a  valuable  interest,  8. 

this  IS  what  distinguishes  insurance  from  a  wager,  33,  74. 
how  affected  by  war.     See  War. 
insurable  interest  in.     See  Interest. 
warranty  of  health,  295.     See  Health. 
LICHTNING,  loss  by,  406. 

LIMITATION   OF    SUIT,  condition  as  to,  in  original  policy  does  not 
affect  reinsurance,  12  B. 
extended  by  war,  39  A. 
place,  490,  491. 

1405 


INDEX. 

[The  references  are  to  the  sections  ] 

LIMITATION   OF   SUIT —  continued. 
time: 

a  condition  that  suit  must  be  brought  within  a  certain  time  is 
valid  even  against  minor  beneficiaries,  478  A. 
miless  unreasonable,  482, 
it  controls  the  general  Statute  of  Limitations,  478  A. 
limitation  in  by-law,  478  A. 
such  conditions  do  not  apply  to  a  suit  to  recover  premiums. 

478  A. 
a  condition  that  no  suit  shall  be  brought  until  defendant 
does  some  act  is  void,  478  A,  also  479. 
the  period  begins  to  run  from  the  time  the  loss  becomes  due  and 
payable,  and  the  right  of  action  accrues,  479. 
there  is  no  right  of   action  until  the  sixty  days  or  ninety 

days  after  proof  allowed  the  company  for  payment,  479. 
wherefore  the  limitation  does  not  begin  to  run  until  that 
time   has  expired,  although    the  language  of  the  policy 
is  emphatic  that  it  shall  run  from  the  time  of  the  tire,  479. 
contra,  479,  and  note. 
Canada  statutes,  479. 
if   sixty   days   are   given    for   payment  they  run  from  the 

time  of  proof,  479. 
if  the  last  day  is  Sunday,  suit  on  following  day  sufficient, 
479. 
limitation  of  the  issuing  of  execution  against  the  company  is 

valid,  480. 
reinsurance  under  a  policy  containing  time  limitations,  481. 
a  new  promise  will  not  revive  a  cause  of  action  once  dead  under 

a  clause  of  limitation,  482. 
non-suit  or  arrest  of  judgment  in  suit  brought  within  time  will 
not  permit  a  new  suit  after  time,  nor  will  a  suit  in  a  court 
without  jurisdiction  stop  the  running  of  the  period,  483. 
but  an  amendment  in  the  name  of  the  defendant  may  be  made 
after  the  time  has  expired,  or  a  new  party  may  be  added,  48o. 
excuse  for  failing  to  sue  within  the  time,  484-488. 
fault  of  insurer  is  an  excuse,  484,  488. 

negotiations  in  bad  faith  or  other  action  lulling  the  insured  into 
security,  488. 
otherwise  if  the  negotiations  are  in  good  faith,  or  cease  before 
the  limitation  expires,  48."3. 
refusal  to  pay  does  not  waive  the  terminal  limitation  of  suit, 
but  does  waive  the  initial  limitation,  i.  e.  the  sixty  or  ninety 
days  allowed  the  company  for  payment,  488. 
demanding  proofs,  or  otherwise  recognizing  the  policy  after  the 

period  has  expired,  is  a  waiver,  488. 
clause  requiring  icriting  for  a  waiver,  488. 

payment  to  mortgagee  does  not  waive  the  limit  as  to  the  mort- 
gagor. 488. 

140G 


INDEX. 

[The  references  are  to  the  sections.] 

LIMITATION   OF    SUIT  —  con/mw^/. 

arrest  for  arson  not  at  instance  of  company  no  excuse,  488. 

intervening  war  may  excuse,  486. 

other  conditions  inconsistent  with  the  time  limit,  487. 

absence  of  defendant,  484. 

inconsistent  conditions,  487. 

waiver  of,  488. 
LIMITS,  settled,  337. 

LOSS  AND  ITS  ADJUSTMENT.     See  Rebuilding  and  Contri- 
bution. 
1.  Contribution  by  several  insurers,  13,  434-440. 

covered  by  policy,  31,  402-459. 

known  to  assured  before  completing  contract  and  not  disclosed  fatal, 
43  G. 

when  there  are  several  causes  of,  301. 

conflicting  claims  to,  creditor,  administrator,  390. 

by  usurped  power,  civil  conmiotion,  mobs,  and  riots,  403. 

by  theft,  injury  by  water,  removal,  404. 

by  lightning,  smoking,  illegal  practices,  405,  406. 

by  negligence,  misconduct,  and  fraud,  407-411. 

by  wilful  destruction  and  exposure,  409-411. 

by  design,  410 

by  explosion,  414-416. 

by  collision,  417. 

total  loss  of  a  building  is  destruction  not  of  the  materials  but  of  their 
specific  character  as  a  building,  421  a. 

if  cost  of  removal  of  ruins  preparatory  to  rebuilding  is  more  than 
their  value,  or  cost  of  repairs  more  than  value  when  repaired,  there 
is  a  total  loss,  421  a. 

broken  leg  necessitating  destruction  of  horse,  total  loss,  421  a. 

plaintiff  may  recover  for  partial  loss  proved,  though  he  sued  for 
a  total  loss,  421  a. 

loss  occurs  at  the  time  of  the  fire,  421  a. 

in  a  life  policy  the  estimate  of  the  value  of  what  is  lost  is  made  by  the 
parties  beforehand,  422 

in  case  of  a  creditor  the  estimate  should  coincide  substantially  with 
the  debt,  422. 

valued  policies,  422  A. 

if  only  part  of  property  put  at  risk  recovery  is  only  pro  rata,  422  A. 

statutes  making  conclusive,  as  to  real  estate,  the  value  named  in  the 
policy,  422  B. 

in  difire  policy  unvalued  the  object  is  indemnification,  and  the  meas- 
ure of  damages  is  the  vahie  of  the  property  lost,  not  the  cost  of  re- 
placement, 423-424. 

remote  damages  from  interruption  of  business,  loss  of  prospective 
rent,  &c  ,  cannot  be  recovered  unless  specifically  insured,  423  et  scq. 

method  of  estimating  value  and  loss.     Cost,  statements  in  application, 

proofs,  &c.,  423  A. 
vor..  II.-   45  1407 


INDEX. 
[The  references  are  to  the  sections.] 

LOSS   AND   ITS   ADJUSTMENT  — cori^mwer/, 

evidence  as  to  amount  of  loss.     Witnesses,  admissions,  &c.,  423  B, 

428. 
evidence  of  fraud,  423  C. 

burden  of  proof  on  amount  of  loss,  423  C. 

temporary  depression  of  value  not  to  be  taken  into  account,  424. 
amount  recoverable,  Lessee,  Mortgagor  and  :Mortgagee,  424. 
impost  and  excise  duties,  424. 

creditor's  recovery  not  limited  to  amount  of  debt,  424. 
goods  in  trust,  424. 
bailment,  424. 

goods  sold  but  not  removed,  424. 
partner,  424. 
part-owner,  424. 

person  having  several  interests,  424. 
policy  running  with  the  property,  424. 
extent  of  damage,  not  extent  of  title,  the  test,  424  A. 
insured  may  recover  for  all  interests  represented  by  him,  424  A. 
ambiguity  resolved  against  the  company,  424  A. 
rent,  usage,  424  A. 

plaintiff  not  estopped  by  proofs  repudiated  by  company,  424  A. 
insurance  on  one  item  cannot  be  diverted  to  another,  424  A. 
if  the  interest  has  diminished  the  insured  can  in  general  only  re- 
cover for  the  interest  he  still  has,  424  A. 
limitation  by  special  provision,  425. 

partial  loss  below  the  proportion  necessary  to  bring  the  policy 

into  action,  425. 
that  liability  is   incurred   beyond  charter  limit   no  defence  to 

company,  425.     See,  however,  430. 
pro  rating  "  without  reference  to  liability  of  other  companies," 

425. 
company  only  to  be  liable  for  what  prior  insurance  does  not 
cover,  425 
repeated  losses,  426. 
transfer  of  claim  for  damages,  426. 
apportionment  of  loss  and  expenses,  427. 
interest,  428. 
mode  of  payment,  428. 
set-off,  428." 

for  improper  refusal  to  receive  premiums,  or  renew,  or  to  pay  a  loss, 
damages  may  be  had,  429. 
2.  Who  may  sue,  445-452. 

nominal  and  real  claimants,  445. 

A.  insuring  in  his  own  name  the  property  of  B.  for  B.'s  benefit. 

extrinsic  evidence  as  to  where  proceeds  should  go,  445. 

heir,  445. 

administrator,  445,  448. 

unless  the  heirs  are  named,  only  the  executor  can  sue,  447  B. 

1408 


INDEX. 

[The  references  are  to  the  sections.] 

LOSS    AND   ITS    ADJUSTMENT  —  continued. 
payable  in  case  of  loss  to  B,  446-447. 
beneficiary  sue  in  his  own  name,  446. 
in  case  of  assignment,  447,  448. 

agent.     Policy  on  goods  "  in  trust"  or  "for  whom  it  may  con- 
cern."    Real  party  in  interest  must  sue  in  Iowa,  448. 
mortgagor  and  mortgagee,  44!j. 

claim  on  proceeds,  and  which  may  sue,  449. 
creditor  cannot  sue  on  policy  payable  to  him  "as  his  interest 
may  appear,"  447  A,  unless  his  interest  is  more  than  the  in- 
surance, 449,  for  the  action  cannot  be  split. 
too  many  plaintiffs,  447  A. 

policy  to  A.  and  B.,  real  interest  all  in  A.,  447  A. 
only  the  person  named  in  the  policy  can  sue,  unless  it  imports 
the  assurance  of  others,  as  by  the  phrase,  "  whom  it  may  con- 
cern," &c.,  447  B. 
only  the  covenantee  can  sue  on  a  policy  under  seal,  447  B. 
dismissal  of  suit  because  in  wrong  name  no  bar  to  another, 
447  B. 
•       suit  against  president  and  secretary  sufficient,  447  B. 
3.   To  WHOM  THE  piiOCEEDS  BELONG,  449-452  B.     See  chap.  xx. 
general  ru'e.     See  middle  of,  456. 
creditor  must  account  for  proceeds  beyond  debt  and  expenses,  if 

premiums  came  out  of  debtor,  449.     See  456,  near  end. 
vendor  and  vendee,  450,  456. 

mortgagor  and  mortgagee,  449,  452  B-452  D,  456,  457  C.     See 
chap,  xxiii.  and  anal.  A,  4. 
mortgagee  no  claim  on  mortgagor's  insurance,  449. 
covenant  to  insure  for  mortgagee's  benefit,  452  C. 
policy  payable  to  mortgagee,  how  affected  by  acts  of  moit- 

gagor,  452  D.     See  373  A,  379,  381,  386. 
insurance   by  'mortgagee  is  for   indemnity,    and    after  debt 
is  satisfied  the  excess  goes  to  the  mortgagor,  452  B. 
Contra,  449. 
landlord  and  tenant,  450. 
lessor  and  lessee,  456. 
carrier's  right  to  claim  proceeds,  457  A,  457  B.     See  chap,  xxiii. 

and  anal.  A,  4. 
wife  insuring  her  life  for  husband,  or  children,  451. 
endowment  policy  payable  in  alternative,  452. 
payment  of  premiums  gives  no  right  to  proceeds,  4.52  A. 
insured  is  to  retain  no  more  of  the  fund  than  covers  his  interest, 

452  A. 
loss  after  succession  goes  to  heir  or  devisee. 

administrator  recovers  as  trustee,  452  A. 
wife's  life  estate  by  marriage  contract  not  a  "succession,"  452  A. 
equitable  owner  against  garnishment  of  legal  owner,  452  A. 

1409 


INDEX, 
[The  references  are  to  the  sections.] 

LOSS    AND   ITS    ADJUSTMENT  —  con/mwe^/. 

oue  interested  may  recover  from  another  who  has  received  the 
whole  fund,  unless  it  is  primarily  for  the  latter's  benefit  and  no 
more  than  covers  his  own  interest,  452  A. 
holder  of  mechanic's  lien,  456,  note, 
builder  no  claim  on  buildee's  insurance  before  house  is  complete, 

452  A. 
equity  will  secure  vendor  the  purchase-money  out  of  vendee's  in- 
surance, 452  A. 
vendee's  claim,  on  completing  purchase  after  fire,  450. 
tenant  in  common,  452  A. 
legatee  no  claim,  where  testator  and  goods  perish  at  sea,  it  being 

unknown  which  went  first,  452  A. 
*'  for  owners,"  or 
"  ichnm  it  vwy  concern,''''  452  E. 
4.  Adjusting  Claim,  Compromise.,  ^-c,  452  F. 

adjustment  fairly  made  conclusive,   if  the  facts  were  actually 
known  (English  case  contra),  though  tlie  parties  mistook  their 
legal  rights,  452  F. 
facts  not  considered  may  afterward  avail,  unless  merely  cumula- 
tive in  an  unimportant  degree,  452  F. 
if  the  assured  knowing  his  rights  is  frightened  into  an  unjust 

settlement,  there  is  no  help  for  him,  452  F. 
yielding  part  of  claim  is  sufficient  consideration  for  promise  to 
pay  the  rest,  452  F. 
but  is  not  binding  on  the  assured  unless  the  claim  is  doubt- 
ful, 452  F. 
or  there  is  some  consideration  for  reducing  his  claim,  452  F. 
performing  conditions  prescribed  is  a  good  consideration  for  the 

promise  attached  to  them,  452  F. 
fraud  vitiates  the  adjustment,  452  F. 
notice,  proof,  account,  and  payment  of,  400-477. 

general  denial  of  liability  to,  waiver  of  preliminary  proof,  when,  4G9. 
payment  of,  procured  by  fraud  or  mistake,  477,  575. 


M. 

MAGISTRATE'S    CERTIFICATE,    when    necessary,    as    preliminary 

proof,  466. 
MAIL,  negotiations  for  insurance  by,  46-49. 
MAILING  notice  as  to  premium  is  sufficient,  356  A. 
MARGIN  of  policy,  effect  of  notes  on,  29  A. 
MARRIAGE  revokes  designation  of  beneficiary  (?),  399 II. 
MARRIED    WOMAN,  insurable  interest  of,  in  life  of  husband,  107. 
rights  in  life  policy  for  benefit  of,  and  children,  391. 

1410 


INDEX. 
[The  references  are  to  the  sections.] 

MASTER   OF   SHIPS,  insurable  interest  of,  94  A. 
MATERIALITY.     See  Repkesentatiox  and  Concealment,  4. 

not  an  open  question  in  warranties,  184. 

an  open  one  in  representations,  184. 

and  concealment,  184. 

■when  question  for  the  jury,  184,  187. 

question  and  answer  conclusive  as  to,  184-188. 

when  for  the  court,  18.3-188. 

MEASURE    OF   DAMAGES,  indemnity  is  the  limit,  2,  7,  8,  11. 

in  reinsurance  the  insurer  cannot  recover  beyond  his  own  liability, 
11,  11  A. 
and  if  he  settles  for  less  than  the  original  policy  he  can  recover 

from  the  insurer  no  more  than  he  settled  for,  11,  11  A. 
if  he  has  not  settled  his  own  liability  is  the  measure  of  that  of 
the  reinsurer,  11  A. 
MEDICAL   ATTENDANT,  usual,  304. 

object  of  reference  to,  304. 
MEDICAL   EXAMINATION.     See  Health,  3. 

MEDICAL   EXAMINER,  statement  of,  as  evidence,  123,  303. 

examination,  object  of,  303. 

how  far  agent,  303. 
MEMBERSHIP  of  mutual  insurance  company,  648-552. 
MEMORANDUM,  what,  29. 
MERGER   OF   TITLE,  when  an  alienation,  269  a. 

MILITARY    SERVICE,  of  the  enemy,  death  in,  not  insurable,  37. 

what  is,  37,  333,  334. 

deatli  in,  332. 

entering,  334. 

voluntary  or  involuTitary,  334. 
MILL,  machinery,  included  in  loss  of,  520. 
MILLS.     See  Conuitions. 

working  of,  276. 

MISCONDUCT,  loss  by,  407,  411. 

defined  and  distinguished  from  negligence,  411. 

MISREPRESENTATION.      See   Representation,    Brief   Index  and 
Full  Analysis, 
defined,  181. 

by  agent.     Chap.  vii.  anal.  3. 
if  doubtful,  insured  to  have  benefit  of  doubt,  193. 
in  original  policy  may  not  avail  a  reinsurer,  ll(z2). 
as  to  title  or  incumbrance.     See  Incumbrance,  3. 
as  to  other  insurance,  372  E. 
as  to  use,  247. 

as  to  part  of  property  insured,  277. 
as  to  title,  287. 

1411 


INDEX, 

[The  references  are  to  the  sections.  ] 

MISREPRESENTATION  —  continued. 

as  to  incumbrance,  290. 

■waiver  of,  500. 

in  guarantee  insurance,  543. 

of  "life,"  579. 
MISTAKE,  in  name  of  vessel  insured  not  fatal,  43  D. 

in  identity  of  assured  not  fatal,  43  D. 

in  charging  too  little  premium,  43  E. 

MOBS   AND   RIOTS,  loss  by,  403. 

MORTGAGE,  assent  to,  by  insurer  does  not  release  reinsurer,  12  B. 

as  an  alienation.     See  Alienation. 

is  an  incumbrance,  291,  292  B. 

though  fraudulent  and  unrecorded,  291. 

before  foreclosure,  no  alienation,  269. 

but  is  an  alteration  of  ownership  and  change  of  interest,  271. 
MORTGAGEE,  interest  independent  of  mortgagor,  6. 

insurable  interest,  80,  82,  83,  96. 

title  in  respect  to  insurance,  287. 

what  he  may  insure,  116. 

state  of  his  account  with  mortgagor  no  concern  of  the  insurer,  116. 

claim  of,  for  loss,  424,  449. 

right  of  subrogation,  456,  457. 
MORTGAGOR,  when  not  interested  in  proceeds  of  insurance  by  mort- 
gagee, 6. 

insurable  interest,  82. 

must  state  title  if  called  for,  287. 

alienation  by,  effect  of,  on  mortgagee,  276. 

title  of,  in  personal  property,  288. 

claim  of,  for  loss,  424,  449. 

right  of  subrogation,  456,  457. 
MOTHER,  insurable  interest  in  life  of  son,  107  (t). 

as  beneficiary,  399  H. 

MUTUAL   COMPANIES,  548. 

may  make  parol  contract,  23  A.     See  Parol  Contract. 

may  contract  with  parties  out  of  the  State,  563. 
agents  of, 

governed  by  much  the  same  principles  as  agents  of  stock  com- 
panies, 139. 

the  agent  acts  in  the  negotiations  only  as  agent  of  the  company 
and  not  of  the  assured,  131. 

an  agent's  overestimate  of  value  binds  the  company,  140. 

where  agent  neglects  to  state  an  incumbrance  mentioned  by  the 
insured,  140. 

the  law  construes    the  powers  of    agents  of  mutual    companies 
more  strictly  than  those  of  stock  company  agents,  127. 

and  in  Massachusetts  the  decisions  are  very  strict,  145,  146. 

1412 


INDEX. 
[The  references  are  to  the  sections.] 

MUTUAL    COMPANIES  —  continued. 

agents  there  cannot  bind  the  company  contrary  to  by-laws,  145, 

146. 
but  by-laws  not  of  the  essence  of  the  contract  may  be  waived, 

147'. 
in  Pennsylvania  also  the  distinction  between  mutual  and  stock 

companies  is  emphasized,  14b,  149. 
see  on  this  subject  also  the  whole  text  from  139  to  151. 
secretary  as  agent  of  directors,  139. 
directors  may  appoint  president  to  indorse,  139. 
liability  of  directors,  504. 
MUTUAL   INSURANCE,  548.     See  Assessment. 

effect  of  war  on,  same  as  with  other  insurance,  39  (s). 

1.  Membership,  548-552. 
capital,  548-551. 

guaranty  and  other  funds,  549-551. 
life,  551. 

lien  on  real  estate,  563. 

directors,  when  liable  for  neglect  to  assess,  564. 

each  person  insured  becomes  a  stockholder,  and  is  at  once  insured 
and  insurer,  548 

the  whole  premium  may  be  paid  in  advance,  and  no  after  lia- 
bility attach,  548. 

charter  lien,  548. 
the  capital  consists  of  cash,  premium  and  deposit  notes,  549,  549  a, 
549  b. 

and  the  liability  of  members  to  a  fixed  amount  beyond  these, 
549. 
mutual  and  stock  business  done  by  same  company,  550. 
benevolent  associations  treated  as  life  insurance  companies,  550  a. 
mutual  life  insurance  guarantee  fund,  551. 
membership,  552. 

how  far  members  bound  by  the  by-laws,  552. 

applicants  not  bound  by  them  until  the  contract  is  complete, 
and  contra,  552. 

acts  of  officers,  552. 

safety  fund,  .552. 

diversion  of  funds  from  purpose  of  charter,  552. 

false  representations  in  procuring  membership,  552. 

estoppel  to  deny  membership,  552. 

a  minor  may  be  a  member,  552. 
forfeiture  of  policy  as  a  defence  on  note,  553,  554. 
surrender  and  cancellation  of  policy,  555;  see  also  556. 

insolvency  of  maker  of  premium  note,  555, 

2.  Assessments,  557. 

right  to  assess  strictly  construed.  The  assessment  must  con- 
form to  the  charter,  and  the  agreement  must  be  by  the  proper 
officers,  557. 

1413 


INDEX. 
[The  references  are  to  the  sections] 

MUTUAL    INSURANCE  —  continued. 

slight  errors  do  uot  invalidate  assessments,  558. 
what  they  may  include.     Insolvency.     Set-off,  559. 

how  the  amount  for  which  the  assessment  is  to  be  made  is 

estimated,  559. 
it   must   not    be   larger   than    necessary   to   meet    existing 

charges,  or  intentionally  omit  stockholders,  559. 
but  an  assessment  may  be  made  to  cover  losses  by  bad  in- 
vestments, or  prior  assessment  illegal  in  form,  and  mere 
excessiveness  if  uot  gross  will  not  be  fatal,  559. 
classification  of  risks  and  funds,  560. 
extent  of  liability  to  pay,  560  A.     See  also,  561. 

fraud  inducing  member  to  join  is  a  defence,  560  A. 
but   neglect   to   read    the   policy,    which   turns   out    to   be 
different   from  what  the  insured  wanted  is  no  defence, 
560  A. 
forfeiture  or  suspension  by  non-payment,  560  B.     (Liability  in  spite 
of;  see  560  A.) 
not  if  assessment  is  invalid,  560  B. 
or  assured's  share  of  company  profits  will  satisfy  the  assessment 

on  him,  560  B. 
or  the  policy  is  revived,  or  there  is  an  excuse  for  non-payment 

which  the  company  ought  to  recognize,  560  B. 
evidence  of  forfeiture,  560  B. 
company's  books  the  best,  560  B. 

sometimes  the  whole  amount  of  the  deposit  note  becomes  due 
upon  a  single  default,  561. 
waiver,  561  A. 

by  course  of  dealing,  561  A. 

any  subsequent  recognition  of  the  policy  as  valid,  561  A. 
sending  a  second  notice  after  the  expiration  of  the  time  for  pay- 
ment, 561  A. 
subsequent  levy  or  collection  of  an  assessment,  unless  qualified, 
561  A. 
notice  of  assessment,  562, 
mail,  562. 
by-law,  562. 
charter  provision,  562. 
publication,  562. 
date,  562. 

time  allowed  for  payment  after,  562. 
contract  with  parties  out  of  the  State,  563. 

lien,  .563.     See  also  .560  A. 
remedy  to  compel  assessment,  &c.,  563  A. 

company  must  make  an  assessment  within  a  reasonable   time,  and 
pay  a  loss,  563  A. 
if  it  does  not  remedy  by  mandamus,  563  A. 
or  suit  for  damages,  563  A. 

1414 


INDEX. 
[The  references  are  to  the  sections.] 

MUTUAL   mSURANCE  —  continued. 

a  by-law  may  diminish  the  class  assessable,  or  may  require  resort  to 
a  superior  body  of  the  society  before  suit,  but  cauuot  cut  off  final 
resort  to  the  courts,  563  A. 
numbering  of  certificates /jn'ma/ac/e  evidence  of  membership,  503  A. 

lack  of  certificate  fatal  to  suit,  563  A. 
liability  of  directors  for  neglecting  to  assess,  564. 
MUTUAL   MISTAKE,  ground  for  reformation,  27.  See  also  Remedies. 


N. 

NEGLTGENCE,  loss  by,  409-411.     See  Risk,  4. 

of  agent,  see  chap.  vii.  anal.  3. 

as  to  mere  personal  undertaking,  no  effect  to  bind  company,  64. 

in  company's  business,  company  responsible,  43  D,  43  E,  58,  64. 
See  Consummation,  1. 

contributory,  no  defence,  409,  530,  538. 

gross,  410. 
NEW   PR():\nSE  does  not  avoid  limitation  of  suit,  482. 
NON-FORFEITABLE  policy,  344  6,  363  a. 
NON-PAYMENT  OF  PREMIUM.     See  Premium. 
NOTE,  premium.     See  Premium,  2 
NOTICE.     See  Proofs,  1. 

of  loss  to  reinsurer,  1 1  (z). 

of  abandonment  need  not  be  given  to  reinsurer,  11  (zg). 

of  loss,  time  and  mode,  11,  216,  460,  461. 

may  be  given  within  a  reasonable  time  after  war  ceases,  39  A. 

of  charter  and  by-laws  ought  not  to  be  attributed  to  the  public,  23  D. 

to  agent  notice  to  principal,  when,  1.32,  153.     See  Agent,  4,  5,  6; 
Incumbu.ance,  6. 

to  agent  of  applicant's  age,  &c  estops  company,  305. 

as  a  condition  of  cancellation,  see  chap.  v.  anal.  2,  3. 

of  other  insurance,  wliat,  and  when,  216,  368-372. 

of  assignment  of  policy,  216,  396. 

of  incumbrance,  216,  294  a. 

of  increase  of  risk,  221-225. 

of  nonpayment  of  premium.     See  Premium,  8. 

of  other  insurance  in  writing,  363. 

forthwith,  &c.,  462. 

by  whom  and  to  whom  given,  463,  465. 

waiver  of,  464. 

by  stranger,  effect  of,  512. 

of  death,  .536. 

of  assessment,  562. 

H15 


INDEX. 
[The  references  are  to  the  sections.] 

o. 

OCCUPANCY,  247-249.     See  Vacancy. 
OCCUTATIOX,  representation  as  to,  306. 

at  time  of  application  must  be  given,  188  A,  306. 

change  of,  5o2. 
OFFICERS.     See  Agknt,  Agents,  Mutual  Companies,  &c. 

of  mutual  insurance  company,  power  of,  146-148. 

(le  facto  signature  to  policy  good,  27. 
OIL,  provision  against  storing,  778. 
OMISSION,  to  answer  question  in  application,  1G6. 
ONE-THIRD,  difference  between  new  and  old,  not  allowed,  423. 
OPEN  POLICY.     See  Policy. 
OPINION,  of  agents,  how  far  binding  principal,  131. 

no  warranty,  296. 

of  witness,  325. 
OPIUiNI  EATING,  representations  as  to  habit  of,  299,  300. 

ORAL,  insurance,  valid,  14. 

representation  prior  to  application,  effect  of,  192. 
OTHER   INSURANCE,   364-376.     See   Double   Lnsurance,  and  for 
fuller  analysis  see  chap,  xviii  at  364. 

means  reinsurance,  when,  12. 

known  to  apent,  133  A. 

understated,  188  A. 

of  part,  entire  contract.  301. 

Bimultaneous  policies,  365  a. 

identity  of  interest  not  necessary,  366,  436,  436  a. 

notice  of,  what,  and  when,  308. 

notice  of,  in  writing,  369. 

notice  of,  by  indorsement,  369. 

consent  to,  in  writing,  370. 

approval  of  and  consent  to,  371. 

waiver  of  forfeiture  for;  375. 

in  life  insurance,  440. 
OVER-INSURANCE.     See  Other  Insurance. 
OVP^RPAYMENT,  retained  by  company,  applied  by  law  to  revive  dead 

policies,  70  C. 
OVERVALUATION.     See  Valuation. 

is   frequently   stipulated  against   because  it   influences    the    assured 
against  the  preservation  of  the  property,  373. 

evidence  of  value,  373. 

sometimes  is  held  that  the  overvaluation  must  be  intentional  to  be 
fatal,  373,  373  A. 
1416 


INDEX. 

[The  references  are  to  the  sections  ] 

OVERVALUATION  —  continued. 

but  best  view  is  a  wilful  ueglect  of  tlie  means  of  information  will 
avoid  the  policy,  even  though  there  is  no  intended  fraud,  373,  note, 
373  A. 
and  a  mistake  has  been  held  fatal,  373,  373  A. 

it  is  said  tiiat  only  a  gross  and  clear  overvaluation  will  be  fatal,  373. 
and  this  whether  there  is  any  condition  on  the  subject  or  not,  373. 
others  hold  a  substantial  excess  sufficient,  373  A. 
want  of  education  is  no  excuse,  373  A. 
a  claim  more  than  double  the  truth  is  prima  facie  fraudulent,  373  A. 

but  not  20  per  cent,  nor  75  per  cent  excess,  373  A. 
a  warranty  shuts  out  the  question  of  intent,  373  A. 

unless  other  parts  of  the  policy  qualify  it,  373  A. 
of  part  of  the  property  does  not  affect  the  rest,  373  B. 
that  is  known  to  the  company,  or  ought  to  be  known,  is  waived  by 
rejecting  the  claim  on  other  grounds,  373  B. 
but  not  if  it  is  a  fraud  and  the  fact  is  unknown,  373  B. 
nor  will  knowledge  of  the  agent  be  sufficient  if  assured  knows 
the  company  is  being  deceived,  373  B. 
under  the  Maine  statute  the  question  is  whether  the  risk  is  increased, 

373  B 
when  overvaluation  at  the  time  of  insurance  is  immaterial.  373  B. 
the  rule  of  this  topic  does  not  apply  to  a  changing  stock  of  goods,  374. 
nor  in  any  case  where  the  insurer  is  only  liable  for  a  percentage  of  the 

actual  loss,  374. 
in  case  of  renewal,  a  depreciation  since  the  first  insurance  does  not 

give  rise  to  a  fraudulent  overvaluation,  375. 
a  violation  of  the  charter,  by  insuring  for  too  large  a  percentage  of 
the  real  value,  does  not  avoid  the  policy  between  the  parties,  376. 
OWNER,  who  is,  in  respect  to  insurance.     See  Title  1,  2,  3,  4,  5. 

"  sole,  unconditional,"  &c.     See  Title  4. 
OWNERSHIP,  mortgage,  alteration  of,  271. 
change  of,  effect  on  right  of  action,  281. 
interest,  title,  285. 


PAPERS  referred  to  in  policy  when  part  of  contract,  158-160. 
PARENT,  interest  of,  in  life  of  child,  102  A,  103-107. 
PAROL,  transactions  prior  to  or  contemporaneous  with  policy,  effect  of, 
2f)B. 
modification  of  a  written  policy  is  good,  24,  24  A. 
PAROL   CONTRACT.     See  Contract. 
of  insurance, 

terms  of,  23. 

must  be  fixed  by  specification,  prior  course  of  dealing,  or  other- 
wise. 27. 
prepayment  of  premium  not  necessary,  22  A. 

1417 


INDEX. 
[The  references  are  to  the  sections.] 

PAROL   CONTRACT  —  continued. 

will  be  specifically  enforced,  23  A. 

not  ordiuarily  within  the  Statute  of  Frauds,  23  C. 

if  one  peril  is  within  the  statute  and  one  not,  the  contract  is  good 

as  to  the  latter,  23  C. 
effect  of  charter  and  by-laws,  14-25,  23  D. 
and  see  cliap.  iv   anal.  5. 
renewal,  21.     See  Renewal,  or  clnip.  v.  anal.  C. 
some  doubt  if  the  long  usage  to  give  written  contracts  has  not  the 

force  of  law  and  makes  parol  insufficient,  14. 
great  weight  of  authority  and  reason  holds  it  good,  14-2.5. 

if  the  insurer  is  a  private  person  the  common-law  riglit  to  make 
oral  contracts  of  insurance  is  clear,  18,  19,  23  I). 
whether  the  contract  is  intended  to  be  final  or  looks  to  the 
issue  of  a  policy,  22,  23  A,  23  D. 
if  the  insurer  is  a  corporation  the  first  question  is  whether  its  or- 
ganic law  gives  it  power  to  make  oral  insurance,  23  D. 
and  the  second  question  is  whether  when  it  exceeds  its  power 
the  contract  may  not  still  be  good  between  the  parties,  14, 
23  D. 
legislative  intent,  23  P. 
one  who  retains  the  benefit  of  a  transaction  cannot  repudiate 

it,  23  I), 
an  innocent  person  who  has  given  value  will  be  protected, 

23  D. 
mere  informality  will  not  avoid  the  contract  unless  the  legis- 
lative intent  is  clear  to  that  effect,  23  D. 
in  any  case  the  preliminary  oral  contract  is  valid  though  the 
charter  require  a  written  policy  ever  so  peremptorily,  23  J), 
custom  is  evidence  to  show  whether  the  contract  was  final  or  looked 
to  the  issue  of  a  policy,  23  B. 

PAROL   EVIDENCE      See  Evidence. 

admissible  to  show  that  a  policy  is  really  one  of  reinsurance,  12  D. 
not  admissible  to  show  that  a  renewal  receipt  absolute  on  its  face,  is 
really  conditional,  70  a. 

PARTICULAR  account  of  loss,  what,  and  when  required,  460,  474,  475. 

See  Pkoofs,  3. 
PARTIES  to  contract,  who  may  be,  35,  35  A. 

in  general,  27,  35. 

infants,  35  A. 

unlicensed  merchant,  35  A. 

enemies.     See  War. 

two  or  more  joining,  35  A. 

PARTNERS,  insurable  interest  of,  in  property  of  copartnership,  91,424. 
insurable  interest  of,  in  life  of  copartners,  109  A. 
transfer  between,  no  alienation,  279-2S1. 
contra,  280. 

1418 


INDEX. 

[The  references  are  to  the  Beetions,] 

PART-OWNERS,  insurable  interest  of,  99. 

PAYMP]NT,  what  constitutes  payment  of  premium,  345-348.     See  Pre- 
mium, 1. 
evidence  of,  359. 
in  work  and  board,  &c.,    347. 
by  promise  of  officer  of  insurers,  .348. 
of  premium,  when  it  becomes  due  on  Sunday,  349. 
waiver  of  payment  of  premium,  360. 
PERiMlT,  to  reside  abroad,  332. 

to  travel,  335. 
PETROLEUM,  when  included  in  risk,  239  A.     See  Risk,  2. 
PHYSIC  IAN,  family,  304. 

PLACE,    reinsurance  of  risks  in  New  York  does  not   include   policies 
issued  in  New  York  on  property  elsewhere,  12  A. 
for  payment  of  premium.     See  Prejiium,  6. 
of  contract,  66,  66  A 

where  goods  must  be  to  be  covered  by  the  risk.     See  Risk,  3. 
when  statement  of,  a  warranty,  2.")7. 
PLEADING,  what  parties  must  allege  and  prove,  183. 
general  statement  of  plaintiff's  case,  588-590. 
value,  590. 

compliance  with  statutes,  590. 
negative  allegations,  590. 

policy  must  be  set  out,  and  application  if  part  of  policy,  589. 
performance  of  conditions  precedent  to  right  of  recovery   must   be 
alleged,  589. 
general  allegation  sufficient,  but  it  must  be  stated  that  the  period 

allowed  the  company  for  payment  has  expired,  589. 
must  state  that  notice  and  proofs  were  furnished  as  agreed,  or 
were  waived,  589. 
proof  of  waiver  of  a  condition  is  admissible  under  the  allegation  of 

performance,  589. 
allegations  as  to  interest,  assignment,  value,  description  of  property^ 

&c  .  590. 
plaintiff  need    not   aver  matters  of  defence,  exceptions,  conditions 
subsequent,  the  right  of  the  company  to  do  business,  sufficiency  of 
capital,  589,  &c.,  nor  that  demand  was  made  before  suit,  590. 
matters  in  defence  must  be  specifically  pleaded,  591, 
intentional  injury,  591. 
arbitration,  591. 
breach  of  warranty,  .591. 
misrepresentation,  591. 
other  insurance,  591. 

objections  different  from  those  raised  before  suit  will  not  do,  591. 
false  swearing,  591. 
fraud,  591. 

ultra  vires,  591.     See  also  577,  and  chap.  iv. 
new  trial,  591  B. 

1419 


INDEX. 
[The  references  are  to  the  sections.] 

PLEDGEE,  insurable  interest.  80,  82,  93  A. 
PLEDGOR,  insurable  interest,  82,  288. 
PNEUM0XL4,  29G. 

POLICY,  life,  generally  a  valued  one,  7. 
form  of, 

charter  form  not  exclusive,  15. 

contra,  15,  note, 
seal  not  requisite,  16,  27. 

unless  the  law  expressly  so  provide?,  16,  note, 
and  even  then  the  contract  may  be  good  without  seal  as  an 
interim  receipt,  17. 
issued  without  order  of  directors  good,  17. 
insured  need  not  prove  officer's  actual  autliority,  16. 
signature  of  president  and  secretary,  15  and  note,  27. 

of  de  facto  officers  sufficient,  27. 
may  be  left  blank  and  name  of  insured  filled  in.  27. 
universal  custom  to  give  written  policy,  embodying  terms  and  con- 
ditions, 14,  29. 
what  is  part  of  the  policy, 

the  application  when,  29,  29  A,  20  C,  31. 

statutes  requiring  its  annexation  to  policy,  29  C. 
endorsements  and  marginal  notes,  29  A. 

parol  transactions  prior  to  or  contemporaneous  with  the  policy, 
29  B. 
agreement  to  give,  on  a  contingency  good,  43  E. 
issued  after  loss,  45,  45  a. 
what  law  governs,  66,  66  A. 
termination  of,  see  chap.  v.  anal, 
cancellation  of,  see  chap.  v.  anal, 
surrender  of,  see  chap.  v.  anal, 
renewal  of,  see  chap.  v.  anal, 
revival  of,  see  chap.  v.  anal, 
provisions  of, 

"  no  agent  can  bind  company  by  any  agreement,"  62. 
under  seal  not  continued  in  force  by  parol,  70  B. 
issued  by  a  foreign  compan}',  wlicn  void,  577. 
a  lax  and  informal  instrument,  26. 
different  modes  of  execution,  27,  28. 
contents  of,  29. 

kinds  of,  open,  valued,  wager,  interest,  time,  and  voyage,  30  to  34, 
114. 
open  and  valued,  30,  31. 
statutes  declaring  a  policy  to  be  valued,  31  A. 
policy  may  be  valued  as  to  one  article  and  open  as  to  another,  32. 
parties  to,  who  may  be,  35. 
distinffui.shed  from  agreement  to  insure,  45. 
cancellation  of,  67-69. 

1420 


INDEX. 
[The  references  are  to  the  sections  .T 

POLICY  —  continued. 
surrender,  69  a. 
suspension  of,  101,  215,  3i3. 
valuation  in  life,  109. 
alteration  of,  1-50  A. 

may  be  modified  by  application,  168,  169. 
what  is  par£  of  the,  158.     See  chap.  viii.  anal.  2. 
how  affected  by  alienation  of  the  property.     See  Alienation. 
simultaneous  policies,  365  a. 
endowment,  344  b. 
non-forfeitable,  344  b,  363  a. 
assignment  of,  377  et  seq.     See  Assignment. 
lapse  of,  effect  on  premium  note,  556. 
refusal  to  deliver,  remedy  for.  56.5. 
suit  to  revive,  568,  569. 
obtained  by  fraud,  suit  to  cancel,  573. 

POSSESSION,  of  insured,  effect  of  change  in,  249. 
as  a  basis  of  insurable  interest,  80,  84,  87,  87  A. 

POWER,  if  contingent,  is  not  an  incumbrance,  292. 

PRELIMIXARY   PROOF.     See  Proofs,  2. 

of  loss,  11,460. 

who  may  furnish,  463,  465. 

time  and  form,  due  notice,  465-467. 

form  and  mode.  465-467. 

waiver  of,  468-471,  473. 

evidence  of  filing,  472. 

when  suit  may  be  brought  after,  476. 

of  death,  536. 

PREMISES  defined,  228,  243. 

PREMIUM, 

A.  Brief  index,  see  fuller  analysis  below  at  B. 

may  be  recovered  back  when  risk  does  not  attach,  4. 

condition  as  to  prepayment  of,  has  no  reference  to  the  preliminary 

parol  contract,  22  A. 
war  is  a  valid  excuse  for  non-payment  of,  40,  350.     See  War. 
may  be  paid  to  resident  agent  of  an  alien  enemy  company,  40,  30  A. 

such  agent  must  receive  the  tender,  40,  note. 

payment  in  confederate  money  good  (?),  30  A. 

tender  and  refusal  of  one  premium  sufficient,  subsequent  pre- 
miums need  not  be  offered,  40,  note. 
date  premium  is  due  may  be  fixed  by  agent's  interpretation,  131. 
neglect  of  agent  to  forward,  135. 
agent's  waiver  of  non-payment,  136. 
time  of  payment  of,  Sunday,  310. 
when  failure  to  pay  works  forfeiture,  341,  344,  363  a. 
what  constitutes  payment  of,  345,  345  a. 

1421 


INDEX. 
[The  references  are  to  the  sections.] 

PRFMIU:^!  —  continued. 

parol  agreemeiat  to  pay,  34i». 

days  of  grace  for,  346,  353,  357. 

may  be  paid  in  work,  or  board,  or  goods,  347. 

agreement  by  officer  of  insurers  to  pay,  or  see  it  paid,  348. 

intervening  death,  350. 

payment  of,  after  death,  352-355. 

excuse  for  non-payment,  prospectus,  custom,  notice,  355,  356. 

payment  of,  c;i  pres  performance,  3.57. 

insolvency  excuses  non-payment,  358. 

payment  of,  evidence,  359,  584. 

waiver  of  prepayment  of.  3G0-363. 

acceptance  of  part  payment  of,  policy  declared  forfeited,  extension  of 

time,  change  of  agency,  course  of  business,  362. 
recovery  back  of,  567,  568,  569,  577. 
thirty  days  grace  on,  582. 
credit  for, 

course  of  dealing  as  evidence  of.  27. 
place  where  paid  may  determine  place  of  contract,  66,  66  A. 
return  of,  as  condition  of  cancellation.     See  Cancellation,  4,  or 
chap.  v.  anal.  4. 
none  in  case  of  surrender  after  forfeiture,  69  B. 
prepayment  of, 

when  necessary  as  a  condition  precedent   to  a   complete   con- 
tract, 43  C,  5.5,  55  A,  56-.58. 

delivery  does  not  waive  condition  for  prepayment,  56. 

charter  requirement  wa'ved,  62  ;  see  63. 
mistake  of  officer  charging  too  little  not  fatal,  43  E. 
amount  of,  not  fixed,  no  contract,  43  F. 
unpaid  is  credit  on  policy  issued  after  loss,  45  a. 

B.  Fuller  Analyi^is. 

payment  of,  usually  made  a  condition  of  the  completion  of  the 
contract,  340. 
1.  What  is  Payment  ? 

check,  note,  any  mo'le  agreed  on,  34-5,  345  B,  345  E. 
if  no  mode  is  fixed  the  agent  may  use  his  discretion,  345 
may  be  in  depreciated  funds  if  such  is  the  usage,  315. 
may  be  in  dividends,  nnitual  accounts,  &c.,  345  a. 

but  profits  not  yet  declared  as  dividends  will  not  be 
applied  to  pay  premiums  to  save  a  forfeiture,  345  a. 
may  be  by  advertising,  board,  &c.,  347. 

may  be  by  order  on  a  third  penson,  345  B. 
a  marginal  provision  that  premium  is  payable,  part  in  cash 

and  part  by  note,  is  good,  345  B. 
an  offer  of  payment  by  a  banker,  the  agent  saying  he  will 
leave  it  in  bank,  is  equivalent  to  a  deposit  of  the  amount, 
345  B. 

1422 


INDEX. 

[The  references  are  to  the  sections.] 

PREMIUM  —  continued. 

a  credit  on  the  books  of  the  company  by  a  general  agent  is, 

345  B. 
payment  to  agent  is  good  though  he  converts  it  to  his  own 

use,  345  B. 
an  agreement  to  pay  in  groceries,  good  (N.  J.),  345  B. 
in  professional  services,  not  good  (N.  Y.),  345  B. 
evidence  that  agent  had  no  authority  to  receive  anything 
but  cash,  345  B. 
•where  such  is  the  case,  setting  off  debts  between  agent 
and  insured  does  not  bind  the  company,  345  B. 
part-payment  will  not  save  the  policy,  even  pro  tanto,  345  C. 
tender  is  sufficient  if  made  every  time  a  premium  comes  due,  345 
D,  315. 

2.  Premium  Notes,  345  A,  345  E-H. 

are  loans,  345  A. 

may  constitute  payment,  345  E. 

authority  to  a  company  to  issue  policies  is  authority  to  take 

premium  notes,  345  E. 
may  be  good  though  the  company  was  insolvent  at  their 

execution,  345  E. 
non-payment  of,  fatal  if  so  agreed,  345  E. 

but  a  stipulation   in  the  note  alone  is  not  sufficient, 
345  E. 
unless  taken  for  a  premium  in  default,  344  D. 
if  the  company  claims  forfeiture  for  non-payment  of 
note,  it  must  surrender  the  note,  345  E. 
though  invalid  (married  woman's),  do  not  avoid  policy  ah 

initio,  345  E. 
void  if  risk  never  attaches,  345  E. 
may  be  written  to  mature  at  loss,  345  E. 
no  presentment,  demand,  or  notice  necessary,  345  F. 
the  company  cannot  claim  the  note  and  repudiate  the  rest 

of  the  transaction,  345  G. 
misrepresentation  of  agent,  a  defence  to  suit  on,  345  G. 
but  not  informality  in  filing  copy  of  charter  with    State 
auditor,  345  G. 

3.  Recoi'ery  by  the  company. 

on  a  note,  though  the  policy  is  suspended  by  its  non-pay- 
ment, 345  H. 
even  after  loss  in  the  period  of  suspension,  345  H. 
and  the  whole  unpaid  premium  may  become  due  and 
be    recovered    on   failure    to    pay   one    instalment, 
345  H. 
the  company  may  deduct  unpaid  premium  from  the  amount 
due  on  the  loss.  345  H. 
even  though  the  Statute  of  Limitations  has  run  on  the 
note,  345  H. 

vol..  ir.  —  46  1423 


INDEX. 

[The  references  are  to  the  sections.! 

PREMIUM  —  continued. 

4.  By  whom  payment  may  be  made. 

any  one  may  pay  premiums,  but  there  will  be  no  lien  on  the 
insurance  money  for  them  except  by  contract,  trust,  sub- 
rogation, or  right  of  a  mortgagee  to  add  charges,  even  to 
preserve  the  property,  349  A. 

contract  to  pay,  good  as  to  minor  beneficiary,  349  A. 

5.  To  whom  payment  is  to  be  made. 

must  be  to  authorized  agent  349  B. 

or  actually  come  to  company's  hands, 
correspondence  admissible  to  show  authority,  349  B. 
handing   over   a   policy  for  delivery  gives  said  authority, 

349  B. 
payment  to  apparent  agent,  good,  349  B. 
facts  may  hold  company  in  spite  of  a  provision  in  by-laws, 

which  are  part  of  policy,  that  the  agent  must  be  appointed 

by  seal,  349  B. 
authority  to  receive  first  premium  does  not  authorize  receipt 

of  after  dues,  349  B. 
if  an  agent  receives  payment  from  himself  after  forfeiture  of 

his  policy,  it  is  a  fraud,  349  B. 

6.  Place. 

payment  at  wrong,  not  good,  348  A. 

parol  admissible  to  show  understanding  as  to,  348  A. 

7.  Time  of  Payment. 

the  premium  is  paid  when  it  is  d(!livered  to  express,  340. 
must  be  at  or  before  midnight  on  the  day  it  is  due,  349. 
if  it  falls  on  Sunday,  the  following  business  day  is  sufficient, 

349. 
days  of  grace,  353-355,  357. 
payment  after  death,  353-355. 
the  time  named  in  the  notice  may  be  waived  by  a  previous 

course  of  dealing,  356  A. 

8.    NOTICK 

of  non-payment  of  an  order  on  a  third  person  taken  as  pay- 
ment, must  be  given  before  the  company  can  claim  a  for- 
feiture, 345  B. 

the  company  need  not  give  notice  that  a  premium  or  note 
will  soon  be  due,  356,  341,  unless 

1.  it  is  necessary  to  inform  the  insured  of  the  amount 
due,  as  where  he  shares  the  profits,  345  A,  356,  or 

2.  a  course  of  dealing  leads  the  insured  to  rely  on  it, 
356,  356  A,  or 

3.  usage   has  made   it  a  part  of  the  contract,   356, 
356  A. 

and  where  there  is  such  usage,  if  no  notice  is  sent,  payment 
in  a  reasonable  time  is  sufficient,  ;)56  A. 

1424 


INDEX. 

[The  references  are  to  the  sections.] 

PREMIUM  —  continued. 

but  it  is  held  in  some  courts  that  a  habit  or  usage  of  this 
kind  may  be  discontinued  by  the  company  at  any  time, 
356  A,  352  A. 
and  no  evidence  of  such  usage  will  be  received  to  save  for- 
feiture unless  it  is  shown  that  in  the  particular  case  in 
question  it  was  withheld  on  purpose  to  obtain  a  forfeiture, 
356  A,  352  A. 
in  New  York  the  notice  must  state  that  in  default  of  pay- 
ment the  policy  will  be  forfeit,  356  A. 
the  law  applies  to  policies  issued  before  it  was  passed, 

356  A. 
and  the  burden  of  proving  notice  is  on  the  company, 
356  A. 
mailing  the  notice  is  sufficient,  whether  it  ever  arrives  or 
not,  356  A. 
9.  Excuse  for  non-pa  ijinent. 

the  act  of  God,  or  of  obligee  is,  350,  350  A. 
so  an  act  of  government,  350,  350  A. 
as  war. 

premiums  may  be  paid  at  the  agency  in  the  enemy's 

country,  350. 
which  agency  should  be  continued  by  the  company, 

350. 
it  has,  however,  been  held  that  war  abrogates  a  con- 
tract of  insurance,  350  A. 
the  instired,  however,  can  recover  the  value  of  the 

premiums  paid,  350  A. 
if  the  right  to  pay  the  premiums  remains,  so  also  does 
the  right  in  the  company  to  recover  them,  351. 
insolvency  of  insurer,  358. 

ceasing  to  do  business,  or  selling  out  to  another  compa- 
ny, 358. 
extension  of  time,  358. 
change  of  agency,  358. 

failure  of  the  company  to  give  the  notice  required  by  a 
course  of  business  or  usage,  358;  see  also  356,  356  A. 
No  excuse. 

failure  to  receive  notice  that  a  premium  is  due,  is  no  excuse, 

341,  352  A;  .see  3.56,  35G  A. 
nor  paralysis,  insanity,  or  other  disease,  352,  352  A. 
nor  a  mere  suspicion  of  insolvency,  3.52  A. 
nor   failure   to   find   the   agent,  by   calling   several   times, 

352  A. 
nor  the  agent's  assurance  that  the  dividends  will  be  suffi- 
cient, 352  A. 
nor  a  personal  agreement  with  the  agent  that  the  latter 
would  pay,  352  A. 

1425 


INDEX. 

[The  references  are  to  the  sectioDS.] 

PREMIUM  —  continued. 

nor  does  the  death  of  the  agent  excuse  payment  of  pre- 
miums due  at  the  home  office,  352  A. 

10.  Suspension  of  the  policy. 

during  default  is  sometimes  agreed  upon,  343. 
it  revives  on  payment,  even  on  a  judgment,  343. 

but  a  part  payment  is  not  sufficient.  343. 
in  the  period  of  suspension  the  company  is  not  liable,  and 

earns  no  premiums.  343.  358. 
but  if  they  accept  premiums  for  that  period  they  cannot 

escape  liability,  358. 

11.  FORFEITCRE  for  non-payment,  341. 

only  occurs  when  the  policy  stipulates  for  it,  343,  314. 

condition  construed  strictly  against  company,  342,  363  A. 

non-payment  of  a  note  at  maturity  may  not  be  fatal,  342. 

may  be  optional  with  tlie  company,  312. 

occurs  at  once  on  non-payment  without  any  entry  on  the 
company's  books,  protest  of  bill,  or  other  act,  342  A. 

beneficiaries  cannot  avoid  effect  of  non-payment,  342  A. 

failure  to  pay  interest  on  a  loan  (i.  e.  a  note),  is  not  failure 
to  pay  premiums,  342  A. 

non-payment  of  a  note  taken  for  a  premium  is  not  fatal  un- 
less expressly  so  agreed,  342  A, 
sometimes  the  policy  is  conditioned  to   revive  on  payment  of 

overdue  premiums,  341  A,  343. 
non-forfeitable,  endowment,  and  paid-up  policies,  344  a. 

Massachu.'5etts  statutes,  344  b,  344  c. 

paid-up  policy  by  agreement,  344  D. 

continuation  of  original  policy,  344  D. 

not  affected  by  repeal  of  laws  under  which  the  original 
policy  was  made,  314  D. 

not  liable  to  execution,  344  D. 

tontine  company  not  a  trustee  of  any  particular  fund  for  a 
policy-holder,  314  D. 

after  indorsement  as  a  paid-up  policy,  going  to  torrid  zone 
not  fatal,  344  D. 

when  the  original  policy  is  to  be  void  for  non-payment  of 
premium  or  interest,  and  provides  for  i.ssue  of  a  paid-up 
policy  after  two  premiums  have  been  paid,  344  E. 
contra,  344  E. 

if  demand  for  a  paid-up  policy  is  expressly  to  be  made  with- 
in thirty  days  after  forfeiture,  the  <n/i^^is .not  of  the 
essence,  344  F.  '  ^ 

contra,  344  F. 

nothing  is  due  until  denth,  3!4  F. 

policy  may  be  non-forfeitable  by  estoppel,  344  G. 
as  by  representations  of  agent,  344  G. 
contra,  344  G. 

1426 


INDEX. 

[The  references  are  to  the  sections.] 

PREMIUM  —  continued. 

the  amouut  of  a  i^aid-up  policy,  or  damages  for  its  refusal, 
is  estimated   according  to  clear  mathematical  prin- 
ciples,   subject    to    the    wording    of    the    contract, 
344  H. 
insured  not  entitled  to  the  whole  sum  he  has  paid  un- 
less so  agreed,  844  H. 
alteration  of  original  contract  from  non-forfeitable  to   for- 
feitable, by  terms  of  a  new  policy  or  a  note  taken  for  a 
premium  in  default,  344  I. 
parol  agreement  subsequent  to  policy  tliat  it  should  not  fail  by 
non  payment,  is  good,  340. 
but  a  mere  personal  promi.se  of  an  agent  that  he  will  see  the 
premium  paid  is  not,  348. 

12.     WAIVER    AND    E.STOPPEL  — 

of  prepayment. 

by  delivery  of  policy  without  payment,  360  A,  360  B. 

sending  policy  by  mail,  360  A. 
by  course  of  dealing  between  the  parties,  360  A. 
by  usage  generally,  360  A. 

assurance  by  agent  that  it  makes  no  difference,  360. 
any  circum.^^tances  showing  that  the  company  does  not 

intend  to  insist  on  the  condition,  360,  360  A. 
giving  credit  expressly  or  impliedly,  360  B. 

agents'   authority  to  waive  the  rule  in  regard  to 
cash  payment,  360  B,  360  D. 
in  general. 

by  agent's  wrong  information  as  to  date  premium  is 

due,  360  C. 
by  circular  issued  by  company,  360  C. 
agent  may  waive  immediate  payment,  360  A,  B,  C,  D. 

contra,  360  F. 
the  method  of  waiver  specified  in  the  policy  must  be 

pursued,  360  C 
waiver  of  breach  by  payment  of  a  less  this  month,  will 
not  compel  the  company  to  pay  another  loss    next 
month,  360  C. 
a  course  of  dealing,  usage,  or  custom,  to  accept  overdue 
premiums  binds  the  company  in  spite  of  a  clause 
I  in   the   policy  declaring   such    acts   to   be   mere 

courtesies,  361,  363. 
<  even  a  general  usage  is  sufficient  without  showing 

that  the  company  adopted  it,  361,  note,  contra, 
360  F. 
an  honest  and  prudent  belief  induced  by  the  com- 
pany that  premiums  will  betaken  after  date  is 
sufficient,  361,  note. 

1427 


INDEX. 
[The  references  are  to  the  sections. J 

PREMIUM  —  continued. 

but  receiving  overdue  premiums  alwajs  with  an  inquiry 
as  to  health,  does  not  estop  the  company  in  future, 
361,  note, 
acceptance  of  an  overdue  premium  waives  the  forfeiture 
for  Us  non-payment,  unless  the  policy  gives  tlie 
company  a  right  to  it  in  spite  of  forfeiture,  ^(52. 
otherwise  with  a  mere  offer  to  receive  or  a  demand 
(even  by  suit)  without  actual  payment,  3U2. 
•where  it  is  provided  that  past  payment  will  be  received 
on  proof  of  continued  health,  receiving  the  premium 
without  such  proof  waives  it,  but  does  vol  waive  the 
fact  of  death  unknown  to  both  parties,  353. 
no  estoppel  unless  the  plaintiff'  is  injured,  360  E. 
no  waiver  unless  the  facts  are  known,  360  E. 
decisions  adverse  to  waiver,  360  F. 

failure  of  the  company  to  give  accustomed  notice 
no  estoppel,  360  F. 
waiver  of  statute  provisions,  making  policies  non-for- 
feitable,  360  G. 
13.    A  prospectus  may  qualify  the  policy,  355-356. 
cy  prh  performance,  357. 
evidence  of  payment,  359. 

a  receipt  is  not  conclusive  but  may  be  contradicted  by  oral 

evidence,  359. 
the  company  cannot  deny  receipt  of  a  premium  acknowl- 
edged in  the  policy  in  order  to  defeat  the  contract,  but 
may  deny  it  in  order  to  recover  the  money,  359. 
Wrongful  refusal  to  receive  premiums. 

insured  may  sue  for  amount  necessary  to  get  another  policy 
as  good,  363  B. 
or  for  what  he  has  paid  in,  363  B. 
recovery  of  premiums  by  insured,  see  567. 
PREMIUM   NOTE.     See  Pkkmium,  B.  2. 
participation  in,  363  A. 

forfeiture  of  policy  no  defence  against,  553,  .554. 
eiTeot  of  surrender  and  cancellation  of  policy  on,  555. 
insolvency  no  defence  against,  555. 
liability  on,  after  lapse  of  policy,  556. 
when  and  how  assessable,  557-561. 
PRESIDENT,  signature  to  policy  required  by  charter,  15  and  note,  27. 
PROCEEDS,  to  whom  they  belong.     See  Loss,  3. 
PROFITS,  expected,  insurable  interest  in,  79. 
participation  in,  363  n. 
in  mutual  insurance.  571,  572 
PROOF   AT    TRIAL,  in  reinsurance,  same  as  in  suit  on  original  policy, 
11. 

1428 


INDEX. 

[The  references  are  to  the  sections.] 

PROOF   OF  AGENCY,  126,  138,  138  A. 
PROOFS   OF    LOSS.     See  Preliminaky  Proofs. 

1.  By  reinsured,  11  (z.^). 

within  reasonable  time  after  war  ceases  is  sufficient,  39  A. 
cannot  be  waived  by  mere  soliciting  agent,  129. 
notice  and  proofs  necessary,  460. 

proofs  may  be  notice,  but  notice  cannot  dispense  with  proofs, 
460. 

a  second  proof  is  to  be  taken  with  the  first,  460. 

assured  not  bound  to  apportion  loss  in  his  proofs,  460. 

time,  place,  and  mode  of  notice,  401. 

mail,  4ol. 

mere  silence  no  waiver  of  time  limit,  461. 

"forthwith,"  "soon  as  possible,"  "  immediately,"  mean  within 
a  reasonable  time  under  all  the  circumstances,  462. 

by  whom  and  to  whom  notice  is  to  be  given,  463. 

waiver  of  notice,  464;  see  also,  461. 

even  defects  in  violation  of  statute  may  be  waived,  for  the  pro- 
vision is  for  the  company's  benefit,  464. 

receiving  and  acting   on  an  oral  notice  waive  a  written  one, 
464. 

silence  when  notice  is  not  given  in  time  is  no  waiver,  for  speak- 
ing could  not  aid  the  insured  to  cure  the  defect,  464. 

2.  Preliminary  proofs,  465;  see  also,  460. 

who  may  furnish  and  receive,  465. 

time  and  waiver  of  it,  465. 

mail,  465. 

form,  465;  see  also,  466. 

due  notice  and  proof  of  death,  465. 

waiver  of  it,  465. 

presumption  of  death  in  case  of  absence,  465. 

in  wliat  part  of  the  seven  years  death  is  to  be  supposed,  to  have 

taken  place,  465. 
two  persons  perishing,  which  first,  465. 
excuse.     Loss  of  policy  is  not,  nor  instantaneous  death  (?)  ;  but 

insanity,  or  absence,  or  act  of  company  may  be,  and  notice  of 

total  loss  may  make  further  proof  unnecessary  except  to  show 

value,  465. 
liberal  construction  to  save  forfeiture,  465. 
books,  invoices,  and  vouchers,  excuses  for  not  furnishing,  465. 
sworn  appraisement  as  part  of  proof,  465. 
proofs  as  evidence,  465,  also,  460. 
honest  mistakes  not  fatal,  465. 
insured   may  recover  more  than   the  value  named   in   proofs, 

465. 
certificate  of  magistrate,  examination  on  oath,  466. 
proof  of  death   467:  see  also,  465. 
family  physician,  460. 

1429 


INDEX. 

[The  references  are  to  the  sections.] 

PROOFS   OF    LOSS  — continued. 

waiver  of  preliminary  proof,  4tj8— 171. 

refusal  to  pay  oii  other  grounds,  or  general  denial  of  liability 
without  giving  reasons  waives  the  furnishing  of  proofs,  or  de- 
fects in  them  if  they  have  been  furnished,  409. 
defects  are  waived  lay  omission  to  notify  the  assured  of  them 
promplhj  and  specijicallij,  so  as  to  give  him  opportunity  for  cor- 
rection. A  mere  general  statement  that  the  proofs  are  imper- 
fect is  not  sufficient.  It  has  been  held,  however,  that  rejecting 
the  proofs  and  demanding  others  "  in  exact  accoidance  with 
the  conditions  of  the  policy  ''  is  a  sufficient  specification,  4G0  B. 
especially  will  any  act  recognizing  the  policy  without  mentioning 

defects  be  a  waiver,  469  B,  473. 
payment  of  money  into  court  admits  cause  of  action, 
proceeding  to  investigate  loss,  make  adjustment,  &c.,  any  act 
leading  insured  to  supposed  proofs  would  be  useless,  waives 
them,  4G9  C,  469  B,  409,  even  though  required  by  statute,  469  C. 
who  may  waive,  469  D. 

provision  in  the  policy  or  in  bj'-law  that  no  condition  shall  be 
waived  except  in  writing  or  by  indorsement  on  policy,  will  not 
prevent  waiver  by  voice  or  act,  473,  473  A. 
particular  defects  pointed  out  waives  others,  470. 
what  is  not  a  waiver,  471. 

mere  silence  not  enough  to  waive  furnishing  proofs,  &c,,  471. 
waiver  of  notice  is  not  waiver  of  proofs,  471. 
evidence  of  preliminary  proof,  472. 
false  swearing  in,  see  477. 
3.  Particular  account,  474  (see  465).  and  what  is  required  in  it,  475. 

loss  of  books  excuses,  except  so  far  as  memory  or  other  means 

serve,  476. 
■waiver  of  it,  475;  .see  also  465. 
time  of  rendering  it,  475. 
when  suit  may  be  brought,  476. 
personal  examination,  &c.,  476. 
fraud  and  false  swearing  in  preliminary  proof,  477. 
payment  by  mistake  may  be  recovered,  477. 

proofs  may  be  notice,  but  notice  will  not  dispense  with  proofs,  477  A. 
a  second  proof  is  to  be  taken  with  the  first,  477  A. 
PROPERTY   INSURED,  transfer  of  title  to,  does  not  carry  insurance 
unless  so  agreed  in  the  policy,  6. 
what  it  includes.     See  Risk,  5. 
PROSPECTUS,  effect  on  contract,  29  B,  3.5.3-3.36. 
PROXIMATE   CAUSE,  459.     See  Cause. 


QUESTION,  conclusive  as  to  materiality,  185-188. 

1430 


INDEX. 
[The  references  are  to  the  sections.] 

R. 

RAILWAY   ACCIDENT,  what  is,  521. 

REASONABLE    NOTICE,  what  is,  when  for  court  and  when  for  jury, 

3G8. 
REBUILDINCx,  or  replacement,  430-433. 

sometimes  tliere  is  a  provision  for  rebuilding  in  the  option  of  the 
company,  430. 

or  for  paying  a  portion  of  the  expense  of  rebuilding,  423,  426. 

no  right  to  replace  exists  unless  expressly  provided  for,  430. 

the  election  must  be  within  a  reasonable  time,  430. 

company  cannot  replace  in  part  and  pay  in  part,  430. 

the  additional  value  of  the  new  over  the  old  is  to  be  deducted,  431. 

removal,  432. 

equity,  432. 

refusal  to  permit,  432. 

refusal  to  perform,  433. 

company  may  have  to  replace  more  than  once,  426. 

partial  rebuilding,  433. 

if  public  authorities  interfere  so  that  company  cannot  rebuild,  it 
must  pay  the  loss,  433. 

measure  of  damages  for  failure  to  replace  properly,  432,  433,  433  A. 

depreciation  of  property  before  fire,  433  A,  431. 

right  of  reversioner  or  life  tenant  to  have  insurance  applied  to  repair, 
433  A. 

order  of   incumbrances  not  changed  by  using  insurance  to  repair, 
433  A. 

assent  to  an  order  to  pay  to  assignee  in  case  of  loss  does  not  deprive 
the  company  of  the  option  to  rebuild,  447. 
RECEIPT,  for  insurance,  effect  of,  59,  69,  359. 

acknowledging  cancellation  may  be  rebutted  if  without  considera- 
tion, 67  A. 

contract  by  intermediate,  69. 

for  premium  open  to  explanation,  359. 
RECITAL,  in  policy  of  receipt  of  premium,  prima  facie  proof,  359. 

in  premium  note  that  policy  has  issued,  prima  facie  evidence,  584. 
REFEREE,  statements  of,  123. 
REFERENCE,  to  third  persons  for  information,  123. 

in  policy  to  application,  effect  of,  162-169. 
REFORMATION.     See  Rkmkdiks,  1. 

mutual  mistake  in  omitting  seal  is  ground  for,  27. 

of  contract  in  equity,  566. 
REFUSAL,  to  assent  to  assignment,  158-164. 

to  receive  premiums,  363  B. 

to  approve  pi'oposal,  ;)87. 

to  renew  policy,  damages  for,  429. 

1431 


INDEX. 
[The  references  are  to  the  sections.] 

REINSURANCE,  what,  9-12. 
contract  oli  indemnity,  9,  11. 

may  be  for  less  than  the  original  risk,  but  not  more,  11. 
if  the  insurer  sues  the  reinsurer  after  he  has  made  a  final  settlement 

with  the  assured  he  recovers  no  more  tlian  he  has  paid,  11,  11  A. 
if  he   sues  befure  a  final  settlement  with  assured,  the  measure  of  tlie 
reinsurer's  liability  is  the  Uabtlity  of  the  insurer  and  not  his  ahiiity, 
11  A. 
if  the  insurer  is  not  liable  on  the  original  policy,  he  cannot  recover  ot 

the  reinsurer,  11  A,  12. 
risk  begins  when  the  risk  on  the  original  policy  begins,  unless  other- 
wise specified,  12  D. 
parol  admissible  to  show  that  a  contract  is  one  of  reinsurance,  12  D. 
rights  and  liabilities  of  reinsurer  and  reinsured,  9,  11,  12. 
reinsurer's  liability  co-extensive  with  that  of  the  insurer,  ll(z). 
reinsured  may  proceed  against  reinsured  without  first  paying  the  in- 
sured, ll(z). 
insolvency  of  reinsured  does  not  affect  the  liability  of  the  reinsurer, 

ll(z),  il  A,  12. 
effect  of  local  usage,  ll(z). 
reinsurer  held  for  costs  of  defending  suit  against  reinsured  unless 

unnecessarily  incurred,  11  (zj). 
costs  of  defending  suit  against  reinsured,  ll(Zi). 
concealment  and  representation,  ll(zj. 
notice  and  proof  of  lo.ss,  11  (22)- 
construction  of /;;-o  rata  clause,  11  (z). 
subject  of  reinsurance  is  the  risk  of  the  first  insurer,  12, 
ordinarily  the  insured  cannot  sue  the  reinsurer,  12. 
even  though  the  insurer  is  insolvent,  12. 

but  sometimes  the  contract  gives  the  assured  the  right  to  sue  the 

reinsurer  directly,  12,  note. 

and  if  so  the  assured  is  not  affected  by  an  arbitration  of  the 

reinsurer,  who  is  liable  to  him  with  other  leinsurers,  12, 

note. 

not  affected  by  condition  in  original  policy  as  to  limitation  of  suit  or 

award  before  suit,  12  B. 
reinsurer  bound  by   assent  of   insurer   to  assignment  or  mortgage, 

12  B. 
reinsurer  bound  by  waiver  of  insurer,  12  B. 
of  all  risks  in  another  company,  surplus  fund  and  its  distribution, 

12  c. 
place  of  the  risk,  12  C 

proliibited  in  England,  but  allowed  elsewhere,  10,  08. 
not  within  Statute  of  Frauds,  12  A. 
not  ullrn  rlref!  when   permitted  by  general  law,  though  not  specified 

in  cliarter,  12  A. 
contribution  to  loss  in,  4o9. 
under  policy  containing  time  limitations,  481. 

1432 


INDEX. 

[The  refereoces  are  to  the  sections.] 

REINSURED,  concealment  by,  11. 
representation  by,  11. 

REINSURER,  liberated  by  increase  of  risk,  218. 

RELATIONSHIP,  as  ground  of  insurable  interest,  102  A,  107. 

representation  as  to,  o05. 
RELINQUISHMENT,  or  waiver  and  estoppel.     See  chap,  xxviii.  anal. 

1.  General  rides,  497. 

any  conduct  recognizing  the  policy  as  valid  after  breach  of  con- 
dition, or  any  act  that  puts  the  insured  to  expense  and  trouble 
on  the  justifiable  belief  that  the  company  still  regard  the 
policy  as  good,  will  be  sufficient,  497. 

waiver  must  be  pleaded.  It  is  a  question  for  the  court  if  facts 
are  admitted,  otherwise  for  jury,  497. 

2.  Waiver  or  estoppel  may  be  by  the  act  of  an  agent  within  his  author- 

ity, 498. 

wheVe  the  agent  makes  the  survey  which  is  signed  by  the  appli- 
cant relying  on  the  agent's  assurance  that  it  is  all  right,  498. 

where  an" applicant  signed  a  blank  application  stating  to  the 
agent  that  there  was  a  mortgage,  and  the  agent  afterward 
fitling  iu  the  answers  stated  that  there  was  no  incumbrance, 
498.° 

a  company  cannot  through  its  agent  write  representations  of 
which  the  assured  knows  nothing,  and  then  hold  him  to  them, 
499. 

it  is  always  a  question  of  fact  whether  the  agent  in  any  given 
matter  acted  for  the  insurer  or  for  the  insured,  500. 

3.  Estoppel  by  facts  ari.-ing  during  negotiations,  .501. 

issue  of  policy  upon  application  containing  an  ambiguous  answer, 
or  no  answer  to  certain  questions,  waives  them,  unless  the 
omission  signifies  the  affirmance  of  a  certain  state  of   facts, 

501 

prepayment,  change  of  location,  kc,  waived,  501. 

issue  or  renewal  with  knowledge  of  facts  is  a  waiver  generally, 
but  not  as  to  want  of  insurable  interest,  501. 

where  insurer  knows  the  undertaking  of  the  assured  is  impos- 
sible, he  cannot  insist  upon  it,  .503. 

4.  Estoppel  by  facts  arising  during  currency  of  the  policy,  502. 

after  knowledge  of  the  facts,  any  recognition  of  the  validity  of 

the  policy  or  conduct  that  misleads  the  assured  to  his  prejudice 

amounts  to  a  waiver,  502. 
agent's  knowledge  of  a  cause  of  forfeiture  and  receipt  of  after- 

mnturinq  premium  or  assessment  is  a  waiver  unless  there  is  aa 

understanding  to  the  contrary,  502. 
courts  will  find  a  waiver  on  slight  evidence,  502. 
notice,  .502  a. 

option,  502  rt;  see  also  512. 
notice  from  stranger,  5U2  a. 

1433 


INDEX, 
[The  references  are  to  the  sections.] 

RELINQUISHMENT  —  continued. 

5.  Estoppel  by  facts  arising  after  loss,  504-505. 

same  principles  as  above. 

any  overlooking  of  known  forfeiture  properly  relied  on  by  tlie 

assured  to  his  prejudice  is  a  waiver  or  estoppel,  504. 
entering  negotiations  for  settlement,  adjusting   loss,   promising 

to  i)jl\,  payment,  &c.,  505. 
refusal  to  pay  on  one  ground  waives  others,  504  A. 
demanding  proofs  (or  even  allowing  assured  to  go  to  the  expense 

of  making  them  (?)  )   waives  a  known   cause  of   forfeiture, 

504  A.      Contra,  504  A. 

6.  There  is  no  estoppel 

where  the  facts  are  not  known,  506. 
nor  where  the  insured  has  not  been  prejudiced,  507. 
silence  usually  no  estoppel,  508. 

the  act  constituting  a  waiver  must  be  intentional,  and  not  a 
mere  mistake,  508. 

7.  Agent  acting  under  undisclosed  instructions,  509. 

stipulation  agaiust  waiver.     Limitation  of  agent's  authority,  511. 

opinions  vary  as  to  the  effect  of  conditions  against  waiver  by 
agent,  or  requiring  all  waivers  to  be  in  writing,  or  in- 
dorsed on  the  policy.     It  is  lield  — 
that  such  provisions  are  valid,  511. 
that  they  are  null  and  void,  511. 

that  they  do  not  apply  to  matters  connected  with  the  crea- 
tion of  the  contract,  511. 
ajid  that  they  apply  only  to  such  matters,  511. 
the  courts  in  many  instances  show  a  tendency  to  repudiate  the 

condition  as  unreasonable,  511. 
on  the  facts  most  of  the  cases  are  fair,  and  the  consideration  that 
these  conditions  may  themselves  he  waived  as  well  as  any  others 
goes  far  to  harmonize  the  decisions,  511. 
collusion  between  agent  and  insured,  513. 
REMEDIES. 

1.  Insured  against  insurers. 

where  insurer  re/uses  to  deliver  the  policy  in  consequence  of  a  fire, 

&c.,  565. 
the  insured  may  sue  in  equity  for  specific  performance    565. 
or  at  law  for  damages,  showing  the  contract  by  other  evidence, 

565. 
falsehood  in  tlie  answers  agent's  fault,  566. 
reformation,  566,  566  A,  566  B. 
injunction,  506,  566  A. 
laches,  566,  .566  B,  566  C. 

but  if  the  policy  is  obscure  the  insured  is  not  to  blame  for  not 
reading  it,  and  if  the  facts  calling  for  relief  can  be  made  out 
clearly,  the  court  will  put  out  the  excuse  of  "  laches  "  merely 
because  the  plaintiff  did  not  read  the  policy. 

1434 


INDEX. 

[The  references  are  to  the  sections.] 

REMEDIES  —  continued. 

there  is  no  period  short  of  the  Statute  of   Limitations  within 

which  a  man  must  discover  error  or  fraud,  506. 
if  suit  is  brought  on  the  policy  within  time  limited,  a  bill  for 

reformation  may  be  brought  after  that  time,  5G6 
equity  will  enjoin  a  suit  at  law  alter  a  bill  has  been  dismissed,  566. 
cases  in  which  equity  will  reform,  566  A. 
cases  in  which  equity  will  not  reform,  506  B. 

no  fraud  or  mutual  mistake.  Parties  did  not  know  the 
facts  at  time  of  insurance,  &c.  Acceptance  of  policy  with 
knowledge  of  error.  An  intent  to  limit  the  right  of  a 
beneficiary  (wife)  uncommunicated  to  the  company  at 
the  time  of  insurance  is  no  cause  for  reformation.  So 
where  insured  stated  goods  to  be  in  building  A.  when  they 
were  in  B.,  560  B. 
2.  Equity  continued,  566  C. 

bill  for  discovery,  566  C. 

specific  performance  of  agreement  to  insure,  566  C. 

setting  aside  a  judgment  on  the  ground  of  new  evidence, 
566  C. 

rescission,  lachps,  566  C. 

cancellation  not  obtainable  by  one  who  has  allowed  another 
to  take  out  a  policy  on  his  life,  though  without  interest 
and  hostile,  there  being  no  allegation  of  danger,  566  C. 

relief  against  forfeiture,  not  if  imposed  by  statute,  506  C. 

interpleader,  566  C. 

jurisdiction,  566  C. 

recovery  of  premiums  (with  interest)  may  be  had  if  the 
policy  is  void  ab  initio,  or  the  risk  never  attaches,  and 
there  is  no  agi'eement  to  the  contrary,  and  no  fraud  or  vio- 
lation of  morals  by  the  plaintiff.  A  mere  mi.staken  repre- 
sentation will  not  prevent  his  recovery,  507. 

in  general  if  the  risk  attaches  for  a  single  moment  on  the 
wJiole  property  no  part  of  the  premium  can  be  recovered, 
but  it  is  otherwise  if  the  policy  becomes  illegal  by  statute 
after  its  issue,  567. 

excess  of  premium  paid  by  creditor  in  excess  of  the  law  for 
insurance  beyond  his  debt  may  be  recovered,  567. 

agent's  promises,  5G7. 

surrender,  507. 

premiums  paid  after  forfeiture,  567. 

after  war  suit  lies  to  compel  recognition  of  policy  or  repay- 
ment of  premiums,  508. 

compulsory  renewal  of  policy,  568. 

surrender  of  policy  unfairly  obtained,  560. 

wrongful  refusal  to  deliver  or  continue  policy,  or  premiums, 
or  give  a  paid-up  policy,  569. 

measure  of  damages,  509. 

1435 


INDEX. 
[The  references  are  to  the  sections.] 

REMEDIES  —  continued. 
venue,  509  A. 

action  on  policy  transitory,  569  A. 
stipulation  limiting  suits  to  home  State  void,  5G9  A. 
foreign  company  may  remove  suits  to  United  States  court, 
569  A. 
remedy  of  insured  against  directors,  570. 
stockholders  may  compel  correction  of  dividend,  571. 
on  forfeiture  company  may  recover  all  dividends  earned  while 

the  risk  continued,  572. 
equitable  adjustment  by  directors  after  forfeiture,  572. 
courts  cannot  interfere.     Dividends.     Profits,  572. 
msurei's  against  insured. 

recovery  of  policy  obtained  by  fraud,  573. 
cancellation,  .573. 
rescission,  573. 

injunction  against  suit  at  law  on  the  policy,  573. 
cancellation.     Rescission,  574. 

payment  on  loss  of  more  than  there  is  a  legal  obligation  to 
pay,  under  a  mistake  of  fact  pertaining  to  liability  may  be 
recovered,  though  the  means  of  knowledge  were  at  hand, 
and  even  though  the  company  had  no  right  to  do  business, 
575. 
false  representations  of  death,  575. 
agents  against  insurers.     Commissioners,  576. 
remedies  by  and  against  foreign  insurance  companies,  577. 

recovery  of  premiums  by  or  from  a  company  that  has  not 

conformed  to  the  conditions  of  doing  business.     Service 

of  process,  &c.,  577. 

whether  a  policy  issued  by  such  company  is  void  or  not,  577. 

ri"ht  of  foreign  company  to  i-emove  action  to  United  States 

courts,  578. 
retaliatory  legislation.  578  a. 

a  company  does  business  in  another  State  only  by  comity. 
Any  restrictions  thought  advisable  may  be  put  upon  it, 
and  it  cannot  overcome  them  by  the  provisions  of  the 
policy,  578  a. 
a  law  affecting  foreign  insurance  companies  may  however 
be  unconstitutional  as  violating  the  uniformity  of  taxa- 
tion, 578  a. 

REMOVAL  of  goods,  70,  401  a,  401. 

of  property  with  knowledge  of  agent  before  renewal  estops  company, 

70  n. 
from  2:»remises  or  dwelling.     See  Vacancy. 

RENEWAL,  upon  changing  stock,  16,  375. 
by  parol,  good,  21. 
of  contract,  71. 

1436 


INDEX. 
[The  references  are  to  the  sections.] 

RENEWAL  —  continued. 
what  constitutes: 

parol  renewal   tjood  even  though  the  original   policy  stipulates 

otherwise,  70  B. 
but  a  policy  under  seal  cannot  be  continued  in  force  by  parol,  70  B. 
the  suit  would  have  to  be  on  the  parol  contract,  not  on  the 
policy  of,  70  B. 
if  a  parol  agreement  to  renew  is  indeterminate,  or  a  mere  agree- 
ment with  the  agent  that  when  the  time  comes  he  will  make  a 
renewal,  it  is  very  well  not  to  hold  the  company,  70  B. 
but  a  present  parol  contract  of  renewal  or  revival,  or  a  contract 
to  issue  a  policy  iu  renewal  at  the  proper  time  ought  to  be 
binding  under  similar  circum-<tances  and  to  the  same  extent, 
as   a  parol  agreem^-nt   with  the   same  agent  for    an    original 
policy,  and  the  authorities  countenance  this  view,  70  B. 
care  must  be  taken  as  to  tlie  form  of  the  suit.      If  there  is  any  doubt 
about  the  renewal,  suit  should  not  be  on  the  old  policy  but  on  the 
parol  agreement  to  renew.     Attention   to  this   point,   and   to  the 
special  facts  of  each  case,  brings  the  decisions  all  into  harmony. 
(See  chap.  li.  anal.  1.) 
terms  of  ; 

same  as  original  contract,  if  not  modified  by  a  new  application, 

or  by  circumstances,  70  n,  and  notes. 
period  covered.     Parol  not  admissible  to  show  receipt  absolute 

on  face  is  conditional, 
renewal  to  one  of  two  original  parties  in  a  gross  sum  destroys 

apportioned  insurance  of  first  policy, 
removal  of  property  with  consent  or  knowledge  of  agent  at  time 
of  renewal  binds  the  company  and  modifies  the  contract,  70  a, 
and  notes, 
receipt  of  renewal  imports  agreement  to  issue  a  policy,  43,  44. 
receipt  for  premium,  effect  of,  359. 
refusal  of,  damages  for^  429. 

RENTS  AND  PROFITS,  insurable.  79,  81,  547. 

REPAIRS,  how  far  permissible,  221,  210. 

payment  of  loss  by,  42G.     See  REBrn.DiNG. 

REPRESENTATION.      For  fuller  analysis  of  the  fundamental  points 
under  this  head,  see  chap.  xvii.  at  181. 
by  reinsured,  11. 

by  assured  true  at  time  of  application,  but  false  at  time  of  reinsur- 
ance, no  effect,  11  (z.,) 
of  agent,  133.     See  chap.  vii.  anal    3. 
inferred,  rather  than  warranty,  in  case  of  doubt,  161. 
construed  strictly  as  to  its  scope,  171,  186-188. 
defined.  181. 

affirmative  and  promissory,  182,  194. 
distinguished  from  warranty,  183. 

1437 


INDEX. 

[The  references  are  to  the  sections.! 

REPRESENTATION  —  continued. 
not  part  of  contract,  183. 
may  be  by  parol,  183. 
materiality  of,  184,  185. 

substantial  compliance  with,  only  required,  184-188. 
in  part  true  and  in  part  false,  189. 
must  be  true  at  time  when  contract  is  completed,  190. 
subsequent  change  of  circumstances  immaterial,  191. 
oral,  prior  to  application,  immaterial,  192. 
equivocal,  193. 
false  pretence  may  be,  197. 

substantial  compliance  with,  equivalent,  198,  199. 
literal  compliance  with,  insufficient,  199. 
good  faith  required,  109. 
material,  though  not  relating  to  risk,  206. 

misdescription  of  ownership  or  of  the  property  or  its  occupancy  will  not 
in  general  avoid  the  policy  unless  so  expressly  stipulated,  2'S. 

clerk  slept  in  store,  mere  representation  not  warranty,  256. 

"  filled  in  with  brick  "  held  a  warranty,  257;  see  effect  of  usage, 
261. 

two-story  house  changed  to  a  three-story  after  application  and 
before  issue  of  policy,  fatal  alteration,  257. 

omission  of  outbuildings,  258;  see  also  260. 

distance  of  buildings  "  contiguous."     Diagrams,  258. 

"  how  bounded;  "  "situation  ;  "  distance  of  other  houses,  259. 

if  the  description  is  on  its  face  imperfect,  260, 

or  if  the  company  or  its  agents  in  any  way  know  of  the 
imperfection,  262,  the  company  cannot  set  up  the  fault. 
See  chap.  vii.  anal.  4;  207,  197. 
misrepresentation  of  relationship  to  the  life-subject  fatal,  263. 
as  to  health,  symptoms  of  disease  and  physical  condition,  295-304. 
as  to  habits,  299. 

answers  to  special  and  general  questions  distinguished,  300. 
as  to  age,  residence,  relationship,  305. 
of  death,  575. 

RESCISSION,  566  C,  573,  574. 

RESIDENCE,  representation  as  to,  305. 

change  of,  known  to  agent  when  he  receives  premium  estops  com- 
pany, 136. 
abroad,  permit,  332. 
restrictions  upon,  335-339. 

REVIVAL,  of  policy,  70  C. 

only  by  new  contract  or  by  estoppel,  70  C,  see  69  B. 
retaining  overpayment  applied  by  law  to  revive  by  estoppel,  70  B. 
representations  in  revival  certificate  part  of  contract,  70  C. 
re-delivery  of  surrendered  policy  after  agent  knows  of  loss  cannot 
revive  it,  69  B. 

1438 


INDEX. 

[The  references  are  to  the  sections.] 

RIOTS,  loss  by,  403. 

RISK.     See  Consummation,  chap,  iv;  Policy;  Termination,  chap.  v. 
A.  Brief  Analysis ,  see  B.  below  for  fuller  analysis  of  the  topic, 
where  none  attaches,  premium  may  be  recovered  back,  4. 
suspended  and  revised,  101. 
increase  of,  216-262. 
notice  of,  to  general  agent,  150. 
generally,  218. 
by  ordinary  use,  219. 
by  improvements  and  repairs,  220-224. 
by  alteration,  222-224,  226-228. 
by  change  in  surroundings,  225,  244. 
by  enlargement,  225. 
and  decrease,  226. 
by  act  of  stranger,  227. 
classification  of,  232. 
increase  of,  by  change  of  use,  239. 
increase  of,  by  unlawful  use,  246. 
limitation  of,  watch,  care,  250 

warming,  stoves,  ashes,  shutters,  255. 

alienation,  264-282. 
duration  and  extent  of,  400,  401. 

begins  in  case  of  reinsurance  at  time  original  risk  begins  unless 
otherwise  specified,  12  D. 
what  it  includes,  fire,  402. 

injury  by  mobs,  usurped  power,  civil  commotion,  403. 
injury  by  water  and  removal,  404. 

theft,  404. 

smoking,  illegal  practices,  405. 

misconduct,  fraud,  suicide,  407,  410,  411. 

negligence,  408-441. 

wilful  exposure,  409. 

falling  of  walls,  412. 

spontaneous  combustion,  explosion,  413. 

intemperance,  wound,  419. 
property  included  in,  420,  421. 
identity  of,  435. 
injury  by  lightning,  506. 

B.   Fuller  (mali/sis  of  risk. 

1.  When  the  risk  begins,  400. 

time  is  of  the  essence  of  the  contract,  400. 
day  of  date  included,  400. 

a  risk  cannot  attach  before  the  organization  of  the  company 
is  completed  so  far  as  to  authorize  it  to  take  the  risk,  400. 

2.  When  it  terminates,  401. 

time  in  remote  part  of  the  world  must  be  reduced  to  the 
time  at  place  of  contract,  401. 
VOL.  II.  —  47  1439 


INDEX. 
[The  references  are  to  the  sections.] 

RISK  —  continued. 

fire  breaking  out  before   expiration  of   policy  but   actual 

loss  afterward,  recovery,  401. 
injury  within  time  causing  death  after  expiration  of  the 

pohcy,  or  after  ninety  days  from  accident,  no  recovery,  401. 
last  day  named  included,  401. 
if  no  duration  is  specified,  a  reasonable  time  is  understood, 

401. 
while  drying  hops,   suspension  during  burning  of   forests 

"  for  ten  days  piior  to  shipment,"  terminates  in  ten  days 

or  on  shipment,  401. 
"until  landed,"  401. 

3.  Place  is  often  material,  401  a. 

it  may  always  be  made  so  by  explicit  language,  401  C, 

and  the  description  of  goods  as  at  a  certain  place  is  fre- 
quently held  a  continuing  warranty,  401  B. 

but  the  nature  and  use  of  the  property  is  to  be  considered, 
401  C. 

and  the  insurance  will  not  fail  because  goods  are  away  for 
repairs,  or  a  team  is  in  pasture  or  field  instead  of  barn, 
401  C. 

insurance  of  goods  on  shipboard  covers  them  while  on  the 
steam  launch,  401  C. 

property  in  ordinary  use  away  from  place  of  deposit  is  pro- 
tected.    See  also  420. 

4.  The  Risk  and  icTiat  it  includes,  402. 

in  the  absence  of  specification,  loss  by  fire,  accident,  death, 
or  any  other  cause  insured  agamst,  is  within  the  policy, 
whatever  the  manner  of  loss,  402. 

e.  g.,  ignition  is  not  necessary  to  claim  under  a  fire  policy, 
402. 

insurers  not  liable  for  loss  by  an  excessive  use  of  heat  pur- 
posely applied,  as  in  over-roasting  coffee,  402,  and  note. 

insurance  against  statute  liability  does  not  cover  common- 
law  liability,  402. 

ice  included  in  river  perils  in  spite  of  parol  understanding 
to  the  contrary  (?). 

wind,  402. 

hail,  402. 

capture,  402. 

insuring  a  ship  for  voyage  A.  does  not  cover  voyage  B.,  402. 

"  usurped  power."     "  Civil  commotion,"  403. 
mobs.     Riots.     Proximate  cause,  403. 
"  resistance  to  authority  "  held  not  to  include  action  of 
a  group  of  escaping  convicts,  403. 

injury  by  water  and  removal  or  theft  in  consequence  of 
bona  fde  and  prudent  efforts  to  save  from  fire,  are  within 
policy,  404. 

1440 


INDEX. 

[The  references  are  to  the  sections.] 

RISK  —  continued. 

smoking.     Goods  illegally  kept  for  sale,  405. 

lightning  policy.     Loss  by  tornado  and  lightning  covered, 

406. 
misconduct.     Fraud.     Suicide.     AVilful  destruction  of  prop- 
erty fatal  to  claim  under  the  policy  unless  loss  was  certain 
any  way,  407.     See  also  411. 
if  loss  is  caused  by  wrongful  act  of  third  person  or  by  as- 
sured while  insane,  the  company  is  liable,  407  A. 
company  liable,  407  A. 

violation  of  orders  by  guests,  407  A. 
neglect  of  captain  to  register  goods,  407  A. 
incendiarism,  407  A. 
by  stranger,  407  A. 
by  wife,"407  A. 

by  assured  while  insane,  407  A. 
negligence,  408. 

mere  negligence,  however  great,  if  short  of  fraud,  is 

covered  by  the  policy,  408.     See  also  410. 
and  if  only  the  remote  cause  of  loss  is  no  defence  even 
when  the  policy  expressly  excepts  loss  by  negligence, 
408. 
wilful  exposure,  409. 

exposure  to  obvious  and  unnecessary  danger,  409  A. 
going  along  railroad  track  at  night  is,  409  A. 
crossing  in  daytime  may  be,  409  A. 
going  to  rescue  of  wrecked  crew  not,  409  A. 
"design."     Gross  negligence  not  fraud,  though  it  may  be 
evidence  of  it,  410. 
misconduct  avoids  a  policy,  411. 

it  differs  from  negligence,  411. 
marine  Insurance,  Negligence,  Barratry,  Theft,  411  A. 
if  after  a  fire  is  out  the  weakened  walls  fall  and  crush  an  adjoining 
building,  this  loss  is  within  a  policy  against  damage  by  fire,  412. 
otherwiseif  seven  days  after  the  fire  a  gale  blows  the  walls  down, 
or  walls  fall  from  inherent  weakness  before  there  is  any  fire,  412. 
spontaneous    combustion   (413)   is   within    a   fire   policy    (contra, 
413,  note),  and   an   explosion    would   seem   also  within 
it,  413,  but  is  frequently  excepted,  415. 
explosion  incident  to  a  fire  not  within  the  exception,  416. 

nor  one  resulting  from  the  business  insured,  415. 
concussion  not  within  a  fire  policy,  414.    (Distinction  rather 

fine.) 
there  are  numerous  cases,  in  some  of  which  the  insured  was 
injured  by  explosion  following  fire,  and  in  others  by  fire 
following  an   explosion,  and  conditions  and  opinions  are 
various,  413-416.     See  also  418. 
bursting  of  boilers,  415. 

1441 


INDEX. 
[The  references  are  to  the  sections.]  , 

RISK  —  continued. 

collision,  417. 

it  is  sometimes  difficult  to  tell  how  far  to  carry  the  rule  ex- 
cluding a  remote  cause.     See  417,  417  A,  419. 
intemperance.     Accident,  &c.     Proximate  cause,  419. 
intemperance  causing  acts  of  exposure  which  produce  death,  is 

the  cause  of  death,  419. 
rules  of  company  against  intemperance  must  be  obeyed,  419  A. 
"sober  and  intemperate  "  does  not  imply  total  abstinence, 

419  A. 

"seriously  impair  health  "  means  his  health  ;  evidence  that 
he  drank  enough  to  impair  ordinary  health  not  suffi- 
cient, 419  A. 

excessive  drinking  violates  warranty  against  pernicious  habit 
obviously  tending  to  shorten  life,  419  A. 
evidence.    Beneficiary  not  estopped  by  doctor's  statements,  419  A. 
agent's  knowledge  may  prevent  company  from  insisting  on  con- 
dition against  intemperance,  419  A. 

and  yet  death  from  intoxication  may  avoid  the  policy,  419  A. 
5.  What  property  is  covered. 

doubt  resolved  against  company,  420. 

wearing  apparel,  420. 

linen,  stock,  furniture,  fixtures,  jewelry,  merchandise,  plate, 
refined  oil,  house,  ship-yard,  cars,  unfinished  house  or 
boat,  lumber,  mill,  factory,  machinery,  tools,  grain,  cat- 
tle, 420. 

stock  of  hair,  iron,  corn,  rice,  fur,  freight,  420  A. 

additions,  goods  in  outbuildings  or  on  a  hired  vessel,  420  B. 

what  is  covered,  question  for  jury,  420  A. 

evidence  admissible  to  show  what  was  meant  to  be  included, 
420,  420  A. 

misdescription  disregarded  if  sufficient  to  identify,  420  A. 

usage  received  in  favor  of  assured,  420  A. 

after-acquired  stock  covered,  420  B. 

"  lost  or  not  lost,"  420  B. 

goods  included  by  mistake,  company  not  liable,  420  B. 

other  goods  shipped  m  place  of  tliose  described,  not  covered, 

420  B  ;  premium  recovered. 

indorsement   of  specific  goods,  secretary  cannot  waive  the 

condition,  420  B. 
New  York  mutual  companies  may  insure  foreign  residents 

and  property,  420  B. 
goods  in  trust  and  bailments,  420. 
6.    Increase  of.     See  Alteration,  Conditions,  Occupancy, 
express  and  implied  provisions  against,  218. 
any   hazardous   use,   whether   among   those  enumerated   in  the 
policy  or  not,  avoids  it,  under  the  general  stipulation  against 
increase  of  ri.sk,  218. 

1442 


INDEX. 

[The  references  are  to  the  sections.] 

RISK  —  continued. 

a   mere    intent    to    violate   a  condition,   however,  is   not   fatal, 
though   steps   have  been    taken  toward   its   execution,    218 ; 
see  236. 
sometimes  the  policy  provides  that  it  shall  only  be  suspended 

during  the  increase,  218  ;  see  also  2-15. 
a  reinsurer  is  liberated  by  increase  of  risk,  though  the  insurer 

consent  to  it,  218. 
increase  between  application  and  issue  of  policy  fatal,  218. 
such  slight  variations  of  risk  as  are  incident  to  the  ordinary  uses 
of  the  property  are  not  fatal,  219. 
otherwise  with  the  erection  of  an  oven,  new  buildings,  or 
machinery,  moving  a  steam-engine,  &c.,  220. 
it  is  immaterial  under  the  usual  clause  whether  the  loss  teas  caused 

by  the  increase  or  not,  220. 
if   the  insured  has  two  policies  from  the   same   office,   a  per- 
mission to  increase  the  risk  under  one  policy  saves  the  other, 
220. 
Notice  to  and  assent  by  the  insurer,  221  ;  see  also  222-225. 
both  must  be  within  a  reasonable  time,  221. 
no  notice  necessary  of  a  change  not  increasing  the  risk,  221. 
agent  may  waive  written  assent,  221. 

ordinary  diligence  in  giving  notice  is  sufficient,  221;  see  215  D. 
7.  Classification  of  Risks. 

goods  are  often  classified  into  hazardous,  extra-hazardous, 
memorandum  articles  not  insurable  at  all  or  only  on  special 
conditions,  232. 
and  a  policy  insuring  one  class  will  be  avoided  if  a  more 
hazardous  class  is  kept  in  stock  or  mixed  with  the  stock 
insured,  232. 
where  there  is  no  bad  faith,  however,  a  rule  similar  to  that 
spoken  of  in  215  B,  as  prevailing  in  France,  might 
be  applied  with  advantage. 
goods  "usually  kept  in  a  country  store,"  233,  238,  239. 
may   include   benzine,    saltpetre,    gunpowder,    &c. 
233,  note. 
"  stock  of  f/roceries  "  includes  saltpetre,   2.33,  note, 
"stock   of  confectioner)/  store''''  includes  fireworks,  but 

groceries,  liquors,  and  tobacco  does  not,  233. 
but  if  a  special  clause  allows   a  reasonable  quantity, 

more  will  be  fatal,  in  spite  of  usage,  233,  note. 
if  the  "  usually  kept,"  clause  is  followed  by  "  except  as 
hereinafter  provided,  the  "  printed  conditions  govern, 
233,  note. 
a  permissive  clause  is  strictly  construed,  whether  express  or 

implied,  234;  see  also  239. 
hazardous  goods  are  those  which  increase  the  risk  of  fire, 
235. 

1443 


INDEX, 
[The  references  are  to  the  sections.] 

RISK  — continued. 

hazardous  trades,  236. 

by  reason  of  the  context  a  permission  of  "  extra-hazar- 
dous "  construed   to   permit  "specially  hazardous" 
trades,  236. 
an  additional  use  of  the  same  grade  of  hazard  as  those  per- 
mitted avoids  the  policy   (as  putting  in  one  more  stove, 
see  220,  note).     An  accumulation  of  hazards  increases  the 
risk,  237. 
•where  a  stock  of  goods  or  property  used  in  business,  &c.,  is 
described   as  insured,  without  qualification,  this  written 
description  controls  inconsistent  printed  conditions,  239  ; 
(see  also  233  and  general  rule,  177). 
all  that  is  properly    incidental    to  the  business  insured  is 
also  insured,  239. 
Gasoline,  petroleum,  &c. 

under  a  policy  on  a  factory  prohibiting  petroleum  it  may  be 

used  as  a  lubricator,  if  such  is  the  custom,  239  A. 
"only    sperm-oil  and  lard  as  lubricator"    not    broken  by 

using  petroleum  mixture  if  as  good  and  safe,  239  A. 
"  lamps  to  be  filled  by  daylight,"  239  A. 
"  kerosene  allowed  for  light  in  dwelling,''''  clerk  sleeping  in 

store  will  not  make  it  a  "  dwelling,"  239  A. 
court  not  judicially  notice  that  gin  and  turpentine  are  in- 
flammable, 239  A. 
Gunpowder,  fireworks,  nitroglycerine.  &c. 

"75  lbs.  allowed,"  mere  casual  presence  of  more  not  fatal, 

it  not  appearing  to  have  caused  the  loss,  239  B. 
policy  on  goods,  to  be  void  if  powder  kept  on  "premises  in- 
sured,"   not  void   for  powder  in  buildings  not  insured, 
though  insured  goods  are  there.      Premises  means  real 
estate,  239  B ;  see  also,  228. 
prohibition  of  gunpowder  does  not  keep  out  fireworks,  239  B. 
"  yankee  notions"  covers  fireworks,  but  "  groceries,  liquors, 
and  tobacco,"  do  not,  239  B. 
the  hiring  of  carpenters  to  make  constantly  needed  repairs  does 
not  avoid  a  policy,  though  the  working  of  carpenters  is  stated 
in  the  printed  conditions  to  be  fatal  ;  otherwise  with  extensive 
alterations,  240. 
"  use,"  "keeping,"  &c.,  when  stipulated  against,  mean  habitual 
use,  keeping,  &c.,  ?41. 
the  condition  is  not  violated  by  casual  use,  241. 
but  a  single  use,  if  it  is  the  cause  of  loss,  is  fatal  (note),  241. 
"  storing  "  means  keeping  to  redeliver  as  received,  242. 

if  company   knows  premises  may  be  used  to  store  cotton 
and  provides  for  additional  premium,  the  storing  is  not 
fatal,  242. 
"keeping,"  "premises,"  means  real  estate,  243. 

1444 


INDEX. 

[The  references  are  to  the  sections.] 

RISK  —  continued. 

change  in  surrounding  circumstances,  24.4. 

change  of  use  from  that  described  is  not  necessarily  fatal,  244. 

suspension  of  policy  follows  temporary  increase  of  risk,  245;  (see 

also  222) ;  and  an  increase  Jnay  be  fatal  though  removed  before 

the  fire,  245. 

a  Jiabit  of  breaking  conditions  is  of  no  consequence  if  there  is 

none  at  the  time  of  loss,  245. 
smoking,  bar-room,  bawdy-house,  bowling-alley,  after  expiration 

of  license,  245  (note). 
*•  unlawful  use  "  not  a  single  misdemeanor,  or  a  casual  use,  246. 
that  A.,  whose  life  is  insured  by  B.,  goes  on  an  illegal  voyage 
without  B.'s  knowledge  is  immaterial,  there  being  no  pro- 
hibition in  the  policy,  246. 
knowledge  by  president  of  addition  made  under  verbal  assent 

estops  company,  246  A. 
if  company  knew  buildings  have  been  or  are  to  be  used  as  ex- 
hibition buildings,  it  cannot  object,  246  A. 
parol    admissible   to  show   agent's    knowledge   of   increase   of 
risk,  246  A. 
permission  to  keep  kerosene,  left  out  of  policy  by  mistake, 
&c.,  246  A. 
if  agent  of  insured  to  renew  knows  of  ihcrease  of  risk  failure  to 
disclose  is  fatal,  246  A. 
RUPTURE,  warranty  as  to,  296,  297. 
accidental,  515. 

S. 

SALE.     See  Alienation,  3,  5,  6,  7. 

conditional,  no  alienation,  272.     See  264. 
of  part,  when  not  an  alienation,  365. 
SALTPETRE,  when  included  in  risk.     See  Risk,  2, 
SALVAGE,  rule  as  to,  not  applicable  in  fire  insurance,  421  a. 
SEAL  not  necessary  in  policy  unless  organic  law  so  provides,  16,  note. 

and  even  then  an  unsealed  policy  may  be  good  as  an  interim  re- 
ceipt, 17. 
policy  under,  not  continued  in  force  by  parol,  70  B. 

SECRETARY,  countersignature  of  policy  required  by  charter,   15  and 

note,  27. 
SERIOUS   ILLNESS,  296. 
SET-OFF,  546,  .592,  593. 

against  assessment,  559. 
SETTLED   LIMITS,  3.37. 
SEVERABLE    CONTRACT,  where  a  contract  insures  against  fire  and 

also  against  a  peril  within  the  Statute  of  Frauds,  23  C. 

1445 


INDEX. 
[The  references  are  to  the  sections.] 

SHERIFF  has  insurable  interest,  80. 
SHIP-YARD,  what,  420. 
SHORTEN  LIFE,  tendency  to,  296. 
SICKNESS.     See  Health. 

cold  is  not,  178. 
SIGNATURE  of  president  and  secretary  to  policy,  15,  and  note. 

of  de  facto  officers  sufficient,  27. 
SILENCE,  when  waiver,  508. 

SISTER,  insurable  interest  in  life  of  brother,  103-107. 
SITUATION  of  insured  premises,  statement  as  to,  259. 
SMOKING,  loss  by,  245,  405. 
SOLE   OWNER.     See  Title,  4. 
SPASMS,  295. 

SPECIFIC    INSURANCE,  loss  under,  436. 
SPECIFIC    PERFORMANCE.     See  Remedies. 

of  parol  contract,  of  insurance,  23  A. 

of  agreement  to  insure,  566  C. 
SPITTING   BLOOD,  representation  as  to,  187,  298. 
SPONTANEOUS   COMBUSTION,  loss  by,  413. 
SPRAIN,  accidental,  514. 
STAMP  ACTS,  effect  of,  25. 
STATEMENT   OF   LOSS,  568-570. 
STATUTE,  requiring  annexation  of  application  to  policy,  29  C. 

declaring  policy  to  be  "  valued  "  as  to  real  estate  in  case  of  total  loss, 
31  A. 
STATUTE   OF   FRAUDS,  not  applicable  to  reinsurance,  12  A. 

or  to  insurance  for  a  year,  18. 

or  more,  23  C. 

usage  cannot  import  a  new  clause  into,  18. 

if  one  of  two  perils  insured  against  is  within  the  statute,  the  con- 
tract is  good  as  to  the  other,  23  C. 
STEAM,  loss  by,  415. 
STOCK   IN   TRADE,  what  included  in,  233,  420. 

STOCK   COMPANIES,  powers  of  officers  less  restricted  than  in  mutual, 
146. 

STOCKHOLDER  in  corporate  property,  insurable  interest  of,  88,  90. 

must  state  title  if  called  for,  287. 
STORING  defined,  242. 
STOVES,  care  of,  255. 
STRAIN,  accident  by,  514. 
SUB-AGENTS  and  clerks,  power  of,  154. 

general  agent  may  appoint   sub-agents,    local    agent   cannot,    126, 
154  A. 

any  sub-agent  or  clerk  appointed  by  an  agent  with  consent  or  recog- 
nition of  the  company  may  bind  it,  154. 

1446 


INDEX. 

[The  references  are  to  the  sections.] 

SUB-AGENTS  —  continued. 

agent  has  implied  power  of  delegation,  154. 
knowledge  of,  binds  company,  132,  140,  154  A. 
agent's  responsibility  for,  question  for  jury,  154  A. 

SUBJECT-MATTER.     See  Insurable  Interest. 
insurance  does  not  run  with  the  property,  6. 

enemy's  life,  property,  when  insurable.    See  War,  orch.  iii.  analysis, 
mistake  in  describing  (name  of  vessel)  not  fatal,  43  D. 
but  if  there  is  no  designation  of  the  property  there  is  no  contract, 

43  F. 
what  property  is  covered.     See  Risk,  5. 
may  include  any  lawful  interest,  71. 

having  an  appreciable  pecuniary  value,  72. 

though  no  market  value,  72. 

nor  even  actual  existence,  72. 
the  thing  or  life  is  not  insured,  but  some  person  in  respect  to  it,  72. 
life,  health,  liberty,  solvability,  fidelity,  property,  profits,  &c.,  73. 

SUBJECT  TO  or  afflicted  with  disease,  297. 

SUBROGATION,  right  of,  453-458. 
insurer's  right  of,  by  contract,  458. 
A.  Of  insurer  to  remedies  of  assured. 

1.  None  at  common  law  as  against  whose  negli^fence  or  wrongful 

act  caused  the  loss,  especially  in  case  of  felony,  453. 

the  true  doctrine  is  that  a  wrongdoer  ought  to  make 

good  the  direct  loss  caused  by  his  act,  great  or  small, 

454. 

the  injured  person  may  sue  the  wrongdoer   first,  and 

if  he  recovers,  the  insurer  is  released,  454. 
or  he  may  sue  the  company  first,  and  then  the  company 
may  pursue   the  wrongdoer,  in   the  name  of  the  as- 
sured or  his  representatives,  454. 
equity   will    restrain    the  assured   from    releasing  the 

wrongdoer,  454. 
the  company  is  treated  as  a  surety,  454. 
che  right  of  subrogation  exi.sts,  although  the  company 

was  not  legally  bound  to  pay  the  loss,  454. 
but  does  not  arise  until  full  payment  has  been  made 
by  the  company,  except  in  case  of  abandonment  or 
express  agreement  to  assign  remedies  to  the  insurer, 
454. 
payment   by   a  mere  stranger,  or  volunteer,  however, 
gives  him  no  right  of  subrogation,  456. 
nor  does  such  a  payment  release  the  insurer,  456. 
liability  of  town  for  acts  of  mob,  454. 

or  defect  of  hi  eh  way,  455. 
railroad  liable  to  company  for  loss  by  sparks,  454. 
carrier's  negligence,  454. 

1417 


INDEX. 

[The  references  are  to  the  sections.] 

SUBROGATIOX  —  continued. 

the  party  liable  for  the  wrong  cannot  take  advantage  of 
the  payment  of  the  loss  by  the  company  to  reduce 
damages,  455. 

2.  Creditor.  456. 

though  company  pays  the  creditor,   he   may  still  sue 
tlie  debtor  for  his  debt  (V),  45(3.     See  however,  456  a, 
449,  452  A. 
company  may  recover  insurance  from  lessee  if  lessor  repairs 
under  the  lease,  456  a. 

so  the  insurer  will  be  subrogated  to  the  right  of  a  ven- 
dor against  a  vepdee  who  has  paid  only  part  of  the 
price,  456  a,  457. 

and  may  use  any  lien  that  the  insm-ed  possesses,  to  the 
extent  of  the  insurance  paid  by  them,  456  a,  457. 

if  the  sale  is  not  complete  at  the  time  of  loss,  so  that 
the  loss  is  the  vendor's,  of  course  there  is  no  room 
for  subrogation,  457. 
the  company  cannot  recover  if  the  assured  cannot,  457. 

except  in  some  cases  of  special  agreement;  see  457  C. 

uor  can  it  recover  more  than  it  has  paid,  457. 

and  the  suit  must  be  in  the  name  of  the  assured,  454, 
457. 

3.  Carrier,  457  A,  457  B. 

insurer  of  goods  lost  by  carrier  is  subrogated  at  common 
law  to  insured's  remedies  against  carrier,  457  A. 
and  may  recover  the  full  value  of  the  goods  and  6 
per  cent  interest,  457  A. 

although  the  insurer  may  have  waived  a  valid  defence 
against  the  assured,  457  A. 

the  insurer  is  not  entitled  to  commissions  on  sales  of 
abandoned  goods,  457  B. 

where  the  policy  says,  "  This  insurance  shall  not  inure  to 
the  benefit  of  the  carrier,"  if  the  insured  agrees  with 
the  carrier  to  give  him  the  benefit  of  the  insurance, 
neither  of  them  can  sue  the  insurer,  457  A. 

in  the  absence  of  fraud  or  of  such  a  stipulation  in  the 
pojicy,  the  assured  may  release  the  carrier,  or  agree 
that  he  shall  have  the  benefit  of  the  insurance,  and 
this  defeats  the  subrogation  of  the  insurer,  457  B. 

the  carrier  has  no  claim  on  the  insurance  except  by 
express  agreement,  457  B. 

4.  Mortgagor  and  Mortgagee,  456,  457  C,  458. 

insurer  paying  moitgagee  is  subrogated  to  his  rights  at 
common  law,  457  C  (N.  Y.).  Contra,  456,  unless 
there  is  an  express  agreement. 

the  mortgagee  may  recover  from   insurer  and   debtor 
both,  456. 
1448 


INDEX. 

[The  references  are  to  the  sections.] 

SUBROGATION  —  continued. 

if  the  mortgagor  procured  the  insurance,  though  mak- 
ing it  payable  to  the  mortgagee,  or  if  he  ultimately 
pays  tlie  premiums,  the  insurance  is  for  his  benefit, 
and  the  iusurer  cannot  rely  on  the  mortgage,  457  C, 
456. 
there  is  often  a  "  mortgagee   clause,"  stipulating  that 
acts  of  tlie  mortgagor  shall  not  vitiate  the  policy,  and 
that  the  company  may  on  payment  of  the  loss  require 
an  assignment  of  the  mortgage  to  that  extent,  or  en- 
tirely on  payment  of  the  mortgage  debt,  457  C. 
the  election  in  tL  •.  latter  case  must  be  made  withia  a 
reasonable  time,  457  C. 
B.  Of  one  person  to  rights  of  another  against  the  insurer,  or  the  in- 
surance funds,  see  Carkiek,  above  in  this  analysis, 
and  chap.  sxii.  anal.  5. 
ultimate  title  to  proceeds,  as  between  mortgagor  and 

mortgagee,  456. 
vendor  and  vendee,  456. 
lessor  and  lessee,  456. 
debtor  and  creditor.  456. 
5.  Proximate  Caui^e.     Sparks  flying  from  a  locomotive.  459. 

car  running  over  fire  hose  and  severing  it  so  that  build- 
ing burns,  railroads  responsible,  459. 
fire  running  from  A.'s  land  to  B.'s,  459. 
town  tearing  down  building  to  stop  fire,  459. 
SUICIDE,  307-325,  407. 

for  fuller  analysis,  see  head  of  chap   at  307. 
raises  no  presumption  of  insanity,  319. 
sane  or  insane,  322. 

unless  excepted,  does  not  avoid  policy,  323. 
insurance  against,  void  as  against  public  policy,  323. 
bona  fide  assignee,  or  beneficiary,  protected  against  by  express  pro- 
vision, 324. 
if  doubtful,  presumption  against,  325 
no  presumption  of,  from  religious  views,  325 
not  provable  by  opinion  of  unprofessional  witness,  325. 
voluntary,  not  covered  by  policy,  407.  * 

loss  by,  407. 
SUIT,  limitation  of,  478-489. 
meaning  of,  489. 

who  may  bring,  544.     See  Loss,  2. 
to  revive  policy,  568. 
SUNDAY,  premium  falling  due  on,  349. 
SUNSTROKE,  death  by,  519 ;  see  296. 
SUPERCARGO  has  insurable  interest,  80. 
SURETY,  insurable  interest,  82. 

1449 


INDEX. 

[The  references  are  to  the  sections.] 

SURPLUS  in  treasury  on  dissolution  of  a  mutual  company,  goes  to  all 

policy-holders  that  helped  to  create  it,  12  C. 
SURRENDER  of  policy,  69  a. 

meeting  of  minds,  and  delivery  of  policy,  with  intent  to  surrender 

it,  terminates  it,  69,  69  B. 
if  in  a  mutual  company  the  member  is  no  longer  liable  for  assess- 
ments, 69  B. 
unless  the  company  was  insolvent  at  time  of  surrender,  67  A. 
re-delivery  by  the  agent  after  knowledge  of  a  loss  cannot  revive  the 

policy,  69  B. 
on  condition,  is  incomplete  until  condition  is  fulfilled.  69  B. 
after  forfeiture,  assured  can  recover  no  premiums,  69  B. 
without  assent  of  beneficiary,  399  P. 
unfairly  obtained,  569,  507. 
SURROUNDINGS,  statements  as  to,  225,  244,  259. 
SURVEY,  what,  and  when  part  of  contract,  159. 
SUSPENSION,  of  risk,  101. 

of  policy,  101,  245,  343.     See  Premium,  10. 


TAVERN-KEEPING,  245. 

TAX-TITLE,  as  an  incumbrance,  292. 

TAXES,  lien  for,  as  an  incumbrance,  291,  292  A. 

TENANT,  insurable  interest  of,  84. 

TENANT  IN   COMMON,  insurable  interest  of,  81. 

TENDENCY  to  shorten  life,  296. 

TERMINATION.     See  chap.  v.  anal. 

TEXAS,  statute  declaring  policies  on  real  estate  to  be  "  valued  "  in  case 

of  total  loss,  31  A. 
THEFT,  loss  by,  404. 
TICKET,  accident  insurance,  70. 
TIME,  of  insurance,  computation  of,  400,  401. 

if  none  specified  a  reasonable  time  is  intended,  216,  225. 

to  pay  premium.     See  Premium,  7. 

parts  of  a  day  taken  into  account  to  determine  which  policy  issued 
first,  365  a. 

beginning  of  risk.     See  Risk,  1. 

end  of  risk.     See  Risk,  2. 
TIME   POLICY,  what,  34. 
TITLE.     See  Incumbrance. 

A.  Brief  A  nab/sis  ;  see  B.  below  for  a  fuller  one. 

insurance  does  not  run  with  title  to  the  property,  6. 

equitable  and  incomplete,  insurable  interest  in,  86,  89. 

1450 


INDEX. 
[The  references  are  to  the  sections.] 

TITLE  —  continued. 
transfer  of,  267. 

change  of,  as  an  alienation.     See  chap.  xii.  anal, 
mortgage  not  change  of,  269. 
and  property  distinguished,  283. 
misrepresentation  as  to,  283-289. 
what  constitutes,  283-294. 
true,  287. 

ownership,  interest,  285. 
sole  and  unconditional  owner,  286. 
absolute  and  leasehold  interests,  288. 
perfect  and  unincumbered,  289. 
fee-simple,  289. 
B.  Fuller  Analysis. 

1.  "Property"  means  the  thing  insured;  "  title,"  the  right  to  or  in- 
terest in  it,  283. 
the  title  is  no  part  of  the  description  of  the  property,  or  its 
condition,  situation,  value,  or  risk,  283. 
Unless  inquiry  is  made  the  title  need  not  be  stated,  it  being  suf- 
ficient if  in  fact  the  assured  has  an  iasui'able  inter- 
est, 284,  285. 
and  where  such  is  the  case,  there  is  a  strong  tendency 
to  hold  the  company  if  the  assured's  representations 
can  be  made  to  fit  the  facts  either  substantially  or 
literally,  284. 
no  misrepresentation  that  does  not  diminish  the  risk 

will  be  fatal,  287,  note, 
it  is  sufficient  if  the  title  is  actually  good  though  it 
appears  defective  on  the  records,  285,  note. 
Where  no  inquiry  is  made  calling  the  property  "  his  "  or  him- 
self the  "  oiLmer"  is  right,  if  in  any  substantial  sense 
it  is  his,  although  (285)  — 
it  is  on  the  land  of  another,  285. 
or  attached,  285. 
or  he  is  only  tenant  for  life,  285. 
or  for  years,  285. 
or  joint  owner,  285. 
or  vendee  with  deed  passed  to  third  person  for  him, 

285. 
or  possessor  under  a  contract  of  purchase,  285,  287 

(even  though  parol). 
or  holder  of  a  claim  enforceable  in  equity,  285,  and 
notes. 
it  is  not  misrepresentation   for  the  equitable 
owner  to  claim  full  title,  285,  note. 
or  vendor  before  deliveiy,  285. 
or  judgment  creditor  to  whom  the  property  has 
been  set  off  subject  to  mortgage,  287. 

1451 


INDEX. 
[The  references  are  to  the  sections.] 

TITLE  —  continued. 

or  purchaser  at  foreclosure  or  sheriff's  sale  before 

deed  acknowledged  or  passed,  287. 
or  grantor  with  defeasance  back  unrecorded,  285, 

note. 
or  mortgagor  before  redemption  expires,  285,  note, 
otherwise  ujler. 
•whether  holder  of  title-bond  from  one  "who  was  suing  in 
equity  to  perfect  his  title,  is  owner,  for  the  jury  to 
decide,  284. 
a  sheriff's  sale  before  insurance  and  annulled  afterwards 
does  not  aifect  the  ownership,  285. 
particular  interest  need  not  be  stated;  the  insurance  may  be 
genera],  and   recovery  according  to  the  interest  proved, 
285,  note, 
except  in  reassurance,  bottomry,  and  freight,  profits,  &c., 
in  some  cases,  285,  note. 
2.   If  the  "  true  title  "  is  called  for  it  must  be  stated  with  substantial 
accuracy,  287. 
it  will  not  do  to  call  the  property  ^^  his"  when  he  is  only  a 
tenant  by  curtesy,  287,  289. 
part  owner,  287. 
stockholder,  287. 
mortgagee,  287. 
mortgagor,  287. 
if  the  charter  requires  statement  of  title  if  less  than  a  fee- 
simple,  an  omission  to  state  title  is  a  warranty  of  a  fee- 
simple,  287. 
individual  may  insure  his  property  under  his  trade  name 
though  it  makes  the  insurer  think  it  is  corporate  prop- 
erty, 287. 
♦'  good  and  perfect  unincumbered  title,"  mortgage  paid  but 
not  discharged  of  record  is  a  breach,  289. 
3.  Fee-simple,  "  if  title  less  than,  it  must  be  stated,"  289. 

verbal  gift  cannot  create,  and  though  deed  made  and  de- 
livered before  lo.ss,  policy  void,  289. 
mortgagee  under  absolute  deed  may  so  state  his  title,  289, 

end. 
fee  of  undivided  portion  of  land  under  buildings  not  suf- 
ficient, 289. 
husband  cannot  call  wife's  property  "  his  "  when  charter 
requires  fee-simple,  289. 
see,  where  agent  knows  the  facts,  294  E. 
■warranty  of  fee-simple  true  if  he  can  enforce  specific  per- 
formance of  a  bond  to  convey,  289. 
if   several  persons   are   insured  in  respect   to   the  same 
property,  the  condition  applies  to  the  sum  of  their  in- 
terests, 289. 

1452 


INDEX. 
[The  references  are  to  the  sections.] 

TITLE  —  continued. 

4.  "  Sole  and  unconditional  owner  :  " 
mortgagor  of  chattels  is,  286. 
"  entire,  unconditional,  and  sole  owner  :  " 
valid  condition,  287  A. 
breach  fatal,  287  A. 

so  is  failure  to  disclose  true  title  if  not  as  required  by 
policy,  though  no  question  asked  at  time  of  application, 
287  A. 
mortgagor  in  possession  in  some  States  is,  287. 
in  general  a  mortgage  must  be  stated,  287. 
contra,  287  C,  even  as  to  absolute  deed  intended  as  a 
mortgage. 
vendee  though  giving  mortgage  for  price,  287  C. 

or  allowing  the  vendor  to  retain  the  legal  title  as  se- 
curity, 287  C. 
a  lien  does  not  affect,  287  C. 
nor  a  conditional  sale,  287  C. 

nor  an  agreement  to  give  clerk  a  share  of  profits,  287  C. 
nor  a  dry  legal  title  iu  another,  287  C. 
sole  beneficial  right  siifficient,  287  C. 
equitable  owner  is,  iu  respect  to  insurance,  287  C. 
one  in  possession  under  a  valid  contract  of  purchase  is, 
287  C. 
though  he  has  assigned  his  contract  as  collateral,  287  C. 
but  mere  verbal   promises  to  convey  are  not  sufficient, 

287  C. 
if  the  description  says  "  held  in  trust  "  or  otherwise,  the 
company  has   notice,    the    condition    does   not   apply, 

287  C. 

not  entire,  unconditional,  and  sole  owner. 

if  there  is  any  outstanding  right,  legal  or  equitable,  287. 

as  tax-title,  &c.,  287,  end. 
stockholder  as  to  corporate  property  though  pledged  to 

him,  287,  note, 
holder  under  quitclaim  from  second  mortgagee,  287  B. 
leasehold  and  contract  of  purchase  of  personalty,  price 

unpaid,  287  B. 
surviving  partner,  287  B. 
life  tenant,  287  B. 
5.  Leasehold  interest.     Absolute  interest  : 

interest  and  title  are  not  synonymous,  288. 

if  the  loss  would  fall  on  A.  his  interest  is  absolute,  288. 

possessor  under  contract  of  purchase  with  part-payment, 

288  (absolute)  (?),  288. 
pledgor,  288. 

lessee  owning  building  to  be  left  on  land  at  end  of  lease, 
not  leasehold,  288. 

1453 


INDEX. 
[The  references  are  to  the  sections.] 

TITLE  —  continued. 

mechanic's  lien,  288. 

not  stating  leasehold   when   required    by  policy,   fatal, 
though  no  question  asked  at  application,  288. 
TORNADO,  loss  by,  covered,  40G. 
TORT,  of  third  person  causing  loss,  407  A. 

of  agent.     See  Agents,  3. 
TOTAL   DISABILITY  from  accident,  522,  523. 
TOTAL   LOSS,  constructive  notice  of  abandonment  need  not  be  given 

to  reinsurer,  11  (Zj). 
TRADES,  hazardous,  230-240. 
TRANSFER   OF   TITLE,  what,  267,  272,  273,  275. 

to  the  property  insured  does  not  carry  the  insurance  unless  so  agreed 
in  the  policy,  6. 
TRAVELLING,  permit  for,  335. 
restrictions  upon,  335-339. 
waiver  of,  339. 
what  is,  524,  529. 
in  a  conveyance,  525,  529. 
TRIAL.     See  Proof. 

TRUST-DEED  not  an  alienation,  272,  276  B. 
TRUSTEE,  insurable  interest  of,  80,  83,  111. 


U. 

ULTRA    VIRES,  reinsurance  not,  if  permitted  by  statute  though  no 
permission  in  charter,  12  A. 
parol  insurance  not  necessarily  invalid,  15,  23,  23  D, 

a  policy  issued  without  order  of  the  directors  good,  17.     See 
Informality. 
UNCLE  as  beneficiary,  399  H. 
"  UNCONDITIONAL  "  OWNER.     See  Title,  4. 
UNLAWFUL   ENTERPRISES  not  insurable,  71. 
UNTRUE   STATEMENT.     See  Representation. 
USAGE,  as  evidence.     See  582. 

in  aid  of  interpretation,  11,  173,  179,  180.     See  chap.  viii.  anal.  4. 

to  limit  liability  of  reinsurer  not  admissible,  11  (z). 

to  make  insurance  contracts  in  writing  does  not  render  parol  invalid, 

14,  18,  29, 
competent  to  show  whether  a  parol  agreement  is  final  or  looks  to  the 

issue  of  a  policy,  23  B. 
as  to  stock  of  country  store,  &c.,  233,  238,  239. 
"  usually  kept."     See  chap.  xi.  anal.  4. 
as  to  keeping  watchmen,  250. 
as  evidence  of  truth  of  description,  262. 

1454 


INDEX. 
[The  references  are  to  the  sections.] 

USE,  change  in  mode  of,  230. 

additional  or  cumulative  is  fatal,  237. 

otherwise  as  to  an  enlarged  use,  231. 

means  habitual  use,  241 

prohibited,  23i,  241-243,  245. 

of  prohibited  articles,  239. 

meaning  of,  241-243,  247. 

unlawful,  246 
USURPED   POWER,  loss  by,  403. 


VACANCY, 

1.  In  absence  of  express  provision  on  the  subject  of  vacancy, 

description  of  premises  as  a  "  dwelling"  or  as  occupied  by  a  par- 
ticular person,  no  warranty  again.st  vacancy,  217 
representation  of  present  status  not  an  agreement  for  its  continu- 
ance, 247. 
change  of  tenants  immaterial,  247. 

"  to  be  occupied  by  a  tenant "  is  only  an  expression  of  expecta- 
tion, 248. 
unless  the  time  is  fixed  within  which  the  house  is  to  become 
occupied,  248. 
temporary  vacancy  between  tenants  is  not  fatal,  249  B. 
nor  on  a  vi-sit;  see  248,  249  D. 
nor  .stoppage  of  mill  for  repairs,  &c.,  248 
nor  even  complete,  permanent  vacancy,  unless  in  bad  faith 
or  such  as  to  increase  the  risk  materially,  248,  249  B. 

2.  An  express  provision  against  vacancy  is  necessary,  247,  248,  249  B. 

unless  the  premises  are  purposely  left  vacant  in  bad  faith,  248. 
or  the  vacancy  is  of  such  character  as  to  come  under  the  increase 

of  risk  clause,  248. 
ordinarily  it  is  not  an  increase  of  risk,  249  B. 

but  if  a  house  is  left  by  the  owner  and  an  intruder  opens  a 
saloon,  the  risk  will  be  increased,  not  by  the  vacancy,  but 
by  what  happened  in  consequence,  249  B. 
an  oral  promise  insufficient,  248 
if  there  is  no  "vacancy  clause,"  good  faith  and  the  "  increase  of 

risk  provision"  are  the  tests,  247-249  B. 
if  there  is  a  vacancy  clause,  its  special  words,  if  not  too  unrea- 
sonable to  be  sustained,  249  G,  must  be  added  to  the  tests,  247- 
219  B 
"vacant  "  means  empty  of  all  but  air,  249  A. 
unoccupied  means  no  one  in  actual  n.se  or  possession,  249  A. 
terms  must  be  construed  with  reference  to  the  subject-matter, 
249  A. 

VOL.  II.  —  48  1455 


INDEX. 

[The  references  are  to  the  sections] 

VAC  AXCY  —  conhnved. 

the  condition   in  a  policy  on  a  hog  house  refers  to  the  human 

occupation  of  the  dwelling  on  the  premises,  not  to  the  hog;>, 

249  A. 

requires  practical  use,  249  (shop)  ;  but  see  249  D  (grain-elevators). 

requires  use  as  a  customary  place  of  abode,  249  A  (dwelling). 

not  uninterruptedly,  but  the  place  of  habitual  return  and 

stoppage,  248,  note, 
leaving  in  charge  of  one  living  near,  not  sufficient.  249  A. 
purpose  to  move  into  a  house  though  partly  executed  is  not 

enough,  249  A,  249  C;    but  see  249  D. 
occupation  of  the  land  is  not  enough,  the  houite  must  be 
occupied,  249  C. 
the  condition  applies  to  all  the  buildings  on  the  premises,  249  A. 

it  is  distributive,  249  A. 
diligence  of  the  insured  does  not  enter  the   question  unless  so 
agreed,  as  by  the  words  "vacancy  ^A•ithin  assured's  con- 
trol," 249  F. 
then  insured  must  show  it  was  beyond  control,  249  F. 
in  general,  removal   by  tenant,  though  before  lease  is  out 
and  without  knowledge  of  assured,  is  fatal,  249  F. 
false  answer  as  to  occupancy  fatal,  249  G. 

policy  once  voided  for  vacancy  not  revived  by  reoccupation,  249  G. 
unreasonable   condition,  which  would  avoid   the    policy   if    the 

premises  were  used  or  not,  is  void,  249  G. 
by-law  as  to,  subsequent  to  policy,  no  effect,  249  G. 
JMaiue  statute,  249  G. 
3.  Vacancy  may  be  waived  • 

expressly  by  writing,  249  H. 

or  orally  even  though  tlie  policy  requires  writing,  249  H. 

or  declares  that  no  agent  can  waive,  249  J. 
a  general  agent  may  waive  this  last  requirement  as  well 
as  the  other,  249  H,  249  J. 
impliedly  by  knowledge  of  the  agent. 

state  of  premises  as  to  occupancy  at  time  of  insurance, 
if  occupation  at  loss  is  same  as  known  to  agent  at 
time  of  insurance,  company  estopped,  249  I. 
although   the   applicant   ignorantly  signed  an 
erroneous  application  filled  up  by  the  agent, 
249  T. 
but  if  house  once  becomes  occupied  after  in- 
surance the  condition  takes  effect,  249  I. 
vacancy  occurring  after  insurance: 

if  agent  tells  assured  it  will  be  fatal,  no  Maiver, 

249  I. 
so  if  he  is  merely  silent,  249  I. 
knowing  that  vacancy  is  likely  to  occur  in  future, 
no  waiver,  249  I.     Tenement,  summer-house,  &c. 

1456 


INDEX. 

[The  references  are  to  the  sections.] 

VACANCY  —  continued. 

general  agent  may  modify  contract  so  as  to   cover   future 
vacancies,  2i9  H. 
if  the  policy  says  unoccupied  buildings  must  be  insured  as  such, 

they  must  be,  '248. 
no  implied  obligation  to  keep  a  watch  in  a  vacant  house,  248. 
mere  going  out  of  one  tenant  is  not  a  "  change  of  tenants  "  till 

new  one  comes  in,  249. 
a  vacancy  is  not  "  an  alteration  of  use,"  249. 
4.  What  is  a  vacancy: 

vessel  left  alone,  249  C. 

moving  in  just  begun,  249  C,  249  A  ;    but  see  249  D. 
leaving  a  few  articles  in  house,  and  non-delivery  of  key  to  owner 
not  sufficient,  249  C. 
nor  supervision  by  one  not  living  in  house,  249  A,  249  C. 
What  is  not  a  vacancy: 

absence  on  a  visit,  248. 
or  a  funeral,  249  D. 
leaving  summer-house  in  winter,  248;  see  however,  2491. 
temporary  suspension  of  a  mill,  248. 

for  repairs,  or  because  of  low  water,  248. 
casual  absence  on  night  of  fire,  249  D. 
moving  in  nearly  complete,  249  U. 
sleeping  in  adjoining  house  not  fatal,  249  D. 
if  any  one  of  the  "  family  "  remains  it  is  sufficient,  249  D. 

or  if  part  of  a  tenement  house  is  occupied,  249  D 
grain  elevator  not  vacant  if  owner  keeps  his  papers  there  and  is 
in  and  out,  249  D. 
notice  of  vacancy: 

must  be  given  if  required  by  the  policy,  248. 
temporary  vacancy  between  tenants  not  fatal  as  an  increase  of  risk, 
219  B. 
but  is  under  the  vacancy  clause,  249  B. 

even  though  the  fire  was  smouldering  unnoted  before  the  tenant 
left,  249  B. 
"  vacant  and  so  remain ,  " 

means  vacant  until  loss,  249  E. 

agent's  knowledge  of  vacancy  at  time  of  consenting  to  transfer 
does  not  waive  the  condition  as  to  remaining,  249  E. 
VACATION   OF   PREMISES,  217-249. 
Valuation.     See  Overvaluation. 

over,  what  is,  and  effect  of,  in  valued  policy,  30,  373-376,  443. 
what  avoids  the  policy,  30,  373-375. 
by  reference,  31. 
renewal  of  changing  stock,  375. 
restriction  of,  in  charter  and  by-laws,  476. 
VALUE.     See  Ovfrvaluation. 

statement  of,  not  generally  a  warranty,  3.  188  C. 

1457 


INDEX. 

[The  references  are  to  the  sections.] 

VALUED   POLICY,  uhat,  30,  31,  31  A. 

how  distinguished  from  open,  30. 

may  be  open,  and  valued,  31,  32. 

statute  declaring  policy  to  be  valued  in  certain  cases,  31  A. 
VENDEE,  insurable  interest  of,  83  a,  87,  87  A,  88,  96. 

title  in  respect  to  insurance,  285,  287. 

claim  for  loss,  549-556. 
VENDOR,  insurable  interest  of,  S3  a,  88,  97. 

claim  for  loss,  549,  550. 

venue,  569  A. 
VIOLATION    OF   LAW,  death  by,  what,  530.     See  Death. 
VOYAGE  POLICY,  34. 


W. 

WAGER  POLICY^  what,  33. 
unlawful,  74,  75. 

See  Insurable  Interest. 
WAIVER.     See  Relinquishment. 

by  insurer  of  a  breach  by  assured  does  not  release  reinsurer,  12  B. 

of  vacancy.     See  Vacancy,  3. 

of  paynient  of  premium,  62,  300-363. 

of  counter-signature  of  agent,  05. 

of  .sealed  instrument  by  parol  good,  24  A. 

receipt  of  premium  by  book-keeper  does  not  waive,  136  A. 

by  agent  authorized  to  take  premiums  after  knowledge  waives  a 
change  of  residence,  136. 
or  forfeiture  for  non-payment,  136. 
secretary  may  waive  breach,  1;j6. 
by  usage,  137. 

by  usual  course  of  business,  of  condition  as  to  written  assent  to  assign- 
ment, 139. 
no  waiver  — • 

of  written  assent  to  increase  of  rfsk,  137  A. 

or  removal,  137  A. 
of  non-payment  when  policy  provides  that  agent  cannot  vary 

it,  137  A 
if  policy  restricts  right  to  waive  to  home  office,  137  A 
or  declares  that  the  agent  is  not  to  vary  the  policy,  137  A. 

such  provisions  valid  as  to  waivers  attempted  a/ie/-  i.ssue, 

137  A. 
not  as  to  those  before  issue  unless  brought  to  notice  of 

assured,  137  A. 
usage  mav  overcome  the  provision  entirely,  137  A. 
of  proofs  of  fo'-feiture  by  adju.ster,  138. 
by  act  of  agent,  143,  144,  498-500,  509,  513. 

1458 


INDEX. 

[The  references  are  to  the  sections.] 

WAIVER  —  continued. 

of  answer  to  question,  166. 

of  forfeiture  by  increase  of  risk,  263. 

by  alienation,  282-282  B. 

by  incumbrance,  294  6-294  G.     See  Incumbrance,  6. 

by  non-payment  of  premium,  360.     See  Premium,  12. 

by  other  insurance.     See  Other  Insurance,  4. 

by  consent  to  assessment,  384. 
breach  of  license  to  reside  abroad,  338. 
of  restrictions  on  residence  and  travel,  339. 
of  notice  of  loss,  464. 
of  preliminary  proof,  468-471,  473. 
of  preliminary  proof,  when,  469,  470. 
of  defects  in  preliminary  proof,  when,  470. 
of  limitation  of  suit,  488 
of  agreement  for  arbitration,  492. 
and  estoppel,  497-518. 
pending  negotiations,  501. 
during  currency  of  policy,  502. 
if  act  is  known  to  be  impossible,  503. 
after  loss,  505. 

none  when  facts  are  not  known,  506. 
none  when  insured  not  prejudiced,  507. 
by  silence  and  intent,  508 
of  acts  prohibited  by  charter,  510. 
effect  of  express  stipulation  against,  511. 
of  assessment,  461  A. 

See  Estoppel. 
WALLS,  falling  of,  412. 

V/AR,  effect  of  — 

on  contract,  36-42. 

1.  The  thought  at  the  basis  of  the  subject,  42  A. 

private  interests  must  yield  to  public,  but  are  to  be  interfered 
with  only  so  far  as  the  public  purposes  positively  require, 
42  A. 

no  subject  can  do  anything  detrimental  to  the  interests  of  his 
country,  30,  voluntary  submission  to  the  enemy,  receivinr/  Jiis  pro- 
tection, or  any  act  or  contract  which  tends  to  increase  his  resour- 
ces, as  transmission  of  money  or  goods  or  any  kind  of  trading 
or  commercial  dealing  between  the  two  countries,  is  unlawful, 
42. 

2.  During  the  war 

a  contract  of  insurance  cannot  be  made  across  the  line  of  hostili- 
ties, 36. 
such  a  contract  is  void,  37. 
an  enemy's  property  in  general  cannot  be  insured,  and  the  disa- 
bility extends  to  subjects  dealing  in  enemy's  property,  37. 

1459 


INDEX. 
[The  references  are  to  the  sections.] 

'  WAR  —  continued. 

and  insurance  of  the  life  or  health  of  one  in  the  enemy's  ser- 
vice is  void,  37  (s). 
the  life  and  property  of  an  alien  enemy  domiciled  here  may  be 
insured,  42  (s). 

3.  A  contract  made  before  the  war 

is  only  suspended  until  the  conflict  is  over,  37,  and  then  revives, 
39,  41,  43. 
except  that  no  recovery  can  be  had  for  loss  of  property 

by  capture  or  otherwise,  in  consequence  of  the  fight,  36. 
unless  the  property  was  exempt  from  hostilities,  39  (s). 
nor  for  any  loss  of  life  or  health  in  the  enemy's  service,  37  (s). 
is  good  as  to  property  and  lives  exempt  from  belligei-ent  power, 
39  (s),  42  (s): 
e.  g  the  life  of  a  neuti-al  domiciled  in  the  enemy's  country, 
39  (s). 
may  be  kept  alive  by  paying  premiums  to  resident  agent.  40. 

4.  Domicil  of  the  owner  in  the  enemy's  country  is  the  genei'al  test  as 

to  property,  38,  42  (s). 

and  the  line  of  demarcation  is  that  claimed  and  held  by  the  bel- 
ligerent power,  38. 

if  the  United  States  were  at  w^ar  with  Spain,  a  Spaniard  domi- 
ciled here  could  contract  and  sue  here  like  a  citizen,  42  (s). 

in  respect  to  life,  hostile  nationality  must  be  combined  with 
domicil  in  the  enemy's  country  to  avoid  the  insurance,  39  (s). 

5.  Conditions  of  the  policy 

as  to  premium  and  forfeiture  for  non-payment  of  it  do  not  apply 

to  -war,  39  A. 
payment  to  agent  here  good,  39  A,  40. 
payment  to  agent  in  South,  in  Confederate  money,  good  (?), 

39  A. 
tender  and  refusal  of  one  premium  makes  tender  of  subsequent 

dues  unnecessary,  40,  note, 
notice  and  proof  after  the  war   sufficient,  39  A,  limitation   of 

suit  extended  by  war,  39  A. 

6.  An  agency  in  a  hostile  country  (Spain,  for  example)  of  a  company 

located  here, 
could  not  be  created  during  a  war  between  the  countries,  30, 

42  (s). 
but,  if  previously  created,  it  would  not  be  revoked  or  sus- 
pended, except  as  to  the  taking  of  new   risks  and  the 
transmission  of  premiums,  40. 
premiums  accruing  on  contracts  made  before  the  war  could 
be  and  muft  be  received  bj'  the  agent,  but  not  forw  arded 
till  after  the  conflict,  40,  note,  42  (s). 
of  an  English  company  would  be  neutral  although  he  was  a  sub- 
agent  appointed  by  an  agent  of  the  English  company  who  was 
resident  here,  40. 

1460 


INDEX. 

[The  references  are  to  tlie  sections.] 

WAR  —  continued. 

7.     When  war  begins  so  as  to  affect  insurance,  38. 
in  civil  war  tlie  rules  are  the  same,  38. 
mutual  companies  same  rules,  39  (s). 
it  excuses  non-payment  of   premium,   350,   350  A,   351.     See 

Premium,  9. 
it  excuses  failure  to  sue,  483. 

WAREHOUSEMAN,  insurable  interest,  80,  95  A. 

has  claim  for  loss,  42i. 
WARMING,  representations  as  to  mode  of,  255. 

WARRANTY,  156-181. 
defined,  156,  166. 
must  be  strictly  true,  156. 

no  particular  form  necessary  to  constitute,  156. 
no  warranty  if  not  intended,  156,  104,  165. 
two  kinds  of,  157. 
affirmative  and  promissory,  157. 
statement  by  reference  made  part  of  the  policy  not  necessarily  a, 

158-161,  164,  165,  169.     See  chap.  viii.  anal.  2. 
how  ambiguous  questions  affect,  166. 
warranties  not  favored,  158. 

courts  lean  to  make  statements  representations,   162  (and  tliey 

ought  to  lean  a  little  harder  than  some  of  them  do), 
general  rule,  a  reference  to  application  in  policy  makes  its  state- 
ments warranties,  159. 
but  reference  in  mere  general  terms  is  not  enough,  159. 
it  must  be  stipulated  that  the  statements  are  warranties  or  con- 
ditions, 159. 
the  words  "  on  condition  "  may  not  be  enough,  162. 
if  there  is  room  for  doubt,   they  are   representations,  159,    162, 

160-165,  170,  171. 
so  if  any  other  purpose  of  the  reference  appears,  159. 

or  if  the  purpose  does  not  appear,  184. 
a  statement  though  written  on  the  policy  itself  may  not  be  a 

warranty,  164. 
what  the  parties  call  representations  cannot  be  made  warranties 

by  being  made  part  of  the  policy,  165. 
question  not  answered  is  a  nonentity,  166. 

if  company  issues  policy,  on  the  omission  the  question  is 
waived,  166. 
part  answer,  warranty  can  go  no  further  than  the  answer,  166. 
the  application,   survey,  or  other  statements  oral   or  written,  if  not 
referred  to  in  the  policy,  are  merely  representations,  159;  see 
also  160. 
if  written  or  oral  statements  are  referred  to  in  the  fwlicy  they 
may  be  proved  by  parol,  159. 

1401 


INDEX. 

[The  references  are  to  the  sections.] 

WARRANTY  —  continued. 

qualified  statement  or  reference,  knowledge,  assertion  of  belief,  not  of 
absolute  truth.  The  several  stipulations  in  the  policy,  appli- 
cation, &c.,  must  be  carefully  compared,  for  something  may 
appear  inconsistent  with  holding  statements  to  be  warranties, 
161,  168,  169. 
or  showing  that  they  are  warranties  only  as  to  some  particulars 

and  representations  as  to  others,  160. 
"  so  far  as  known,"  161,  166. 
"  in  all  respects  true,"  followed  by  "  to  best  of  my  knowledge," 

no  warranty,  161. 
other  qualifying  clauses,  160,  161. 

it  is  a  question  for  the  jury  whether  the  assured  did  answer  ac- 
cording to  his  best  knowledge,  161. 
construction  of,  see  chap.  viii.  anal.  3,  4. 
substantial  fulfilment,  see  chap.  ix.  anal.  18-1. 

distinction  between  warranty  and  representation.     See  Representa- 
tion, 2. 
superfluous  answer  no,  166. 
not  implied,  unless  material,  170. 
construed  strictly  as  to  their  scope,  171. 
construed  strictly  against  insurer,  178. 
modified  by  statute,  180  a. 
distinguished  from  representation,  183. 
a  part  of  the  contract,  183. 
distinction  between,  and  representations  as  to  pleading  and  evidence, 

183. 
promissory,  not  condition  precedent,  188,  note, 
colorable  compliance  with,  199. 
against  alteration,  223. 
as  to  place,  2.57. 

statement  of  present  use  not,  231. 
of  good  health,  295. 
WATCH,  what  constitutes,  188,  250-252. 
WATCHMAN.     See  Conditions. 
when  mill  not  in  use,  188. 
absence  of,  252. 
WATER,  injury  by,  404. 
WEARING  APPAREL,  420. 
WHARFINGER,  insurable  interest,  80,  95  A. 
WIDOW,  rights  as  beneficiary,  391,  399  F,  399  H. 
WIFE,  insurable  interest  in  life  of  husband,  107  h. 

rights  in  policy  for  benefit  of  her  and  children,  391. 
insurance  of  life  of,  for  benefit  of  husband,  451. 
WILFUL  BURNING,  what,  583. 
WILFUL  EXPOSURE,  loss  by,  409,  530. 
1462 


INDEX. 

[The  references  are  to  the  sections  ] 

WITNESS,  must  state  facts  not  opinion  as  to  completion  of  contract,  43  A. 

AVORK,  examination  after,  254. 

WORKING  of  mills,  253. 

WOUND,  proximate  cause  of  death  by,  419. 

WRITING  prevails  over  print,  177,  239. 

WRONG-DOER,  no  right  of  subrogation,  554. 

1463 


University  Press  :  John  Wilson  and  Son,  Cambri<l,f^e. 


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